TOKYO: Five Japanese banks plan to provide a total of 400 billion yen in subordinated loans to ANA Holdings Inc., whose All Nippon Airways unit has been financially struggling due to the coronavirus pandemic, informed sources said Wednesday.

Subordinated loans have a lower repayment priority than ordinary loans and can be partly treated as capital. The banks are expected to sign loan contracts as early as this month.

ANA is expected to receive 130 billion yen each from Sumitomo Mitsui Banking Corp. and the government-backed Development Bank of Japan, 60 billion yen from Mizuho Bank, 50 billion yen from MUFG Bank and 30 billion yen from Sumitomo Mitsui Trust Bank, the sources said.

The company has proposed cutting annual employee pay by 30 pct on average as part of efforts to slash costs as it suffered a net loss of 108.8 billion yen in April-June, its record quarterly loss.

ANA has secured some 1 trillion yen in funds, including credit lines. Still, it is considering procuring some 200 billion yen through a public offering of shares, while seeking subordinated loans from main creditor banks.

In its fiscal 2020 second supplementary budget, the Japanese government expanded support measures for businesses, including subordinated loans by government lenders.

JIJI Press