Indonesia may sell 49% of Garuda

[Sing Yew 1]

Indonesia may sell 49% of Garuda

 

JAKARTA: Indonesia may sell up to 49% of national flag carrier PT Garuda Indonesia to strategic investors as the airline struggles to deal with mounting debt, the Jakarta Post reported yesterday.

 

“Many investors are willing to put their money into Garuda. There is no reason for us not to let them join the airline. But the government will remain in control with 51% ownership,” State Enterprises Minister Sugiharto was quoted saying in Bandung, the capital of West Java province.

 

Sugiharto did not give a timeframe for the stake sale.

 

The state-firm said last month it would not be able to repay on schedule about US$55mil in principal debt due at the end of last year, but would continue to pay interest on its debts and make required payments to aircraft lessors.

 

Garuda president director Emirsyah Satar has said negative factors such as a weakening rupiah, higher oil prices, competition and security issues, including the Bali bombings in October last year, have made it harder for the company to service its debt.

 

The company has said its total debt was US$826.5mil, with more than 60% owed to the European Credit Agency. – Reuters

[Sing Yew 1]

Garuda Indonesia Needs US$56 Million-Bridging Loan: Minister

JAKARTA, Jan 6 Asia Pulse - National flag carrier PT Garuda Indonesia needs a US$56 million bridging loan to overcome its short-term financial problems, Transportation Minister Hatta Radjasa said Thursday.

The minister said Garuda also explained its need for working capital in an amount almost the same as the bridging loan it required.

 

Radjasa said the government agreed in principle to help overcome Garuda`s financial problems but it could not make a decision alone because it has to consult the House of Representatives (DPR).

 

He said Garuda had discussed its loan requirement with its creditors.

 

"It is expected that the creditors will understand and be willing to help because the government itself also wants to assist," the minister said.

 

The minister said Garuda needed the bridging loan to carry out rescheduling and revive its financial strength before it holds an initial public offering (IPO).

 

Asked about the amount of money the government would inject into Garuda, the minister said this was a matter for the finance minister, the state minister for state enterprises and the DPR to decide.

 

"Let`s see later, whether the finance minister, the state enterprise minister and DPR will agree to allocate some US$50 million dollars or so to Garuda," he added.

 

At present, Garuda`s debts are estimated to amount to US$800 million which include 150 million in promissory notes and 500 million in debt to the European Credit Agency (ECA).

 

Garuda also owed US$150 million in Mandatory Convertible Bonds to state-owned Bank Mandiri.

 

Garuda Indonesia would hold a meeting with its creditors to reschedule repayments of its debts which mature this month.

 

"We will ask our creditors to reschedule repayment of our debts," Garuda president director Emirsyah Satar said Thursday.

 

He said the Garuda management held a meeting with the creditors early last month but the meeting failed to result in an agreement to reschedule the debt repayments.

 

"For their part, the creditors will set up a steering committee at the upcoming meeting," he said.

 

(ANTARA)

 

 

Looks like MH may even need more than GA.