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Garuda Indonesia's $9.4 billion debt settlement is up for a vote among creditors

Image: Reuters Berita 24 English -  Garuda Indonesia 's creditors, including Rolls-Royce of the United Kingdom and Airbus of Europe, wil...


Image: Reuters

Berita 24 English - Garuda Indonesia's creditors, including Rolls-Royce of the United Kingdom and Airbus of Europe, will vote on a $9.4 billion debt restructuring package on Friday, with the carrier confident of receiving enough support to move on.

A simple majority vote will win a binding agreement for all claims, including holders of Garuda's $500 million sukuk, if it represents two-thirds of Garuda's liabilities held by creditors attending the meeting in a Jakarta court.

According to the most recent court document, the process will recognise a total of 138.5 trillion rupiah ($9.35 billion) in claims, down from 142.4 trillion rupiah previously reported.

Irfan Setiaputra, Garuda's chief executive, told creditors ahead of the vote that he hoped for the best deal for all stakeholders that "ensures future commercial partnership."

Garuda has given aircraft manufacturers, lessors, maintenance vendors, and Islamic bond investors, who own the majority of the liabilities, a significant debt "haircut," or write-down, in exchange for $825 million in 9-year bonds and $330 million in equity.

It has also proposed that banks and state-owned companies such as Pertamina, which provides fuel, and airport operators extend their loan maturities.

Despite the fact that Boeing had not participated in the court process, Setiaputra told creditors that bond and equity offers had taken into account potential claims by Boeing related to Garuda's plan to cancel its order for 49 737 MAX 8 planes.

The CEO stated that Boeing will be granted an undefined amount of time to present its claim, which amounted to $822 million.

If it does not, the offer to Boeing will be deducted from the total bonds and shares, with the remainder being prorated to other creditors, according to him.

The proposals had received support from Airbus and Rolls-Royce, according to the CEO. According to a court document, the corporations filed claims of 9.9 trillion rupiah and 7.8 trillion rupiah, respectively.

Rolls-Royce did not immediately respond to a request for comment, while Boeing and Airbus declined to comment.

When the epidemic ravaged worldwide aviation travel, Garuda's financial troubles were exposed.

Other Southeast Asian airlines, such as Malaysia Airlines, Thai Airways, Philippine Airlines, and AirAsia X, have also undergone court-supervised corporate reorganisation.

Garuda lost $1.66 billion in the first nine months of 2021, a larger loss than the same period the previous year.

To get the firm back on track, Garuda executives want to focus on serving local routes and increasing air freight. Following the judicial procedure, the state-controlled airline revealed rights-issuing plans that were authorised by the Indonesian parliament.

(1 US dollar = 14,810.0000 rupiah)


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