Govt approves Garuda debt-restructuring plan<\/p>\n
JAKARTA (JP): The Financial Sector Policy Committee (FSPC)
\napproved on Thursday the proposed restructuring of some US$1.2
\nbillion debt owed by national flag carrier Garuda Indonesia to
\nvarious domestic and international creditors.<\/p>\n
\"Garuda's debt restructuring proposal has been approved by the
\nFSPC,\" Garuda president Abdul Gani told reporters following a
\nmeeting with the FSPC, which groups several senior economic
\nministers.<\/p>\n
Gani said that the government had given the green light for
\nthe state-owned Bank Mandiri to partly guarantee the airline's
\nUS$610 million foreign debt to the European Credit Agency (ECA),
\na consortium of lending institutions from Germany, France and
\nBritain.<\/p>\n
\"Bank Mandiri will provide risk participation of $100
\nmillion,\" he said.<\/p>\n
Gani explained that the ECA had demanded that one of the
\ncountry's state banks partly guarantee Garuda's debt as a
\nprecondition for agreeing to the debt-restructuring proposal.<\/p>\n
He said that with the Bank Mandiri risk participation, ECA
\nwould agree to reschedule the debt repayment term from 12 years
\nto 16 years.<\/p>\n
He said that Garuda took the ECA loan when it leased six
\nAirbus 330-300s.<\/p>\n
Gani said that the FSPC had also approved the restructuring of
\nGaruda's $103 million debt owed to Bank Mandiri by converting the
\nloan into five-year bonds bearing a coupon rate of 4 percent.<\/p>\n
He added that the restructuring proposal for $38 million in
\ndebt owed to the state-owned airport operators PT Angkasa Pura I
\nand PT Angkasa Pura II had also been approved.<\/p>\n
Under the proposal, Garuda would issue further five-year
\nconvertible bonds.<\/p>\n
Gani, however, said that a restructuring of Garuda's $9
\nmillion debt to the government had yet to be approved.<\/p>\n
\"We still have to talk to the Finance Minister on the
\npossibility of converting the debt into bonds,\" he said.<\/p>\n
Gani said that the FSPC had also approved the proposed
\nrestructuring of $460 million in debt owed to various other
\nparties.<\/p>\n
He said that most of the debts were in the form of commercial
\npaper. Garuda has proposed to reschedule the coupon payment to
\neight years.<\/p>\n
Elsewhere, Gani said that Garuda was expected to book $58
\nmillion in profit after tax this year, and $108 million in 2001.<\/p>\n
\"That's based on our business plan,\" he said.<\/p>\n
Garuda has been badly hit by the country's economic crisis
\nthat started in the middle of 1997 as its passenger load factor
\nplunged and U.S. dollar-based debt ballooned with the sharp
\ndepreciation of the rupiah against the dollar.<\/p>\n
Gani said earlier this year that the economic crisis had
\ncaused the airline to suffer a negative equity of $310 million.<\/p>\n
Garuda had to painfully restructure its debt, finances and
\noperations in a bid to avoid bankruptcy.<\/p>\n
The restructuring of the country's corporate debt is seen as a
\nmajor factor in reviving confidence in the economy and restoring
\ncredit lines to the real sector both from domestic and
\ninternational banks.<\/p>\n
So far, only a few major debt restructuring deals have been
\nhammered out.<\/p>\n
The Jakarta Initiative Task Force (JITF) has just recently
\nhelped facilitate a debt restructuring deals worth $1.2 billion
\nincluding debt owed by the Bakrie and Brothers conglomerate.<\/p>\n
The government has promised to provide tax breaks to
\ncooperative debtors if they restructure their debts through the
\noffices of the JITF. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-approves-garuda-debt-restructuring-plan-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}