Garuda to restructure $1.08b in foreign debts
Garuda to restructure $1.08b in foreign debts
JAKARTA (JP): Debt-ridden flag carrier Garuda Indonesia will
meet its creditors in June to hammer out a restructuring
agreement over US$1.08 billion in foreign debts, finance director
Emirsyah Satar said on Wednesday.
Emirsyah said the airline and its financial advisor Deutsche
Bank had been working on a business plan to present to the
creditors as the basis for the debt renegotiation deal.
"We will present a business plan in June and request debt
restructuring," he said at the State Palace.
Emirsyah said that at successive preliminary meetings in
London and Singapore early last month, creditors demanded Garuda
present a business plan detailing the airline's corporate
restructuring process and business prospects.
He said the debt restructuring plan would cover $100 million
in long-term debt, $380 million in short-term promissory notes
and $600 million in leasing obligations for six Airbus-330s.
He declined to provide further details.
Garuda began a massive overhaul of its operations and
management last year, after the airline was devastated by the
sharp decline in the rupiah against the U.S. dollar.
The airline was hit by rising operational costs dominated by
dollar-based spending and by plunging passenger numbers as the
travel industry was depressed by the financial crisis that
started in the middle of 1997.
The company returned six leased aircraft in June as part of
its cost-saving measures and had offered an early retirement
package to more than a thousand employees.
The airline currently operates 40 aircraft, of which 19 are
leased and 21 are owned.
Garuda has yet to announce its 1998 net profit, but insiders
estimate a net loss of Rp 400 billion (US$45.5 million).
Company president Abdul Gani said in February the airline was
projected to post a net profit of Rp 280 billion in 1999.
Garuda is one of the state-owned companies undergoing an
intensive restructuring program launched by State Minister of the
Empowerment of State Enterprises Tanri Abeng.
Profitability
The restructuring measures aimed to boost the profitability of
state firms and increase revenue for the government in the form
of dividends and taxes.
On Wednesday Tanri said the restructuring measures had been
successful as net profits from state enterprises, excluding banks
and electricity company PT PLN, had surged to Rp 11 trillion in
the 1998/1999 fiscal year from Rp 9 trillion in the previous
fiscal year.
He declined to disclose the tax contribution from the state
enterprises, but said the figure helped compensate for the lower
than expected revenues generated by the government's
privatization program.
The government did not realize its target of $1 billion from
the projected privatization of five state enterprises in the
1998/1999 fiscal year. Cement maker PT Semen Gresik was sold for
$121 million and a port container terminal unit of port operator
PT Pelindo II raised $215 million, contributing $336 altogether.
Tanri cited bearish market conditions and regulatory hitches
as the main reason for the failure of the program.
He said the postponed privatization of several state
enterprises in the 1998/1999 fiscal year would be carried out in
the current 1999/2000 fiscal year and would aim to raise Rp 13
trillion. (rei/prb)