PT Garuda Indonesia Tbk (IDX: GIAA) announced to issue Mandatory Convertible Bonds (MCB) amounting to Rp8.5 trillion (US$574 million) - Photo by AP II Office

JAKARTA (TheInsiderStories) – The airlines firm owned by the government, PT Garuda Indonesia Tbk (IDX: GIAA) announced to issue Mandatory Convertible Bonds (MCB) amounting to Rp8.5 trillion (US$578.23 million), the management announced today (10/16). After the corporate action, the government ownership will rises from 60.5 percent to 84.8 percent.

While, PT Trans Airways, owned by Indonesian tycoon Chairul Tanjung, shrank from 25.8 percent to 9.9 percent and public will be diluted from 13.7 percent to 5.3 percent. The management announced the issuance of the MCB run by private placement scheme and have seven years tenure.

The conversion will be carried out into new Series B shares with the conversion price based on 90 percent of the average closing price for a 25 days periods from Oct. 13, 2020, stood at Rp206 a share. Garuda targeting to request an approval from the shareholders on Nov. 20. 

Based on the balance sheet in the first half of 2020, the issuer has negative working capital around $3.68 billion. The state-run flight carrier’ liabilities are valued at $10.36 billion, in which the amount exceeds 80 percent of the company’ total assets valued of $10.28 billion.

As part of the National Economic Recovery program, the airliner has become one of the state-owned enterprises that will get a capital injection from the government. In the issuance of the MCB, the government through the state financial firm, PT Sarana Multi Infrastruktur will be able to act as a standby buyer, he adds.

Regarding the company‘ financial condition, the CEO, Irfan Setiaputra revealed, it had received the approval of SUKUK-holders to extend the settlement period of the bond issuances of $500 million with a three years tenure from the maturity date on June 3, 2020. He stressed, with the approval, the company believes will accelerate the recovery of its performance.

In the first half of 2020, Garuda‘ operating income was valued at $768.12 million, down 43.15 percent compared to the previous year of $ 1.09 billion. While, last year, the flight company recorded a net profit of $6.99 million. The achievement of this 2019′ profit reversed the 2018 net loss of $231.16 million which was booked after restated the financial report.

Total revenue which rose 5.5 percent to $ 4.57 billion last year from the previous year of $ 4.33 billion. But in the first quarter of 2020, the company actually posted a net loss, reversing from the previous bookkeeping profit due to decrease in income.

US$1: Rp14,700

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