JAKARTA (TheInsiderStories) - The Indonesian government plans to merge PT Garuda Indonesia Tbk (IDX: GIAA) with other tourism state-owned enterprises (SOEs) to set up a holding company for tourism and aviation sector. The plan is to integrate the flight carrier, including PT Citilink Indonesia, with other entities to manages airports, hotels, department stores and manages Borobudur temple.
Other state-owned companies will join are PT Pengembangan Pariwisata Indonesia (ITDC), PT Angkasa Pura I and II, and PT Hotel Indonesia Natour. CEO of the company, Irfan Setiaputra, expect post-integration, its hoped that his company will get benefit from the merger program and more easily receive funds from the government.
Deputy minister for SOEs, Kartika Wirjoatmodjo targeted, the establishment of the tourism and aviation holding completion in 2022. In detail, he explaine, during 2021 to second quarter of 2022, the ministry will carry out portfolio restructuring and after that to the new holding effective.
“I just had a discussion about holding aviation and tourism. We will integrated Garuda, Angkasa Pura, ITDC, HIN into one holding,” he stated on Sept. 16,
As known, Garuda has financial problems and has fired 700 employees with contract labor status as of Nov. 1, as a decline in flight service demands during the pandemic. He said, the employees reduction is part of a strategic step taken by the company to improved the future of the company’ business.
“Beyond our estimates, this pandemic condition has a long-term impact on the company’s performance, which until now has not shown significant improvement,” Setiaputra stated.
To help the airlines financial performances, currently Garuda has announced to issue Mandatory Convertible Bonds (MCB) amounting to Rp8.5 trillion (US$578.23 million). After the corporate action, the government ownership will rises from 60.5 percent to 84.8 percent.
While, the ownerships of 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 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.
US$1: Rp14,700
Written by Editorial Staff, Email: theinsiderstories@gmail.com
