JAKARTA (TheInsiderStories) – Most of PT Garuda Indonesia (IDX: GIAA) has agreed to extend the maturity of US$500 million Global SUKUK to 2023, said the CEO on Friday. Originally the bond matured on June 3, 2020.
Irfan Setiaputra, the CEO, told reporters through a virtual conference, the company is still waiting until June 10 for all holders to vote. He added, Garuda offered a fee up to 1.25 percent to the bondholders.
He conveyed, the airline sought to extend the maturity of the debt after its operations took a hit from epidemic-linked travel restrictions. He admitted, travel restrictions have resulted in a 90 percent drop in passengers volume at the state-owned flight carrier.
These conditions, forced the company to slash costs and focus its business in cargo and chartered flights, adds by Setiapurtra. Recently, through the transportation and logistics business line-PT Aerojasa Cargo officially launched “KirimAja”, which is a digital application-based freight service with a range of goods delivered to a number of flight destinations served by the entire fleet of the Group.
“COVID-19 pandemic requires us to be more adaptive and creative in accelerating developing business opportunities in the new normal era, one of which we developed through the logistics service business by introducing “KirimAja” which is an application-based freight forwarding service digital,” said the CEO.
He noted, the rapid development of the e-commerce industry in Indonesia and the emergence of new trends in the new normal era have made the logistics service sector have an important role in bridging the needs of the public for fast, accurate and efficient shipping services.
“Freight service at this time is not only a mere transactional need, but has become part of the lifestyle of people in the borderless era to be able to establish friendship with relatives and colleagues through the delivery of gifts as a form of attention in the period of limiting community activities during the pandemic “, said Setiaputra.
Indonesian government will injects new capital Rp8.5 trillion ($607.14 million) to the company to help its financial condition. Currently, the state-owned firm has a total loan of $1.83 billion and net loan $1.53 billion, while the equity position worth of $720.62 million.
Garuda Indonesia is recorded have significant short-term liabilities as of the end of 2019, totaling $3.25 billion. These short-term obligations dominate the company’ total liabilities which reached $3.73 billion, consist of bank loans $984.85 million and bonds.
Setiaputra stated, now the company explores various options to overcome the company debts amid the COVID-19 outbreak. In response to the local bourse query, the publicly listed firm says it has begun negotiations with lessors to delay or extend the payment periods.
He continued, beside renegotiate with its creditors, Garuda also seeking financing support from financial institutions. In addition, the airline planned to cut its expenses by 20 percent, and is seeking some form of government support.
He also “optimized” the number of flights, increases the capacity of cargo business and repatriation flights, closing unprofitable routes, delaying the delivery of four Airbus A330 900 Neos for this year.
Early of 2020, Garuda has aborted its global bond issuances worth of $900 million caused not get approval from the shareholders. Initially, the funds will use to pay the maturity debt in June.
Setiaputra elaborated, the maturity debt will be paid by three schemes. First, the company will issue the bond without special guarantee $750 million with tenure four years. The company also considered to conduct private placement with a value of $750 million.
The last option which takes the company into account is the peer to peer lending in dollar currency of $500 million. The transaction has tenor until 2024 and aims to pay debt matured in one year.
In 2019, Garuda posted an operating profit of $147 million, a turnaround from 2018’ $199 million operating loss. Revenues worth of $4.56 billion, and net profit was $7 million.
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