Garuda Indonesia attains approval to delay $500mn sukuk

Garuda Indonesia (GA, Jakarta Soekarno-Hatta) has secured 90% approval to restructure its sukuk bond obligations, a vital step towards improving its financial position as coronavirus-linked travel restrictions continue, local media reported. Holders representing more than 90% of the value of the USD498.88 million sukuk, or Islamic bonds, approved to delay payment by three years, CEO Irfan Setiaputra told a virtual news conference on June 5. The debt had been due to mature on June 3. The company will wait until June 10 for all holders to vote, Setiaputra said. Garuda had offered a bonus fee of up to 1.25% to those voting in favour before June 1. “We have put forward a proposal that makes sense in this current situation. Hopefully, in three years, conditions will improve, and we can execute our obligations,” Setiaputra said. As previously reported, the chief executive said one month ago, on May 4, that Garuda had suggested to sukuk holders to consider either a smaller repayment now or a payment extension. Travel restrictions have cut passenger volumes by 90% at Garuda Indonesia, which posted a profit of USD6.5 million for 2019. Since the crisis took hold, the flag carrier has focussed its business on cargo and charter flights. The company foresees a potential 10% rise in cargo revenue in 2020, having carried 335,764 tonnes last year.