Garuda Indonesia seeks sukuk delay, creditors demand $13.8bn
Garuda Indonesia (GA, Jakarta Soekarno-Hatta) is seeking to extend the maturity of its USD500 million dollar sukuk – its Islamic debt securities – by ten years from their current maturity of 2023. Meanwhile, creditors have submitted around IDR198 trillion rupiah (USD13.85 billion) in claims, higher that the USD9.8 billion liabilities the carrier previously admitted to.
The beleaguered majority state-owned carrier’s chief financial officer, Prasetio, told an investor briefing on January 7 that the company had proposed that sukuk holders convert parts of the debt into equity and alter the terms of the bonds as part of the airline’s ongoing PKPU debt restructuring, Reuters reported. Jakarta has said it expects the court-led restructuring process to be completed within six months.
Garuda is offering sukuk holders a recovery rate of USD0.19 on the dollar and to convert a third of the debt to equity, the CFO said. When asked about a possible extension of the maturity, he added: “We are offering a ten-year [maturity] with a 7.25% coupon rate.”
In a sign of market concerns about Garuda Indonesia’s recovery prospects, the indicated price of the sukuk has tumbled to record lows of less than USD0.23 on the dollar.
Garuda defaulted on the bonds in June 2021, having already extended their tenure by three years in June 2020 when they were originally due.
Seperately, administrators for the flag carrier told Bloomberg News on January 10 that they had received claims from more than 470 creditors by a January 5 deadline. They are now working to verify these provisional claims and will decide on January 19 which amounts are valid.
The higher figure, they explained, was due in part to some lessors submitting total and future liabilities and not discounting or calculating the present value of those debts. For now, the airline will keep to the USD9.8 billion liabilities on its books, Prasetio told the news agency.
Kartika Wirjoatmodjo, deputy minister of state-owned enterprises, told Reuters that Garuda Indonesia had asked lessors to subscribe to new bonds, for lease rates to be lowered to market rates, and to pay power-by-the-hour rates for as long as the pandemic lasts.
The airline is also seeking to return more aircraft in an effort to cut its fleet to 66 from a pre-pandemic tally of 142. According to the ch-aviation fleets advanced module, it currently operates 118 aircraft and its regional unit Citilink (QG, Surabaya) an additional 60. Lessors are due to respond within the next two weeks, the deputy minister said.