Dec 20, 2010

Garuda completes debt restructuring

The state-owned airlines Garuda Indonesia has completed the restructuring of debt to creditors following a debt repayment agreement with the European Export Credit Agency (ECA) and a number of banks worth US$277 million in London on Friday afternoon.
As reported by Bisnis.com today, the agreement that took place at the Indonesia Embassy was signed by Garuda Finance Director Elisa Lumbantoruan and David Brackenridge from Lloyds TSB which represents a number of banks as witnessed by President Director of Garuda Emirsyah Satar and Indonesian Ambassador HE Yuri Thamrin.
Total debt of the national airline was reduced significantly since 2005. Fifth position last year amouting to US$868 million has dropped to US$464 million as of November 2010. The decline occurred after the payment, debt buyback, and convertible stock.
The remaining debt valuing to US$277 million that has been signed today will be restructured until 2016. This debt funds were used to purchase six Airbus A330-300 in 1996.
Emirsyah Satar said the financial restructuring was an important achievement for Garuda in order to smooth a number of corporate actions including the IPO.
Meanwhile, Ambassador Yuri Thamrin said that Garuda is expected to be more solid after the agreement was signed.
"I'm delighted with the signing of the agreement today. This means that Garuda is more solid upon their commitment to fulfill its obligations and also smooth its IPO. We are certainly proud as Indonesian citizens if our flag carrier is improving," he said after the signing.
According to him, if Garuda could fly to England then it would be profitable to attract tourists to Indonesia.
"We should be pragmatic, the number of tourists from England is quite large in average of 162,000 per year, which mostly in Europe. It would be much better if there is a direct flight," he added.
In addition, VP Corporate Communications of Garuda Indonesia Pujobroto said that Rothschild served as their financial consultant during the restructuring.

Disclosure: No position at the stock mentioned above.

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