Garuda Indonesia (GA, Jakarta Soekarno-Hatta) has said it is renegotiating payment of its five-year global sukuk - an Islamic financial certificate similar to a bond - worth USD498.88 million, due to mature on June 3, as it struggles to maintain cashflow during the Covid-19-related traffic shutdown.
Garuda CEO Irfan Setiaputra said during a virtual news conference on May 4 that the company had suggested to sukuk holders to consider either a smaller repayment now or a payment extension.
Issued on June 3, 2015, the sukuk has an annual return of 5.95%, according to the company’s 2019 financial report for the year ending September 30.
The state-owned flag carrier currently has a net worth of USD720.62 million but shoulders debts from loans totalling USD1.83 billion, according to media reports. It has significant short-term liabilities, USD3.25 billion as at the end of 2019, dominating its total liabilities which stretch to USD3.73 billion.
The chief executive said that besides renegotiating with its creditors Garuda is also seeking financing support from financial institutions, aims to cut costs by 20%, and is looking for some form of government support.
On May 6, Garuda revealed in a stock exchange filing that it had received three loan facilities from state-owned Bank Rakyat Indonesia with a total value of USD382 million.
These include a USD50 million short-term loan with an interest rate based on the one-month London Interbank Offered Rate (LIBOR) plus 2.85% per year; a loan facility of up to IDR2 trillion rupiah (USD133 million), half of which is for its LCC subsidiary Citilink (QG, Jakarta Soekarno-Hatta), with an interest rate of between 8.25% and 10.75%; and a bank guarantee or standby letter of credit (SBLC) denominated in rupiah with a ceiling of USD200 million.
“These transactions aim to fund our working capital, including paying for fuel, aircraft leases, and other activities that will support the company’s main business,” the airline said in the filing.
