Receh.in—PT Garuda Indonesia (Persero) Tbk. (GIAA), a state-owned airline company, has confirmed that it will issue a new global sukuk worth between $70 million and $80 million alongside a private placement on December 28, 2022. This will allow the company to fulfill all requirements for the lifting of the suspension of its shares on the Indonesia Stock Exchange (BEI) before the end of the year.
GIAA's shares have been suspended since June 18, 2021 due to the company's inability to pay the interest and installments on its $500 million global sukuk, equivalent to IDR 7.8 trillion (at an exchange rate of IDR 15,600).
"We defaulted on the sukuk, and as a requirement for lifting the suspension we will issue a new sukuk after restructuring the old one, which was worth $500 million. After the PKPU [Indonesian Commercial Court] approved the haircut to a sukuk worth $70-80 million, it must be issued first," said Irfan Setiaputra, CEO of Garuda Indonesia, in a public presentation on Tuesday, December 27, 2022.
Setiaputra confirmed that the issuance of the new global sukuk, worth up to IDR 1.09-1.28 trillion, will coincide with the completion of the private placement process, scheduled to take place tomorrow, December 28. This will allow GIAA to inform the BEI that it has met all requirements for lifting the suspension on its shares.
"It is the authority that determines when the suspension will be lifted, but it is Garuda's responsibility to ensure that all requirements are met by the end of the year, or on December 28 or sooner," Setiaputra added.
When asked by one retail investor, Setiaputra reiterated that the new global sukuk must be issued within the next two days. "It is not fair for the suspension to continue for any longer, so we hope to resolve this within the next 1-2 days and inform the authorities so that the suspension can be lifted," he said.
Despite the regret at the length of time GIAA's shares have been suspended, Setiaputra is somewhat grateful as the company's fundamentals have become much stronger since the shares resumed trading.
Furthermore, of the $500 million global sukuk, GIAA will use 2/3 of the total debt as equity, as per the policy in the PKPU homologation in July 2022. Prasetio, GIAA's Director of Finance and Risk Management, added that as part of the ongoing private placement process, part of the value of the global sukuk will be converted into equity, while the remainder will remain as a new sukuk issued alongside the private placement.
"The conversion of debt into equity, plus the 2/3 sukuk worth $70 million, will become a total of IDR 1.28 trillion in new equity," Prasetio explained. "This is in line with the company's plan to strengthen its equity and improve its financial structure."
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