Garuda Indonesia, in an effort to restructure its debt, is offering to buy out holders of two tranches of floating rate notes at a discount.
Garuda will pay a discounted rate for the debt, and has allocated $25 million to buy out holders of $305 million in floating rate notes due 2007, and 366 trillion Indonesian rupiahs ($38.8 million) in floating rate notes also due in 2007, says Garuda.
It will hold a 'reverse dutch auction' for both tranches on 15 December. In a reverse dutch auction there is one buyer and multiple sellers, with the auctioneer raising the price from a low starting point until a bidder agrees to sell at that price.
"This is an important step in completing our debt restructuring process," says Garuda president and CEO Emirsyah Satar. "We believe the offer to repurchase notes at a discount provides note holders excellent value and the restructuring of the notes will provide long term stability for Garuda's operations the repayment of the notes."
"Garuda will continue to work to complete the restructuring of its other debts as soon as possible," he adds.
On 21 October Garuda said it will repay debts of 967 billion Indonesian rupiah to state oil company PT Pertamina over the next seven years.
Garuda is working restructure its debt in time for an initial public offering it plans to have next year.
Source: Air Transport Intelligence news