Garuda Indonesia has delayed plans to raise up to $900 million in funds meant for refinancing its debt.
In an Indonesia Stock Exchange disclosure dated 31 December 2019, it attributes the delay to the likelihood that the year’s financial results will not be ready for an extraordinary general meeting (EGM) scheduled for 22 January.
The carrier’s fiscal year runs from 1 January to 31 December.
Commenting on the delay in its financing plans, Garuda states that “the company is studying alternative funding options to ensure that it can realise its goals of refinancing debt that is due within one year, while also complying with applicable regulations”.
It is unclear if a new agenda will be proposed at the EGM of if the meeting will be postponed.
Earlier in December, Garuda called for an EGM to be held this month, with the sole aim of seeking shareholder approval for fundraising plans through three options: a global sukuk issuance, a private placement, or peer-to-peer lending.
The exercise would allow the carrier to maintain cash flow for operating activities, remain a going concern, improve its performance and operational certainty, among other benefits. It would also be able to make payment promptly, increasing the level of trust creditors have in the company.
The global sukuk issuance was to raise up to $750 million, which Garuda said will either refinance a similar sukuk issued in 2015 and due for redemption in June 2020, or clear debts with a one-year repayment term.
Via the private placement option, it was looking to raise around $750 million at an interest rate still under negotiation with potential financiers. It did not specify what the funds will be used for.
The carrier also indicated plans to raise around $500 million via peer-to-peer lending, and the funds will go towards repaying debts due within a year. The only guarantee provided for this option is a standby letter of credit with a one-year term, covering 20% of the transacted value.
Total funds raised would not exceed $900 million, Garuda said then, as the amount is well above its total equity of $730 million.