Garuda Indonesia has ended a more than three-year effort to restructure its $1.6 billion debt after winning approval from courts in Singapore and the UK for extended repayment schedules with creditors.
Executive vice-president for finance Emirsyah Satar said at the Association of Asia Pacific Airlines meeting in Bali, Indonesia that the approval from Singapore and London courts was secured early in November. Two months earlier, most secured and unsecured creditors agreed to the revised debt repayment schedules. State-owned Garuda stopped making principal payments on its debts in mid-1998 as a result of severe financial difficulties.
The court-approved debt restructuring will see $610 million owed to European export credit agencies for financing on Airbus A330-300 purchases repaid over 16 years instead of 12. More than $320 million owed to promissory note holders is to be paid over the next seven years. This debt has been overdue for some time and Satar said that - as part of the restructuring deal - unsecured creditors will receive 15% of principal payments in December. Most of the rest of Garuda's debt is owed to the government, which has agreed to convert this into equity.
Garuda barely survived the 1997-9 Asia-Pacific economic crisis that hurt Indonesia more than any other country in the region. Prior to the downturn, it operated 58 aircraft but reduced this to 42 as part of its sweeping restructuring, which was aided by Lufthansa Consulting and Deutsche Bank. The carrier also scrapped 16 international routes and cut its employee base from 13,000 to 9,600.
Source: Airline Business
