ASEAN KEY DESTINATIONS
Garuda clears path for IPO
The IPO was expected to be worth more than Rp 4 trillion (US$444 million), Garuda said in a statement released on Sunday after the European Export Credit Agency agreed to extend the maturities of about $288 million in loans to 2016.
The agency agreed to be repaid in installments of $45 million and $60 million per year.
Garuda's president director, Emirsyah Satar, said restructuring the debt was an important milestone in the company's growth plan, "particularly regarding Garuda's IPO in the near future."
Plans sell about 30 percent of the airline's equity had been scheduled for the third quarter of this year, but that was delayed as the debt deal was still in progress.
Elisa Lumbantoruan, Garuda's finance director, and David Brackenridge, creditor representative from Lloyds Banking Group, recently completed the deal in London.
Funds from the IPO, expected in February 2011, will go toward purchasing new planes, adding more destinations and improving maintenance standards.
Mandiri Sekuritas, Danareksa Sekuritas and Bahana Securities are arranging the share sale, while Citigroup and UBS AG are the international sales agents, news agencies report.
The IPO is also important to state-owned Bank Mandiri, Indonesia's largest lender, which hopes to sell its shares in the carrier.
Since 2005 Garuda has sought to restructure its debt through installation payments, repurchasing debt and debt-to-equity conversion.
Its efforts succeeded in reducing its debt, which shrank from $868 million five years ago to $464 million in November, according to the airline.
The carrier restructured $76 million of debt owed to state-run oil and gas firm Pertamina in October 2009, and in December that year it reached an agreement with Mandiri to convert Rp 967 billion of debt into a 10.61 percent equity stake.
Emirsyah said the debt agreement and share sale would make it easier for Garuda to add new destinations like India and expand its routes to Europe.
It currently flies to 31 domestic and 19 international destinations, according to its Web site.
It hopes to expand its fleet from 84 planes to 120 by 2014.
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