ASEAN KEY DESTINATIONS
Garuda seeks investor advice
Elisa Lumbantoruan, Garuda's acting financial director, said that the company plans to begin meeting overseas investors early next week.
"We will meet investors in Asia's financial centers, including Singapore and Hong Kong," Elisa said. "Listing is expected on the Indonesia Stock Exchange in mid-February."
Garuda will continue seeking investors in London and New York in the third week of January.
Elisa said Garuda had already submitted all the necessary prerequisites to capital market watchdog Bapepam-LK and the Indonesian Stock Exchange.
Analysts said Garuda's share sale was expected to help boost corporate governance and improve transparency.
Garuda plans to sell up to 40 percent of the company, and it expects to raise around Rp 4 trillion. Elisa said the initial share sale would also include the sale of state-owned Bank Mandiri's 10 percent share in the carrier, which is worth Rp 1 trillion.
Citigroup and UBS AG were hired as financial advisers for the sale. State brokerage firm Danareksa Sekuritas, Bahana Securities and Mandiri Sekuritas will also help arrange the sale, Elisa said.
Proceeds from the IPO will go toward financing further expansion, such as purchasing new planes, adding destinations and improving maintenance standards. Garuda plans to add new routes, including to India, and it also wants to increase its fleet from 84 planes to 120 by 2014.
Emirsyah Satar, Garuda's president director, had said earlier that 2011 profit would not be as high as expected due to Garuda's agressive expansion.
He also said passenger growth would be around 10 percent.
After a good turnaround in 2009, Garuda posted a nine-month profit of Rp 194 billion, far below its full-year profit target of Rp 1.15 trillion, with its unpreparedness for expansion cited as the cause.
Garuda purchased 24 next-generation aircraft last year, the company's biggest expansion in the space of a year, but it lacks the qualified pilots needed to fly the planes. In addition, its new routes have yet to produce a profit.
Garuda concluded a $288 million debt restructuring plan with its creditors in Europe last year. The European Export Credit Agency agreed to extend the maturities of Garuda's loans to 2016, and the agency agreed to be repaid in yearly installments.
Airline reviewer Skytrax named Garuda the world's most improved airline in May after a survey of 17.9 million travelers.
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