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NEWS UPDATES Asean Affairs   16 November 2010

Garuda to Submit IPO Plan

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Indonesian flagship carrier Garuda plans next week to submit its long-delayed plans for an initial public offering, to fund its ambitious expansion, a top executive said on Monday.

"Our plan to list on the Indonesia Stock Exchange [IDX] by February is back on track, and Bank Mandiri will also sell its shares in our company," said Emirsyah Satar, Garuda's president director. The lender holds a 10.6 percent stake in the carrier.

The state airline had announced plans to sell 30 percent of its equity with proceeds of up to $300 million, but Sumaryanto Widayatin, deputy minister for infrastructure and logistics at the State Enterprises Ministry, said on Monday that the share sale would be smaller than expected.

However, high-level sources at Garuda said that a 30 percent stake would indeed be sold.

The mixed messages suggest a lack of coordination between the State Enterprises Ministry and the companies it oversees.

On November 6, the ministry reported that the carrier had suffered a Rp 39.5 billion loss for the first nine months of the year, putting the IPO plans in jeopardy.

Days later, it was revealed that Garuda had actually booked a healthy profit for the period because the ministry had released unaudited results, and the share sale was back on track again.

The company had delayed its IPO plan from the third quarter to restructure $240 million in debt.

Garuda plans to use proceeds from the offering to double its fleet to 116 jetliners by 2014, as well as opening more international and domestic routes.

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