Indonesia Court Extends Garuda Debt Restructuring Amid Ballooning Claims

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JAKARTA. An Indonesian court on Friday extended the deadline for Garuda Indonesia’s debt restructuring by 60 days, giving the airline more time to verify billions of dollars in claims, according to a statement from the company.

Garuda Indonesia, which is owned by the Indonesian government, is attempting to reduce its debts from $9.8 billion to $3.7 billion through a court-supervised process known as PKPU.

According to state news agency Antara, the court in Jakarta had received $13.8 billion in claims from creditors, lessors, and suppliers, which the carrier required to authenticate.

The court was supposed to hear creditors’ responses to Garuda’s plans on Friday, but after a request from Garuda and the majority of creditors, the court allowed a delay, according to the statement.

“The extended time allows all parties to finish the verification process and guarantee the PKPU operates in accordance with sensible standards,” Garuda CEO Irfan Setiaputra said in a statement.

He added, “The extension also gives us more time to draft a more mature settlement proposal through hard and constructive negotiations.”

According to CNBC Indonesia, Out of 501 claims, Garuda has only validated 148.

Garuda executives and a government official have stated that the carrier has recommended to creditors that portions of the debt be converted to stock, that the debt be halved, and that new 10-year bonds be issued.

Negotiations with plane lessors would also be part of the process, with Garuda asking for the return of some planes while also negotiating a lower lease rate for those it keeps, they said on Jan. 7.

After the restructuring process, the government would seek parliamentary approval to invest cash into Garuda once the airline is in better financial health, according to deputy state-owned enterprises minister Kartika Wirjoatmodjo.

Chairul Tanjung, the second-largest shareholder in Garuda after the government, has also stated that he intends to increase his holdings.

Garuda wants to restructure $500 million in Islamic bonds as part of the debt it wants to restructure.

Source: Reuters

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