Garuda Said to Require $1bn to Stay Afloat

Indonesian carrier Garuda Indonesia needs at least $1bn in additional funding to reduce debt and stay afloat with the government open to giving up its majority control. According to Kartika Wirjoatmodjo, a deputy minister at Indonesia’s State-Owned Enterprises Ministry, the state-controlled airline is currently in talks with creditors to restructure debt worth $6.3bn and expects to reach an agreement in 2Q2022. Garuda has considered several options such as zero-coupon bank loans and mandatory convertible bonds. Wirjoatmodjo told Bloomberg, “I have to emphasize that the government is not looking to bankrupt Garuda. What we are looking for is debt settlement either outside court proceedings or through court proceedings.” Garuda will start looking for ways to raise $1bn for its working capital and to repay its liabilities after the debt agreement is in place and the government is open to the possibility of private investors being majority owners. Garuda last reported negative equity of $2.8bn and total liabilities of $13bn at end-June 2021. The deputy minister said that the flag carrier must cut debt by 70% to 80% in order to stay afloat and added, “I’d put Garuda’s challenges at 9.5 on a scale of 1 to 10…we are just running on hope now.”

Garuda’s 5.95% 2023 was up 0.3 points to 36.569.

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