Indonesia gov’t loan details for Garuda expected earliest end-May, state won’t intervene in sukuk repayment - official

JAKARTA – Indonesia’s Ministry of State-Owned Enterprises is finalizing a loan package worth 8.5 trillion rupiah ($574 million) to help state carrier Garuda ease its tight liquidity as the airline continues to take a hit from travel bans and restrictions due to COVID-19. The details of the loan will be finalized by the end of May at the earliest, Arya Sinulingga, special staff to the SOE Minister told Salaam Gateway.

There are several options for the government assistance, including an equity participation that might dilute other shareholders’ holdings, a convertible bond where the ministry can convert its equity to its stock that might dilute other shareholders’ portions even more, and a subordinate bond. Garuda’s shares are currently 60.54% owned by the government, while 25.8% are held by Trans Airways and 13.6% by the public.

“We, along with the Finance Minister are assessing all the best options available. We are still discussing the schemes (for the 8.5 trillion rupiah package), but basically Garuda still has to return it to us later. Hopefully there will be a decision by the end of May at earliest,” Arya said.