JAKARTA – Indonesia’s national carrier Garuda has appointed U.S.-based advisory-focused investment bank PJT Partners to help it negotiate repayments for the $496.8 million five-year sukuk it issued on June 3, 2015.
The company will also establish a joint discussion team between sukuk holders and PJT Partners, Irfan Setiaputra, Garuda CEO told Salaam Gateway.
“We’ve hired a consultant, PJT Partners to deal with the situation. Usually every time a bond or sukuk due date is approaching, we prepare three options for the holders to consider: repayment with a discount, full repayment or a payment extension,” said Irfan.
“It’s the same with the current situation, we’ve offered them three options,” he said.
Garuda Indonesia has $984.8 million in short-term liabilities, or loans of less than a year as per December, 31, 2019, compared to $1,047 million the previous year.
One of the biggest is its $496.8 million global sukuk issued in 2015, which is due to mature on Jun 3, according to the company’s most recent financial statement filed on April 2 with the Indonesian stock exchange. The company somehow managed to book $6.4 million in profit compared to the previous year that saw a loss of $228.8 million.
Irfan admits the due date of the global sukuk amid the COVID-19 crisis has pushed the company into a corner as the airline is struggling to maintain its cashflow with a sharp downturn of the number of flights due to the implementation of large-scale social distancing across the country and the imposition of domestic travel bans.
80% of Garuda’s passengers are domestic and its business is severely hit as the government banned all domestic air travel starting April 24 through June 1 to limit the spread of COVID-19.
The company has taken several steps to make operational costs more efficient during the pandemic, including rental negotiations with lessors for its 10 Boeing-777 to save $800,000 per month, returning all grounded Bombardier CRJ -1000 to save $50 million on maintenance costs, delaying fee payment for its 25,000 employees and pay cuts of between 10% and 50% for staff, supervisors, managers, captains and members of the board.
“It’s really unfortunate. The due date is exactly during the pandemic period. I hope with the help of the consultant, we can find a win-win solution,” said Irfan.
Garuda Indonesia on April 29 sent letters to its sukuk holders asking them to disclose each of their share values so the company can identify their liabilities better and more accurately.
(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim [email protected])
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