Garuda discusses debt settlement

The Jakarta Post ,  Jakarta   |  Fri, 02/03/2006 10:28 AM  |  Business

The Jakarta Post, Jakarta

Garuda Indonesia is still negotiating with its creditors on possible options for the settlement of the airline's US$794 million in debts.

""There has been a meeting with our creditors, but we are still waiting for their agreement,"" Garuda chief executive Emirsyah Satar said Thursday following the signing of a cooperation agreement between the airline, the Indonesian Advocates Association and the Indonesian Indigenous Businessmen's Association in Jakarta.

He declined, however, to disclose the outcome of the meeting held last month in Singapore. ""Garuda has already proposed that a portion of the debt be restructured. But we cannot make any statements as the figure has not been finalized yet,"" Emirsyah said.

Garuda has total debts of about $794 million, which consists of $510 million owed to the European Credit Agency (ECA), $130 million to its medium-term bond and promissory note holders in Singapore and $150 million to Bank Mandiri and state airport operators Angkasa Pura I and II.

Emirsyah said that ECA representatives would visit Indonesia on the first or second week of February to discuss the debt problem with representatives of the Office of the State Minister for State Enterprises, which directly oversees the airline.

Emirsyah further said that the company was paying installments on the debt of about US$80 million annually. ""We are doing our best to repay the debts,"" he said.

Meanwhile, the Central Jakarta Commercial Court on Thursday turned down a bankruptcy petition filed by IT consultants PT Magnus Indonesia against the national flag carrier.

Garuda's lawyers, Hanafiah Ponggawa and Partners, stated through a Garuda press release that Magnus had failed to produce evidence in support its petition.

Magnus filed the bankruptcy petition against Garuda after accusing the latter of failing to pay its fees. Garuda said that it had refused to pay the fees as Magnus failed to meet Garuda's expectations in both qualitative and quantitative terms.

On Jan. 3, Garuda Airways brought an action against Magnus in the Central Jakarta District Court for breach of contract and nonperformance. (03)

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