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View all search resultsGaruda Indonesia to raise $1.4b via private placement
The plan includes 63 percent of the proceeds going to the airliner's low-cost subsidiary Citilink to strengthen its cash flow and clear a US$225 million debt to Pertamina, according to the disclosure document.
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A Garuda Indonesia aircraft takes to the skies as it departs from Hong Kong International Airport on Jan. 23, 2017. (Shutterstock.com/e X p o s e)
N
ational airline PT Garuda Indonesia plans to issue 315.6 billion series D shares to raise Rp 23.67 trillion (US$1.4 billion), comprising Rp 17.02 trillion in capital deposits and Rp 6.65 trillion in shareholder loan conversion into equity, in a bid to support its operations and strengthen its financial position.
The shares are to be issued through a private placement at a price of Rp 75 per share.
According to a disclosure document the state-owned enterprise (SOE) released on Friday, the corporate action will involve state asset fund Danantara as both investor and creditor.
Around 37 percent of the raised funds will be allocated to Garuda Indonesia’s working capital and operations, including aircraft maintenance and repair. The remaining 63 percent will go to subsidiary Citilink, which aims to boost its working capital via the conversion of shareholder loans into a cash capital deposit and to repay its $225 million debt to state-owned oil and gas holding company Pertamina.
“The use of funds raised from this private placement is expected to have a positive impact on the company’s financial position, increase equity, strengthen its capital structure and support the sustainability of the company and its subsidiaries in the future,” Garuda Indonesia said in a statement.
The company also said the share issuance would be discussed at its general shareholders meeting on Nov. 12, emphasizing that the SOEs Regulatory Agency (BP BUMN) and President Prabowo Subianto had approved the move as part of its restructuring.
Garuda expects the private placement to significantly improve its financial performance, projecting its equity to reach $183 million by the year-end and its current ratio to increase from 0.44 to 1.22.
