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Bondholders approve Garuda Indonesia’s sukuk extension
Garuda president director Irfan Setiaputra said 90.88 percent of the bondholders, accounting for $454.4 million worth of sukuk, voted in favor of the extension.
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An ATR 72-600 plane of national flag carrier Garuda Indonesia is preparing for takeoff in Jember, East Java, on Nov. 6, 2018. Garuda Indonesia has secured approval from its bondholders to extend its US$500 million sukuk for three years. (AFP/Adek Berry)
N
ational flag carrier Garuda Indonesia has secured official approval from its bondholders to extend its US$500 million sukuk (sharia-compliant bond) for three years as the airline struggles to stay afloat amid the pandemic.
Garuda president director Irfan Setiaputra said 90.88 percent of bondholders, which account for $454.4 million of the sukuk, voted in favor of the extension during a bondholders meeting on Wednesday.
“We would like to extend our utmost gratitude to all bondholders who supported us and the future of Garuda Indonesia during this challenging time,” Irfan said in a press release on the same day.
Stocks of Garuda, traded at the Indonesia Stock Exchange (IDX) under the code GIAA, jumped 1.46 percent as of 12:50 p.m. Jakarta time on Thursday as the main gauge, the Jakarta Composite Index (JCI) slipped 0.51 percent. The stocks have lost more than 43 percent so far this year.
Garuda Indonesia issued the global sukuk on June 3, 2015, with a five-year tenure and an annual return of 5.95 percent, according to the company’s financial report released in September last year. However, the company struggled to repay the debt papers to its investors amid the COVID-19 outbreak that hits aviation industry as people stay at home to limit the coronavirus spread.
The airline has cut its employees salary, furloughed about 800 contract workers and laid off 180 contract pilots, among other things.
One hundred of the company’s 142 aircraft have been grounded since the COVID-19 outbreak hit country, as its daily flights dropped due to the government’s large-scale social restrictions (PSBB).
Garuda’s flight traffic was down 83 percent year-on-year (yoy) in April, according to the company’s letter to the Indonesia Stock Exchange (IDX).
