The MCB will require conversion of the said bond into stocks in accordance with the contractual conversion date. The MCB for the airline is expected to have a tenor of three years, with state-owned infrastructure financing company PT Sarana Multi Infrastruktur (SMI) projected to act as a buyer for the bond and eventually a shareholder of the company.

The legislature made the decision after a working meeting with State-Owned Enterprises (SOEs) Minister Erick Thohir on Wednesday, citing the reason that Garuda could not receive state-capital injections (PMN) as it is a publicly listed company.

“We proposed that Garuda receive MCB that could be converted for three years, as Garuda has been hit hard by the [COVID-19 pandemic] like other airlines around the world,” Erick said.

The nation’s aviation industry has been severely impacted by the ongoing health crisis, with restrictions discouraging people from traveling. The International Air Transport Association (IATA) has stated that 2020 will be the worst year in history for airlines, with global airlines expected to face a combined US$84.3 billion in losses.

The MCB scheme is part of the government’s national economic recovery (PEN) program, to support the recovery of the virus battered economy. The government expects the fiscal deficit to reach 6.34 percent this year as it allocates Rp 695.2 trillion in stimuli, partially to bolster the economy amid the pandemic.

Under Government Regulation No. 23/3030 on the national economic recovery program, the government has allocated more than Rp 152 trillion to bail out SOEs through PMN, among other mechanisms, of which Garuda is set to receive Rp 8.5 trillion.

Popular

Mass poisonings cast doubt on free meals reforms

Much ado about asset forfeiture

New data rules could unlock cross-border data flows