Indonesia to Discuss Garuda Debt Restructuring Plan

The state minister for state firms and officials of the ministry of finance will meet with ambassadors of the countries grouped in the European Credit Agency to discuss restructuring of PT Garuda Indonesia's debts.

"The meeting will be conducted in the second week this month," State Minister for State Firms Sugiharto said here on Friday.

He said he would explain to the creditors the latest condition of the country's flag carrier.

"This reflects the attention of the government as a shareholder in PT Garuda," he said.

The total debts of PT Garuda have reached US$800 million and US$510 million of the amount are debts to the European Credit Agency, while another US$130 million are mid-term debts and the rest are debts to Bank Mandiri and PT Angkasa Pura I and II.

He said the US$55 million mid-term debts were due at the end of 2005, but Garuda failed to pay it.

The president director of PT Danareksa, Lin Che Wei, as Garuda's debt restructuring adviser, said he would offer some options to save the company in the meeting with the creditors.

"The options certainly must be taken into consideration by the shareholders," he said, without mentioning the options.

The president director of PT Garuda, Emirsyah Satar, admitted earlier that he had met with the creditors several times, but that no solution had been reached.

"How much of the debts will be restructured and how long it will be, cannot as yet be disclosed pending advice from the creditors, as well as input from Garuda's financial advisers namely PT Danreksa and Roschild," he said.

The company's problem so far was repaying the principal debts to the ECA.

Sugiharto said demanding debt restructuring was common among companies, especially when facing pressures from global or outside factors.

"In view of that, Garuda has to open up including for a strategic alliance with noted global airlines," he said.

He admitted that in strategic alliances, some parties often sought cross ownership.

"However, as a shareholder we will remain committed to maintain Garuda as a state-owned company and therefore we will not reduce government ownership of 51 per cent shares in the company," he said.

* The total debts of PT Garuda have reached US$800 million, of which

1. US$510 million are owed to the European Credit Agency,
2. while another US$130 million are mid-term debts
3. and the rest are owed to BANK MANDIRI and PT ANGKASA Pura I and II.
   

SUMMARY
Indonesian officials to meet with European Credit Agency to discuss restructuring of Garuda Indonesia's debts

Source:
Asia Pulse Businesswire & Asia in Focus
02/07/2006