CNA – Flag carrier Garuda Indonesia secured yesterday approval from its shareholders to launch a right issue in December to raise up to IDR14.3 trillion (USD929.48 million), the company said.
The rights issue will allow the government to top up Garuda’s capital by IDR7.5 trillion, a plan that had been approved by the parliament in April, according to a prospectus for the transaction.
The government’s additional investment is part of Garuda’s promise to debtors to strengthen its capital following the airline’s court-supervised debt restructuring programme agreed in June.
Garuda plans to offer shares at a price range of IDR182 to IDR210 a piece, meaning in total it would be able to raise up to IDR14.3 trillion, including the government’s capital top-up, if other shareholders fully subscribe to the sale at the highest price.
“The company will optimise the additional capital mainly for maintenance, aircraft restoration, fuel, plane leases… The (proceeds) hopefully can strengthen the company’s business outlook,” chief executive Irfan Setiaputra said in a statement.
Shareholders also approved the conversion of IDR4.2 trillion worth of liabilities into equity – part of the debt restructuring agreement.
Assuming stakeholders participate in the rights issue at the maximum price, the government’s stake in the carrier would shrink to 51.25 per cent from 60.54 per cent previously.
The stake held by its second-biggest shareholder, PT Trans Airways, owned by Indonesian billionaire Chairul Tanjung, will be diluted to 21.90 per cent from 28.27 per cent.
Garuda’s books have improved amid the easing of travel restrictions, with the airline posting a USD3.76-billion net profit in the first six months of this year, the company said.
