Debt-laden Garuda Indonesia needs $1b to stay afloat

Garuda Indonesia needs at least $1b of additional funds to cut debt and stay afloat, as the government says it could give up its majority control of the troubled flag carrier. Garuda is currently in talks with creditors to restructure $6.3b worth of debt and expects to reach an agreement in Q2 2022, according to Kartika Wirjoatmodjo, a deputy minister at Indonesia’s State-Owned Enterprises Ministry. The state-controlled airline has prepared several options in the debt negotiations, including turning to instruments such as mandatory convertible bonds or zero-coupon bank loans. “We are negotiating with many parties with different needs, so their preferences vary,” Wirjoatmodjo, who oversees state transport companies, said Monday. “I have to emphasize that the government is not looking to bankrupt Garuda. What we are looking for is debt settlement either outside court proceedings or through court proceedings.” Once a debt agreement is in place, Garuda will start looking for ways to raise $1bto repay its liabilities and for working capital. With such high funding needs, the government is now choosing to be realistic and open to the possibility of private investors becoming majority owners. “We are reaching out to major hub players,” he said. The airline must slash its debt by 70%-80% in order to survive, he said. The company’s latest available financial reports show that Garuda had negative equity of $2.8b at the end of June.<br/>