Garuda 3-Year Postponement Of Debts Obligations Brings Badly Needed LiquidityJune 13, 2020
Indonesia national carrier Garuda was able to secure enough votes from bondholders in order to postpone maturity date of one of its obligations for another three years.
The airlines’ five-year maturity trusts certificates designated sukuk in islamic finance had been introduced in May of 2015. With their maturity date of June 3rd 2020 fast approaching in a Covid-19 context that had grounded one hundred of the company’s 142 aircraft, a serious liquidity crisis had to be avoided. This was just achieved during Wednesday June 10th, 2020 super meeting with more than 90% of bondholders voting electronically in favor of the three year maturity date postponement.
The US$500 million sukuk issued on May 27, 2015, at a 99.256% price and 5 year maturity (due june 3rd 2020) carried a semi-annually coupon rate of 5.950% (payable each year on May 3rd and December 3rd). At the time, a well orchestrated campaign to market the certificates globally had led to a $1.9bn oversubscription in global finance strongholds such as Abu Dhabi, Dubai, Singapore, Hong Kong, Zurich and London.
Wednesday bondholders agreement is bringing badly needed liquidity the government is set to give Rp 8.5 trillion ($597.6 million) in a working capital guarantees for the airline as part of the economic recovery stimulus package
Garuda (GIAA) shares traded up 1.46 percent mid-day thursday.