JAKARTA (Reuters) – An Indonesian court on Friday extended the period for Garuda Indonesia’s debt restructuring by 60 days to allow the airline more time to complete the verification of billions of dollars of claims, the carrier said in a statement.
State-controlled Garuda is seeking to slash $9.8 billion in debts to $3.7 billion under a court-led process, called PKPU, the airline has said.
The court in Jakarta, however, had received $13.8 billion of claims from creditors, lessors and vendors, which the carrier needed to verify, according to state news agency Antara.
The court was scheduled to hear creditors’ response to Garuda’s proposals on Friday, but a delay was granted by the court after a request by Garuda and the majority of creditors, according to the statement.
“The additional time provides an opportunity for all stakeholders to complete the verification process and ensure the PKPU runs according to prudent principles,” Garuda’s chief executive Irfan Setiaputra said in the statement.
“The extension also provides us more time to prepare a more mature settlement plan through intense and constructive negotiations,” he said.
CNBC Indonesia reported Garuda had only verified 148 claims out of 501.
Garuda executives and a government official have said the carrier has proposed to creditors to switch parts of the debt to equity, take a debt haircut and subscribe to new 10-year bonds.
The process will also include negotiations with plane lessors, which Garuda will ask to take back some planes while also negotiating a cut in lease rates for those it keeps, they said on Jan. 7.
The government will seek parliamentary approval to inject capital into Garuda after the restructuring process, once the airline is in better financial shape, deputy state-owned enterprises minister Kartika Wirjoatmodjo said.
Indonesian billionaire Chairul Tanjung, who is Garuda’s second-biggest shareholder after the government, has also said he plans to top up his investment.
The debt Garuda aims to restructure includes $500 million of Islamic bonds.
(Reporting by Gayatri Suroyo; Editing by Ed Davies)
