Indonesian airline Garuda reduces debt owed to bond holders by $151.2 million

JAKARTA – Flag carrier Garuda Indonesia said late on Jan 4 that it has paid back US$113.8 million ($151.2 million) of the debt it owes to bond holders as part of its restructuring process.

In 2022, the airline won creditors’ approval to restructure more than US$9 billion of debt after it faced financial difficulties due to Covid-19-related travel curbs, among other reasons.

Garuda said in a statement that it settled the amount to bond holders after completing two tender offers. Using tender offers meant the airline only had to pay around US$50 million to settle the $113.8 million.

“We hope that this initiative can improve our capital structure, so it can become healthier,” Garuda chief executive Irfan Setiaputra said, adding that the debt was paid using the company’s internal cash.

A company generally does a debt tender offer to retire its bonds at less than the original face value and by doing so, it also reduces the interest costs.

The settlement was related to Garuda’s United States dollar bonds, some of which are in the form of Islamic notes, with a total principal amount of US$624.21 million, Garuda said.

The bonds were issued for Garuda’s creditors as part of the restructuring agreement.

Following the partial settlement, the remaining principals for the bonds are at US$501 million, the airline added. REUTERS