Creditors to vote on Garuda Indonesia's US$9.7b debt settlement

GARUDA Indonesia's creditors including Britain's Rolls-Royce and French planemaker Airbus will vote on Friday (Jun 17) on a US$9.7 billion debt restructuring proposal, for which the flag carrier is confident of winning enough backing to move forward.

A simple majority from creditors at the meeting is needed to secure a binding agreement for all 501 claimants, which include holders of the firm's US$500 million sukuk.

The court verified 142.42 trillion rupiah (S$1.3 billion) worth of claims against Garuda that it will recognise under the process, but that could be challenged right up to the vote.

Garuda fell into financial troubles when the pandemic decimated global air travel.

The airline has proposed settling its debt to aircraft lessors and Islamic bondholders with new 9-year bonds and equity worth US$1.15 billion and offered to banks and state firms a loan maturity extension by 22 years with a 0.1 per cent interest rate.

CEO Irfan Setiaputra on Thursday told a news briefing he was confident the plan would get the required votes and said Airbus and engine manufacturer Rolls-Royce had already backed the proposals.

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"We are quite optimistic that the (support from) lessors and creditors are already at a level above 50 per cent," he said on Thursday.

Rolls-Royce's units and Airbus filed 9.9 trillion rupiah and 7.8 trillion rupiah of claims to Garuda respectively, according to a court document. REUTERS