The first phase of the rights issue is injecting Rp7.5 trillion in funds from the government to Garuda as (part of) the initial restructuring process.
Jakarta (ANTARA) - National flag carrier Garuda Indonesia is set to conduct a rights issue to strengthen its capital, the State-Owned Enterprises Ministry has informed.



The plan for the rights issue would be realized if the process of deferred debt payment obligation (PKPU) was resolved peacefully, Deputy State-Owned Enterprises Minister, Kartika Wirjoatmodjo, said during a hearing with Commission VI of the House of Representatives (DPR) here on Tuesday.



"The first phase of the rights issue is injecting Rp7.5 trillion in funds from the government to Garuda as (part of) the initial restructuring process," he informed.



The funds will come from the allocation of state capital participation from investment financing, operational financing, and restructuring fund reserves for the 2022–2023 period.


Related news: Garuda Indonesia to add more flights for Eid homecoming



The second phase of the rights issue will be conducted in the third and fourth quarters of 2022 to secure additional funding from strategic investors. After the second phase of the rights issue is completed, the government's stake in Garuda will reach 51 percent.



"As we know from the last decision of the Garuda working committee, we will restrict the government's share ownership in Garuda to 51 percent of its total shares," Wirjoatmodjo said.


Related news: Minister estimates normalcy restored in aviation industry in 6 months


The Jakarta District Court has approved the last PKPU extension for Garuda till June 20, 2022.



Meanwhile, Commission VI has agreed to the government's plan to disburse Rp7.5 trillion in state capital participation (PMN) funds for Garuda. The funds will be sourced from the 2022 state budget on the condition that Garuda reaches a peaceful agreement with creditors.



In addition, the parliament has also given the green light for the conversion of debt into shares, with the state’s share ownership reaching at least 51 percent.


Related news: South Sulawesi Governor welcomes PM Albanese during visit to Makassar

Related news: G20 offers momentum for Indonesia to gain global trust: VP

Translator: Sugiharto Purnama, Suharto
Editor: Fardah Assegaf
Copyright © ANTARA 2022