We agree with the conversion of the debts."
Jakarta (ANTARA News) - The debt of PT Merpati Nusantara Airlines to a number of other state companies would be converted into shares, to save the debt ridden state owned airline, an official said.

"We agree with the conversion of the debts," Coordinating Minister for Economy Hatta Rajasa said here on Tuesday after a meeting to save the airline .

In addition, the debt in the form of sub-loan agreement (SLA) to the government would be converted into non-cash state capital participation, Hatta said

According to Hatta currently Merpati ran up a total debt of Rp6.7 trillion to 20 creditors.

Debts to state companies including airport operators Angkasa Pura I and II , Bank Mandiri , energy company Pertamina and insurance company Jasindo totaled Rp2 trillion.

The rest includes Rp2.5 trillion in SLA to the government and around Rp3.2 trillion in tax and to other creditors.

Hatta said the government decided to restructure the debts of Merpati as it believes the airline could still rise from its financial woes.

"Merpati is still needed to serve pioneer flights in a number of provinces especially in eastern part of the country," he said.

Merpati would be given one month to submit its business plan to the government and other loan providers.

"Merpati is also allowed to look for funds for the procurement of aircraft," he said.

Looking for partners Minister for State Enterprises Dahlan Iskan said he agreed with the decision of the government to give Merpati more opportunity to resume operation.

"Actually, based on a conclusion of the state asset management company PT Perusahaan Pengelola Aset (PPA), Merpati should be closed down, but the government found a way out by converting debts into shares," Dahlan said.

He said after the process of debt conversion has been wrapped up Merpati is allowed to look for partners.

"So far Merpati may not have partner as it has big deficit. Now with book clean of debt Merpati could invite investors to jointly develop its business," he said.

He did not rule out Merpati merged into Garuda, the nations flag carrier.

However, the conversion plan still needs approval from the Commission VI of the House of Representatives, he said.
(Uu.H-ASG/A014)

Editor: Aditia Maruli Radja
Copyright © ANTARA 2013