Tuesday, 9 July 2013


Indonesia’s biggest airline, PT Garuda Indonesia [Persero] Tbk [GIAA] released promissory notes worth Rp2 trillion. This bond was part of the Sustainable General Offer Bond I-2013 with targeted fund of Rp4 trillion. This was disclosed by the President Director of Garuda Indonesia, Emirsyah Sattar in Barlroom 1, Ritz Carlton Pacific Place, Jakarta on Tuesday [11/6].
The interest of sustainable bond l phase one with tenure of five years and fully guaranteed was offered at 8.25% - 9.25% interest.
In this great bond release plan the company appointed Bahana Securities and Mandiri Securities to act as underwriter, with bank CIMB Biaga Tbk. Fitch Ratings as bank’s representatives. Fitch Rating had awarded A rating for Garuda’s bond project.
Emirsyah stated that 80% of the find obtained from this bond offer would be used for paying down payment of purchase of aircrafts of B737-800 ER, AA 330-300 and A320, whilst the remaining fund of 20% would be used as working capital in the form of aircraft rental.
The initial offering od Sustainable Bonds l of the first phase 2013 would be exercised on June 11 – 14 2013 with offering period on July 1-2 2013, which would be booked at the Indonesia Security Exchange [BEI] on July 8, 2013.
It was disclosed that this bond offering project had A rating from PT Fitch Ratings Indonesia. This bond was not quarantined by any special insurance mobile or stationary or company’s income.
As told, he fund obtained form this bond selling would be used for paying down payment of the abovementioned aircrafts around 80%. The points was that company needed funding for paying down payment to support company’s development, while 20% would be spent on aircrafts rental.
The fund obtained from General Offering phase l would be entirely used by the company at least by end of 2014. In this bond releasing plan the company referred to financial book keeping of December 2012. Net profit of the year underway increased by 61.32% to USD 110,148 million while business income was jacked up by 11.89% to USD 2.887 billion.
Meanwhile by end of last month, according too Emirsyah, Garuda Indonesia had obtained credit of USD 40 million or around Rp392 billion from PT Bank Rakyat Indonesia Tbk [BRI]. Garuda stated the fund would be used for financing business expansion, including pre-delivery payment of aircrafts. “The credit facilities offered lower interest level than the market price today” he said.
Emirsyah Sattar Further remarked that he finally decided to release bonds in local currency since price and level of coupon was getting better. Besides, GIAA coded emitents also considered balance of composition of company’s debt.
He changed from forex to domestic currency as the pricing was good, not because of Rupiah weakening and the company also had to balance up debts.

Debt Diversification
In tune with Emir, Garuda’s Finance Director Handrito Hardjono described the change of plan as debt diversification measure because so far the company had done much borrowing in foreign currency. “The risk is considerably low in Rupiah compared to USD. If needed we can swap into dollar” Emir remarked.
By cyclical, performance in quarter l was always negative; but by end of year GIAA coded emitent often succeeded in making net profit. “The bottom line [of quarter l-2013 was more or less the same as last year, there is not much change” Emir said.
He admitted that one of the reasons why Garuda always lost was high business burden, while income was not enough to cover up the losses. One of the crucial components in the burden structure was fuel expenses.
The portion of fuel to Garuda’s business expenses came to 37%. An known, the avtur fuel used by aircrafts always followed market price. To troubleshoot this fuel price problem, the company constantly protects expenses by hedging of fuel price. “We make hedging for around 20% of fuel need” Emir said.
Beside releasing bonds, the management of GIAA was also seeking for other options in financing, like releasing rights issue, and see the potentials of realization of this plan in semester two this year or next year. Release of this new share as planned would be 10% of total shares registed in the company.
By this government’s portion of ownership in GIAA would be reduced to 60%. The number of shares released, as planned would be 3 billion shares.
As with the emission value. According to Handrito, it depended on the market price; but it was estimated that the total fund obtained from rights issue would be USD 200 million. The option to obtain fund from the two schemes was necessary to fulfill need for company’s capital expenditures in 2013 which amounted to around USD 400 billion. (SS)  

Business News - June 14,2013 

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