Held EGMS August 12, Garuda Indonesia Asks For Blessing To Increase Capital Of Rp7.5 Trillion To Convert Bonds To Shares
Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - PT Garuda Indonesia (Persero) Tbk will hold an Extraordinary General Meeting of Shareholders (EGMS) on August 12, 2022. One of the agenda is to ask for permission to increase capital with pre-emptive rights (HMETD) or rights issue as many as 225.58 billion new shares.

In the disclosure of information to the Indonesia Stock Exchange (IDX), the management of Garuda Indonesia explained that the government as a series A shareholder will implement the Pre-emptive Rights by depositing new capital through state equity participation (PMN). The value is IDR 7.5 trillion

"The number of new shares is equivalent to 871.44 percent of the issued and paid-up capital. The exercise price is Rp. 459," Garuda Indonesia management wrote, quoted Thursday, July 7.

The proceeds from the implementation of the additional capital by providing Pre-emptive Rights, after deducting emission costs, will entirely be used by the company for aircraft maintenance which is subject to the Go-Forward aircraft fleet lease and alternative lease agreements.

"For costs and expenses related to restructuring the company's debt; maintaining the company's minimum cash needs; and supporting the operational needs of the company and its subsidiaries, such as aircraft and engine rental costs, fuel and others," the management wrote.

After conducting the rights issue, GIAA will conduct a private placement (PMTHMETD) scheme. Garuda Indonesia management explained that one of the restructuring schemes that have been approved in the peace plan is to convert the company's assets to creditors who are entitled to receive equity through PMTHMETD.

The issuance of new shares through PMTHMETD is carried out in order to improve the company's financial condition as referred to in Article 8B of POJK No. 14/2019.

In detail, it can be done as long as the public company has a negative net working capital and has a liability exceeding 80 percent of the assets of the public company at the time of the GMS which approves the increase in capital. In addition, if it is unable to meet financial obligations when due to unaffiliated lenders as long as the unaffiliated lenders agree to receive shares or convertible bonds of a public company to settle the loan.

This PMTHMETD is part of the peace plan and is expected to ease the company's financial burden and improve the company's financial structure so that it is seen as the best choice for the company and all shareholders of the company.

In accordance with the reconciliation plan, the company and creditors entitled to receive equity have agreed that the exercise price will be determined by the privatization team based on a fair price assessment of the company's shares by an independent appraiser to be determined by the privatization team.

"In the event that the specified exercise price is below the nominal value of the company's shares, the company will issue shares with a new class with a different nominal value in accordance with the provisions of OJK Regulation No. 31/POJK.04/2017 concerning Issuance of Shares with Different Nominal Values," he said. Management.

After the private placement (PMTHMETD) is completed, Garuda Indonesia will then issue mandatory convertible bonds (OWK). The management explained that the OWK had been issued in 2020 of IDR 1 trillion of the total approved value of IDR 8.5 trillion with a maximum tenor of 7 years.

"After the implementation of the addition of capital by granting Preemptive Rights and simultaneously with PMTHMETD, the Company also plans to convert OWK. Thus, after the transaction and conversion of OWK is carried out, shareholders who do not exercise their rights to exercise Pre-emptive Rights can be diluted by a maximum of 92.72 percent, ' wrote Management.

All of Garuda Indonesia's corporate actions will be presented at the EGMS on 12 August 2022. The meeting will also report on the progress of the company's restructuring process. However, this agenda requires approval because it is reporting.

"The company will seek approval from the EGMS with due observance of the provisions stipulated in OJK Regulation No.15/POJK.04/2020 and OJK Regulation No.16/POJK.04/2020 concerning the Implementation of the General Meeting of Shareholders of Publicly Listed Companies Electronically, to conduct transactions as listed in this Disclosure of Information," he said.

After exercising the Rights and OWK, the share ownership structure of Garuda Indonesia will change. Where the pro forma share ownership after the exercise of the Pre-emptive Rights assumes the participation of public shareholders is only 20 percent of the total rights available to be later issued into ordinary shares.

This percentage represents the total ownership of public shareholders with ownership greater than 0.25 percent of the paid-up capital prior to the exercise of the Pre-emptive Rights


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