Sukuk Double Trouble – Garuda Indonesia Sukuk in Trouble

today 30 July 2017 GMT
Photo Credit: Garuda Indonesia

Garuda Indonesia Sukuk hits Turbulence

After the Dana Gas Sukuk leak, another Sukuk announced turbulence when Indonesian national airline Garuda Indonesia announced its $500 million sukuk issued in 2015 may need to make an emergency landing.

The Indonesian flag carrier is seeking to amend a number of conditions as below:

  1. Amend Condition 6(c)(i) to read that “Consolidated Total Equity shall not be less than U.S.$500,000,000;”

  2. Amend Condition 6(c)(ii) to read that “the ratio of Consolidated Total Debt to Consolidated Total Equity shall not exceed 3 times;”

  3. Amend paragraph (d) of the definition of “Consolidated Total Debt” to delete and expressly exclude references to “indebtedness under a finance or capital lease;”

  4. Irrevocably waive any Dissolution Event, Potential Dissolution Event or breach of the Terms and Conditions, the Declaration of Trust relating to the Non-Compliance Event

Garuda recorded a net loss of $283.8 million in the first half of the year, attributable to a $138.3 million loss due to tax amnesty programme expense, and $145.5 million to losses from operations. Net losses from operations amounted to $145.5 million for the six months.

Sukuk holders who vote in favour will receive a participation fee of 0.6% of the outstanding principal amount of their certificates. A shareholder meeting is scheduled for 18 August in Hong Kong.

Garuda Indonesia 2020

The Wakala Sukuk issued in 2015 for $500 million achieved an order book of US$1.9bn and was issued at a profit rate of 5.950%. The sukuk was issued for a duration of 5 years.

Full details of Garuda can be found at: Garuda Consent Solicitation.


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