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Indonesia tycoon to top up Garuda's capital after restructuring

Reuters - January 11, 2022

Jakarta – Billionaire Indonesian businessman Chairul Tanjung said on Tuesday he will lift his investment in struggling flag carrier Garuda Indonesia after the airline completes a court-led debt restructuring.

The announcement came as the government asked prosecutors to begin a graft investigation into some of Garuda's plane leasing contracts.

Garuda, which has been battered by the plunge in air travel during the COVID-19 pandemic, is undergoing a court-led debt restructuring over unpaid liabilities.

"We hope the (court) process will be finished soon," Tanjung told a news conference broadcast by one of his media outlets.

"Once it's done, our plan is to increase capital to strengthen (Garuda)," he said, without elaborating.

The businessman is Garuda's second-biggest shareholder after the government, holding a 28.3% stake through PT Trans Airways.

Garuda said it has total outstanding liabilities of $9.8 billion. State news agency Antara reported the court had received $13.8 billion of claims that it will verify by Jan. 19.

Separately, state-owned enterprises minister, Erick Thohir, on Tuesday brought to the Attorney General's Office audit documents that he said indicated wrongdoing in Garuda's lease contracts for ATR 72-600 planes.

"We know based on valid data that in the procurement process for airplanes, leasing, there are corruption indications with various brands," Erick said.

Garuda said in a statement it will support the investigation process. The airline has 13 ATR 72-600 planes.

The Franco-Italian turboprop maker ATR did not immediately respond to a request for comment.

Garuda has previously been embroiled in several graft scandals. In November 2020, the UK Serious Fraud Office announced an investigation into Canada's Bombardier over suspected bribery in sales to Garuda.

Garuda's former chief executive Emirsyah Satar was jailed for eight years in 2020 for bribery and money laundering related to the procurement of planes and engines from Airbus and Rolls-Royce.

Garuda's current executives are trying to renegotiate leasing rates with lessors in and out of court, which they say are higher than rates other airlines pay.

Erick said any probe of leasing arrangements should not affect the court process because authorities had identified lessors suspected of being embroiled in graft.

[Reporting by Bernadette Christina Munthe and Gayatri Suroyo Editing by Ed Davies.]

Source: https://www.reuters.com/markets/europe/indonesia-tycoon-top-up-garudas-capital-after-restructuring-2022-01-11