Garuda Indonesia IPO May Raise $1.1 Billion, Help Expand Fleet

Jakarta Globe, Widya Utami | January 12, 2011

PT Garuda Indonesia, the nation’s biggest carrier, and a shareholder may raise as much as $1.1 billion in the country’s largest initial public offering in more than two years. Shares will be sold at Rp 750 to Rp 1,100 each, Elisa Lumbantoruan, the airline’s acting finance director, told reporters in Jakarta today.

Garuda will use its sale proceeds to pay for new planes as it
 works to quadruple the size of its low-cost unit to take advantage
 of rising travel demand in Asia. (Bloomberg Photo)

The offering will comprise 9.36 billion shares, or a 37 percent stake, including new shares and existing stock being sold by PT Bank Mandiri, Garuda said in a statement published in Suara Pembaruan newspaper today.

“This IPO will help Garuda become more efficient in competing in the global market,” Hadiyanto, the airline’s president commissioner, said at the press briefing today.

Garuda will use its sale proceeds to pay for new planes as it works to quadruple the size of its low-cost unit to take advantage of rising travel demand in Asia.

The carrier last month concluded a debt-restructuring agreement to pave the way for the share sale, likely to be Indonesia’s largest since PT Adaro Energy raised 12.3 trillion rupiah ($1.4 billion) in 2008.

Garuda will spend $1.3 billion on capital expenditure over the next five years, of which about 80 percent will be for planes, Lumbantoruan said.

The airline has a fleet of 87 planes, which will climb to 153 planes, including the low-cost units, by the end of 2014, he said.

The low-cost unit’s fleet will rise to 25 planes from six, President Director Emirsyah Satar said today at the press conference. He didn’t give a timeframe.

Outperformance

Companies raised 30.6 trillion rupiah in IPOs in Indonesia last year, according to data compiled by Bloomberg.

That was almost an eight-fold increase from a year earlier.

The benchmark stock index has risen 34 percent in the past year, outperforming a 9.3 percent gain for the MSCI Asia Pacific Index.

Garuda has hired PT Bahana Securities, PT Danareksa Sekuritas and PT Mandiri Sekuritas to oversee the share sale, Garuda said in the statement.

The public offering is scheduled for Feb. 2, 4 and 7 and trading will begin Feb. 11, it said.

Garuda in December signed final debt agreements with European export credit agencies including Compagnie Française d’Assurance pour le Commerce Extérieur and Germany’s Euler Hermes, which were owed about $288 million in unpaid loans.

The accords extended maturities to mid-2016, with payments to be made in installments of between $45 million to $60 million a year, Satar said at the time. 

Bloomberg