AJCapital has resigned from its role as financial advisor to an ad hoc group (AHG) of holders of PT Garuda Indonesia Tbk’s $500 million 5.95% sukuk, and is now expected to take on that role for the carrier in an upcoming in-court supervised restructuring (PKPU), said two sources familiar with the matter.
Garuda’s board had approached AJCapital to work with the company as its financial advisor for the anticipated PKPU process before it resigned its role with the AHG several weeks ago, both sources said. The verdict on whether Garuda will enter a PKPU, based on a petition filed by IT consulting services firm PT Mitra Buana Kooporindo, is expected to come today, Dec. 9,
as reported.
Garuda’s request to AJCapital is said to have come about as the carrier needs an experienced financial advisor to handle its onshore PKPU processes, which are currently expected to deal with local creditors, said one of the two sources. The current expectation is that the sukuk, which is English law governed, would be dealt with through a UK scheme, but potentially as a separate creditor class to lessors. Reorg reported in
September that the carrier was expected to file a UK scheme of arrangement for its lessors, as it intends to remove around 80 aircraft from its fleet. The UK scheme would be on top of the ongoing PKPU in Indonesia,
as reported.
Garuda
announced in June that it had appointed Guggenheim Securities LLC as financial advisor alongside PT Mandiri Sekuritas, with Cleary Gottlieb Steen & Hamilton LLP and Assegaf Hamzah & Partners as its legal advisors, as reported. McKinsey & Company was retained as a business advisor to help the airline optimize its route and fleet and rationalize its workforce,
as also reported.
Clifford Chance and Houlihan Lokey are the respective legal and financial advisors to the AHG for the Garuda sukuk, and are
verbally engaged to hold the same roles as advisors to the lessors committee for Garuda, as reported.
Clifford Chance is also advising the following lessors in their legal proceedings against Garuda, according to U.K. court filings,
as reported:
- Oriental Leasing 31 Company Ltd. v. Garuda Indonesia Holiday France S.A.S. filed Feb. 4 2021
- SMBC Aviation Capital Limited v. Garuda Indonesia Holiday France SAS and another, filed July 24, 2021
- AerCap Ireland Limited and others (AerCap Ireland Capital DAC, Glide Aircraft 73B‐41815 Limited, NimbusFunding Limited, Calais Location S.A.R.L, Grenoble Location S.A.R.L., ILFC France S.A.R.L.,Nancy Location S.A.R.L., ALS France S.A.R.L.) v. Garuda Indonesia Holiday France SAS, and another. Case filed on Dec. 5, 2020
Garuda is represented in the PKPU process before the Central Jakarta Commercial Court by Assegaf Hamzah & Partners, while Mitra Buana is represented by Law Office Suwandi & Associates, as reported.
AJCapital and Garuda declined to comment.
Reorg’s coverage of Garuda is
HERE.
-- Rae Wee, Stephen Aldred