Commodities

Garuda Indonesia, steelmaker Krakatau Steel to issue convertible bonds

National flag carrier PT Garuda Indonesia and steelmaker PT Krakatau Steel are planning to each issue 7-year convertible bonds under an Indonesian government financing scheme after their businesses were hit by COVID-19.

JAKARTA, Oct 15 (Reuters) - National flag carrier PT Garuda Indonesia GIAA.JK and steelmaker PT Krakatau Steel KRAS.JK are planning to each issue 7-year convertible bonds under an Indonesian government financing scheme after their businesses were hit by COVID-19.

Garuda plans to issue a maximum 8.5 trillion rupiah ($579.41 million) of bonds, it said in a stock exchange filing late on Wednesday, while Krakatau Steels plans to issue as much as 3 trillion rupiah of bonds.

Garuda's convertible bonds will be bought by the Finance Ministry, while Krakatau Steel's bonds will be bought by the government through state firm PT Sarana Multi Infrastruktur, the companies said.

The government loan is "very much needed" Garuda said, with restrictions on travel to contain the spread of the coronavirus resulting in the company posting a $728.15 million loss in the first half of 2020.

"The proceeds from the transaction will be used to support the liquidity and solvency of the company, specifically used to finance the company's operations," Garuda said.

The state companies will seek shareholders approval in late November for the plans.

($1 = 14,670.0000 rupiah)

(Reporting by Bernadette Christina Munthe Writing by Fransiska Nangoy Editing by Ed Davies)

((Fransiska.Nangoy@thomsonreuters.com;))

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