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Thursday June 17, 2010

Garuda IPO likely this year after debt deal

JAKARTA: Indonesian flag carrier Garuda has reached a settlement on its debt, paving the way for it to proceed with a US$400mil initial public offering (IPO) this year.

State Enterprises Minister Mustafa Abubakar told reporters on Tuesday that a debt deal with the European Credit Agency (ECA) had been settled.

“I have been told that Garuda’s debt with ECA has been settled. The deal will be officially signed this month. It means that the IPO will go ahead this year and not be delayed to next year,” said Mustafa, whose portfolio also includes telecoms, banks and plantations companies.

Workers conduct final checks on Garuda aircraft at a maintenance facility in Cengkareng near Jakarta — Reuters

“Garuda’s performance is at its best now, we must push the plan this year.”

Indonesia is keen to push ahead with the IPOs of Garuda and of steel giant Krakatau Steel so it can take advantage of a strong investor interest in South-East Asia’s biggest economy. The stock market is up 12% this year as investors have been drawn by a buoyant economy underpinned by commodities exports and strong consumer demand.

The rise in stocks has fuelled plenty of talk of IPOs and of potential mergers and acquisitions in the telecoms and banking sectors.

PT Telekomunikasi Indonesia (Telkom) is currently in talks with mobile phone operator Bakrie Telecom on consolidation of code division multiple access (CDMA) in the next one or two months.

Mustafa said Telkom must retain a majority stake if it merged its CDMA operations with Bakrie Telecom, but warned that the merger could face opposition from the country’s anti-monopoly commission.

He also said that four state-controlled banks would be exempt from the country’s single banking presence policy, effectively ending pressure on the lenders – Bank Mandiri, Bank Negara Indonesia, Bank Rakyat Indonesia and Bank Tabungan Negara – to be owned under a single holding company.

“We are preparing the concept for our banks to be exempted from the single presence policy,” he said. — Reuters

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