BOC Jakarta Branch contributes to $200 million syndicated loan to PT Garuda Indonesia (Persero) Tbk for general corporate purposes

BOC contributions to 200 million syndicated loan to PT Garuda Indonesia (Persero) Tbk for general corporate purposes On December 2, 2013, PT Garuda Indonesia (Persero) Tbk entered into a syndicated loan facility with a maximum credit limit of $200 million with 5 banks including Lembaga Pembiayaan Ekspor Indonesia (Indonesia Eximbank); PT Bank Central Asia, Tbk (BCA); PT Bank Internasional Indonesia Tbk (BII); PT Bank CTBC Indonesia; and Bank of China, Jakarta Branch (BOC).

BCA is the facility agent and security agent.

The syndicated loan facility amounted to $100 million and Rp 1,193 billion, and was for general purposes of the company. The loan has a term of 36 months due on December 2, 2016. The principal will be repaid every 3 months in which the first repayment will be made 12 months from the signing date.

The loan is secured by an interest reserve account in which the balance is to be kept sufficient for 3 months of interest payments. The account is held with BCA.

On December 31, 2013, the borrower made the first drawdown which amounted to $75 million, and in 2014 made a total drawdown amounting to $25 million and Rp 1,193 billion.

Unless otherwise permitted, the BCA Syndicated Loan prohibits Garuda and its material subsidiaries from: (i) creating or permitting to subsist any security interest over any asset, (ii) disposing any asset, (iii) lending money to any third party, and (iv) obtaining any new loan unless: (a) proceeds from such new loan will be solely used to refinance any existing indebtedness, (b) amounts drawn under such new loan cannot be greater than any existing indebtedness which will be refinanced, and (c) the period of the new facility cannot be less favourable than the existing indebtedness to be refinanced.

The BCA Syndicated Loan requires Garuda to comply with certain financial covenants including maintaining: (i) a debt ratio of the Group of a maximum of 5.75x from the date of the agreement to the first anniversary of the agreement; 6.25x from a day after the first anniversary of the agreement to the second anniversary of the agreement; 7.00x from a day after the second anniversary of the date when the loans have been fully repaid; (ii) a coverage ratio of the Group of a minimum of 1.00x; and (iii) a cash percentage ratio of a minimum of 5 per cent.

The above financial covenants will be tested quarterly and Garuda is also required to furnish BCA with a compliance certificate which states that it has complied with the financial covenants on a quarterly basis.

The Creditors have the discretion to require Garuda to repay any amount outstanding under the facility in the event of a change of control, which will occur if the Government of Indonesia holds less than a specified percentage of Garuda’s shares.

Subject to the Creditors’ approval, Garuda may also prepay the loan under the following conditions: (i) it shall provide written notification on the same at the latest 3 days before the prepayment date; (ii) the facility may only be prepaid after the last day of the availability period; (iii) any prepayment notifications cannot be revoked; and (iv) any amount prepaid under the BCA Syndicated Loan cannot be redrawn.

In the past, Garuda has failed to maintain the debt ratio and the coverage ratio mentioned above, and the Creditors have granted Garuda waivers by way of waiver letters dated September 30, 2014 and November 14, 2014 respectively that waive the breaches of the debt ratio and coverage ratios for the periods ending June 30, 2014, September 30, 2014 and December 31, 2014.

As of December 31, 2013, the outstanding balance of the loan amounted to $73,488,690. The loan was fully repaid as of April 2, 2015.