The English language Jakarta Post reports that flamboyant Indonesian businessman Setiawan Djody has prepared a financial package of between US$300 to $500 million that, if approved by the Government, will make him the majority owner of Merpati Nusantara Airline (MZ).
By way of a consortium comprised of the Djody-owned company PT Setdco working in collaboration with unnamed Canadian and Australian financial institutions, the deal will come to the rescue of the state-owned airline which is in technical default of a Rp. 331
billion debt owed to the Indonesian Bank Restructuring Agency (IBRA) that fell due on April 11.
Ailing financially since 1998,
MZ has grounded its fleet of Indonesian-manufactured CN-235 aircraft included in a balance sheet of other aircraft and assets with an estimated value of Rp. 900 billion.
Despite a widespread perception in
the airline industry that MZ is badly over-staffed and inefficient in its operations, Setiawan has publicly vowed that he will not reduce rank and file staff or change the senior management structure of the airline should his bid for a takeover be successful.
Setdco's offer, which will pump equity into the airline and assume its debt burden, must first receive the approval of the Ministry for State-Owned Enterprises. Whether or not the deal will allow
Setdco to benefit from a promised Rp. 230 billion "haircut" from its Rp. 330 billion debt promised by IBRA to MZ remains unclear.
MZ, the former Garuda Indonesia subsidiary, operates a number of domestic and regional routes with heavy emphasis on eastern Indonesia.
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