Settlement Scheme For Debt Financing Using Mezzanine With Warrants (Study Case: PT Garuda Indonesia (Persero) Tbk)

Abstract

Since the spread of Covid 19 in China in December 2019, all sectors have been affected by COVID-19, including the aviation industry. This resulted in a decrease in the number of flight passengers and decreased the company’s operational and financial performance, including PT Garuda Indonesia (Persero) Tbk. Furthermore, the decline in the company’s performance resulted in it experiencing liquidity difficulties and an inability to pay its short-term liabilities. The research was conducted to solve those problems with the case study research method, where the authors searched for and collected publicly available data and performed simulations that could be applied by PT Garuda Indonesia (Persero) Tbk. This problem can be solved using a mezzanine with warrants scheme, where the company will lend money to private equity, and interest payments will be paid yearly. In addition, at maturity, the mezzanine loan will be converted as collateral with a value that meets the agreed internal rate of return. The warrants will be exercised into shares. Therefore, the private equity shares ownership of PT Garuda Indonesia (Persero) Tbk.

Keywords: Debt Financing, Financial Restructuring, Mezzanine