Garuda Indonesia is converting $95 million owed to Indonesia's Bank Mandiri into shares, which will give the bank a 10.6% stake in the airline.
The debt, which was held by Mandiri in the form of mandatory convertible bonds, will be converted to shares, says Garuda's CEO, Emirsyah Satar.
The process will be completed by year-end, he adds.
"Approval has already been given by Indonesia's Central Bank, so we are just working out the administrative details," says Satar.
Mandiri will hold a 10.6% stake in Garuda after the transaction is completed, but this will be reduced when the carrier rolls out its initial public offering in mid-2010, he adds.
Garuda reportedly plans to sell a 40% stake through the IPO to raise $300 million to $400 million.
Source: Air Transport Intelligence news