Garuda proposed that lessors, vendors and other creditors take a large cut and replace the remaining amount with $800 million worth of new bonds and $330 million worth of shares, a company presentation at the court showed.

The offer is directed at lessors, plane maintenance vendors, aircraft makers and holders of its Islamic bonds, to whom Garuda owes more than 255 million rupiah ($17,513.74) each.

The new bonds will have 10-year maturity with a 6.5% coupon per annum in cash.

Garuda declined to comment on how much debt in total it will seek to settle through this scheme.

According to the latest verified claims list, lessors made up the biggest chunk of Garuda's outstanding liabilities at 82.73 trillion rupiah ($5.68 billion) or nearly 70% of the total at 120.5 trillion rupiah.

The list has yet to include claims by 43 creditors that have not been verified, a court-appointed administrator told the meeting.

Garuda defaulted on $500 million Islamic or sukuk bonds in June, 2021.

The airline has also proposed to settle its debts to banks and other state companies by extending the loans' maturity by 22 years and offering a 0.1% interest rate per annum.

Garuda owes state energy firm Pertamina and Bank Rakyat Indonesia 7.54 trillion rupiah and 4.61 trillion rupiah, respectively, among other debts.

Creditors will vote on Garuda's proposals on June 15, said administrator William Daniel, adding that the offer can still change up until before the vote.

Garuda CEO Irfan Setiaputra told reporters after the meeting creditors have responded well to the offer.

Garuda, whose finances have deteriorated due to a drop in travels during the COVID-19 pandemic, has said it will seek to launch two rights issues to raise $936 million after it concludes the debt settlement process.

($1 = 14,560.0000 rupiah)

(Reporting by Stefanno Sulaiman; Editing by Gayatri Suroyo and Kanupriya Kapoor)