Garuda seeks new wings with 36.5 pct IPO

* IPO will float 9.3 bln new and existing shares - sources

* Term sheet says deal seeks to raise $500 million

* 70 pct of IPO reserved for local investors - minister

PT Garuda Indonesia, the nation's biggest carrier by fleet size, aims to sell a 36.5 percent stake, or 9.3 billion new and existing shares, via an initial public offering next month, according to two sources with a direct knowledge of the plan. 
 

Indonesia's booming economy is attracting great interest from foreign investors and encouraging local companies to tap the equity market. The benchmark share index jumped 46 percent last year, supported in part by $2.18 billion in foreign ownership -- more than double that of 2009. 

Garuda aims to raise up to $500 million via the long-delayed IPO according to a term sheet seen by Reuters earlier this month. 

"The total shares of Garuda's enlarged share capital is about 25.7 billion and around 9.3 billion will be sold to the public," said the sources, who declined to be named as details are not yet public. 

The Indonesian government planned initially to launch the IPO last November, but delayed it until 2011. The company aims to list on Feb. 11, the term sheet said.

MYTHICAL BIRD

Garuda, established in 1949, is named after a mythical giant bird that is one of the state's main symbols, but has struggled in recent years and had been banned for a while by the European Commission from flying to Europe because of safety concerns. 

The airline shocked some investors in November when days after the government said the company had a first nine-month loss of 39.5 billion rupiah, Garuda instead announced a profit of 194 billion rupiah, attributing the change to an auditing anomaly. 

Mustafa Abubakar, state-owned enterprises minister said on Tuesday that 70 percent of the IPO would be for local investors and the rest for foreign. "This offering also includes 10 percent stake of Garuda owned by Bank Mandiri," Abubakar added. 

Garuda owed bank Mandiri about 1.3 trillion rupiah until an agreement to convert the debt into a 10 percent stake last year. Citigroup Inc and UBS AG are the international book runners for Garuda's offer. Source: Reuters