The Securities and Exchange Commission of Pakistan announced on May 6 that it has approved the scheme of arrangement between Pakistan International Airlines Limited, doing business as PIA-Pakistan International Airlines (PK, Islamabad International), and PIA Holding Company Limited. did. Legal separation of PIA’s core aviation business from its “non-core” activities.
“The approval of this plan paves the way for PIA Holding Company to own 100% of PIA’s shares and simultaneously issue and allocate shares to PIA’s eligible shareholders,” the accompanying statement reads. Two days earlier, the Competition Commission of Pakistan also approved the same draft agreement.
These approvals are part of the maze of bureaucratic approvals that Pakistan’s government and national carrier must secure in order to sell a majority stake in PIA. Central to this process is the creation of a PIA holding company and the transfer of US$2.26 billion of non-core debt from his PIA balance sheet to the holding company. The government claims this will make the airline a more attractive proposition to potential buyers. The government wants to sell 51-100% of PIA’s share capital and hand over control of the loss-making airline.
Under this scheme of arrangement, shares of Pakistan International Airlines Corporation Limited will be exchanged for shares of PIA Holding Company Limited. The latter entity will take over his 100% ownership of Pakistan International Airlines Corporation Limited. In addition to non-core debt, non-core assets of approximately USD 89.3 million will also be transferred to a holding company wholly owned by the Government of Pakistan. PIA will have approximately $526 million in core assets and $726 million in core liabilities.
Pakistan’s Finance Minister Mohammad Aurangzeb said at an investment conference in Saudi Arabia earlier this week that the government hopes to complete the privatization by early July. His initial EOI deadline was recently extended to mid-May, and reports are emerging that there is some interest in PIA. The government is keen for foreign investors with foreign exchange and aviation experience to come in and take over the airline. However, early reports suggest that it is mainly local companies that are looking to operate the facility.
