The Govt & Domestic Banks | Remove Last Hurdle To PIA Privatisation

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ISLAMABAD: The government, domestic banks and development finance institutions (DFIs) have successfully concluded PIA’s commercial debt negotiations, removing the last hurdles in the way of privatisation of the national flag carrier.

Under the arrangement, Pakistan International Airlines Company Ltd’s (PIACL) commercial domestic debt will be moved to PIA Holding Company Ltd, established by the federal government as part of the former’s legal restructuring.

According to a statement issued by PIACL on Friday, the development paved the way for filing of a scheme of arrangement (SoA) for legal segregation of PIACL from the Securities and Exchange Commission of Pakistan (SECP).The federal cabinet approved the segregation plan on Feb 6 this year.

PIACL’s privatisation has been a priority agenda for the federal government, and the development represents one of the most complex restructuring exercise undertaken to prepare PIACL for privatisation. This arrangement will help make a viable business case for private sector’s investment in the national flag carrier.

According to the statement, domestic banks and DFIs demonstrated a firm commitment to the government’s privatisation initiative and exten­ded their full cooperation in finalising the arran­gement for PIACL’s commercial domestic debt.

The term sheet covering mutually agreed commercial aspects of loan transfer was signed on Thursday between PIACL, PIA Holding Company and lender banks.

In order to manage the affairs of PIA Holding Company diligently, a seven-member independent board comprising the former State Bank of Pakistan governor and prominent leaders from banking and other areas of expertise was notified this week by the federal government.

The board in its inaugural meeting endorsed the SoA delineating the pathway for privatisation of the national flag carrier.

Following the approval of its draft by the boards of PIACL and PIA Holding Company, the SoA for PIACL restructuring was filed with the SECP on March 28.

Following these significant developments, expressions of interest from potential investors for the privatisation of PIACL have been planned to be called in the coming days.

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