PIA minority shareholding
PC to seek EoI from investors: minister
WASIM IQBAL &
ZAHEER ABBASI
ISLAMABAD: Privatization Commission will seek expression of interest (EoI) from private investors for Pakistan International Airline (PIA) minority shareholding within three months, subject to the approval of Cabinet Committee on Privatization (CCoP).
This was disclosed to a parliamentary panel during a briefing about the prospects of privatization of the national flag carrier by the present government.
A meeting of National Assembly’s Standing Committee on Privatization presided over by Syed Imran Ahmed Shah was informed on Wednesday by Minister for Privatization Daniyal Aziz and secretary privatization that PC has sought permission from CCoP for inviting EoI from private sector partners and investors for 49 percent government shares in PIA within three months.
Later, a shareholders’ agreement will be executed to outline a method to exercise management control by the federal government in line with best international practices, according to PC privatization plan.
Responding to a question regarding various phases of privatization of PIA, Minister for Privatization Daniyal Aziz said restructuring of PIA has been completed in phase-I and now the phase-II regarding the sale of PIA to a third party is under way.
He explained, “As per law, PC is completing all the legal and financial prerequisites for the privatization of PIA and it is not necessary that it will be sold out by the present government.”
Daniyal Aziz said that as per rules and business of the government, the PC is forming a new company where loans and other liabilities will be parked. This will turn PIA air transport business into a positive company and bring ease to attract third-party investment/shareholding in the company.
Talking about losses of PIA, he said that PIA is facing losses of Rs150 million daily while $300 million are annual losses of Pakistan Steel Mills Corporation and there is a need to take quick decision.
Based on December 31, 2015 data, liabilities of PIA were Rs324 billion, assets were worth Rs115 billion while equity was Rs209 billion during pre-restructuring of PIA. But liabilities reduced to Rs72 billion and assets went down to Rs96 billion and equity reached Rs24 billion in post-restructuring.
In October 2014, the PC appointed a consortium of M/s Dubai Islamic Bank, IATA Consulting, Deloitte, Haidermota BNR, Freshfields Bruckhaus Deringer, Abacus Consulting, APCO, and Prestige as FA.
In a draft restructuring and implementation plan, the consortium envisages that transaction should be carried out in two phases. In Phase I, formulation of restructuring and divestment strategy and its implementation should be completed while in phase-II, private sector partnership in the core operations of PIAC should be facilitated for closure of the transaction.
“To proceed ahead with the privatization of PIA, the PC will have to undertake necessary actions to re-engage the services of financial advisors, since the financial advisory services agreement stands expired on October 3, 2017,” according to the brief.
The minister said the services of financial advisors expired during the period when Ahmed Nawaz Sukhera was appointed as interim secretary Privatization, adding no process was initiated for financial advisors’ re-engagement.
He said that advisors have prepared a draft scheme of arrangements, for transfer of specified assets into a new entity, and a draft memorandum of association and draft articles of association for incorporation of new entity.
He further said that the case of re-engagement of the services of financial advisors under same terms and conditions would be sought from Cabinet Committee on Privatization following approval from the PC Board.
He said that PC Board on November 02, 2017 recommended that for the privatization of PIA, sub-section 4 of section 4 of the PIA (Conversion) Act 2016 may be amended, however, the same may not be attainable as PML-N has no majority in the Senate.
He said that PC will take its recommendations again to CCOP for its approval as per law which are: transmission of scheme of arrangement/ order to PIACL, pursuant to section 4 of the PIAC (Conversion) Act will be completed in three weeks; the request by PIA to federal government in accordance with section 4 of the PIAC (Conversion) Act to be issued within 4 weeks and valuation of assets pertaining to airline business of PIA will be carried out within 6 weeks.
On November 2016, PC, Aviation Division, PIACL and financial advisors agreed on carving out of non-essential business segment of PIACL, including hotels, real estate, precision engineering and legacy financing (including debt like liabilities).
Secretary PC Syed Irfan Ali Shah said that they are running against the time but it does not mean that they would compromise transparency by taking decision in haste.
He said, “We are running against the time but we have to ensure transparency and will not take any decision in haste.”
The secretary maintained that Parliament has given PC a mandate to complete the transaction of PIA by April 15, 2018, adding the PC has still re-engaged the services of financial advisors and PIA also required three months to look into draft implementation plan submitted by financial advisors and come up with some option.
Source: brecorder.com
Advisers being rehired for PIA sell-off
By Amin Ahmed | 3/22/2018
ISLAMABAD: The Privatisation Commission is in the process of re-engaging the services of the consortium of financial advisers on the same terms and conditions to proceed ahead with the privatisation of Pakistan International Airlines Corporation Limited (PIACL).
The service agreement of the advisers had expired early October 2017. The commission appointed the consortium of Dubai Islamic Bank, IATA Consulting, Deloitte, HaidermotaBNR, Freshfields Bruckhaus, Deringer, Abacus Consulting, APCO, and Prestige as advisers for the transaction.
On Wednesday, Privatisation Minister Daniyal Aziz briefed the National Assembly Standing Committee on Privatisation that the procedural steps and the recommendations made by the financial advisers and the steps taken so far by his ministry concerning the national carrier`s sell-off.
He apprised the committee of the restructuring plan of PIACL through which PIA`s investment, hotel and real estate would be segregated from the aviation, engineering, landing and handling, healthcare and flight kitchen. He also informedthe members about the core and non-core liabilities of PIACL and modes to implement the segregations.
The financial advisers have prepared a draft scheme of arrangements for transfer of specified assets into a new entity as well as its draft memorandum of association and draft articles of association for incorporation.
PIACL and the Aviation Division are to effect the segregation.
ThePrivatisationCommission, along with the consortium, has prepared a draft restructuring and implementation plan, which involves carving out of nonessential business segments of PIACL including hotels, real estate, precision engineering and legacy financing including debt like liabilities.
The transaction is envisaged to be carried out in two phases; the first entails the formulation of restructuring and divestment strategy and its implementation, while the second involves facilitating private sector partnership in the core operations of PIAC, leading to the successful closure of the transaction.
About the Utility Stores Corporation, Mr Aziz said that it is not in the preferred list of entities and will be tackled after thorough deliberations and extensive meetings with the bodies concerned.
Source:
DAWN
PIA’s Rs324 billion liabilities in 2015 may now be touching Rs480 bn: minister
ISLAMABAD: The liabilities of the state-run Pakistan International Airlines (PIA) might have touched Rs480 billion-mark. The government is compiling its fresh losses and liabilities figure which were earlier at Rs324 billion by end December 2015, Federal Minister for Privatisation Daniyal Aziz said.
“The PIA liabilities were recorded at Rs324 billion by the end of December 2015,” said the minister while briefing the National Assembly’s Standing Committee on Privatisation, which was held under the chairmanship of Syed Imran Ahmed Shah, MNA.
The government is compiling the data of losses and liabilities of PIA occurred by the end of December last year, he added. The minister said that PIA liabilities are around Rs324 billion as according to the data available of 2015. However, he said that these liabilities might have now reached to Rs480 billion as the national flag carrier is facing around Rs150 million loss every day.
Aziz shared the plan approved by the Cabinet Committee on Privatisation regarding Privatisation of PIA. He briefed on the procedural steps and recommendations made by the Financial Advisory Consortium (FAC) for Privatisation of PIA and the steps had been taken up by the ministry. He informed the committee about the historical background of PIACL transaction, formational of restructuring and divestment strategy and its implementation (Phase-I), facilitating private sector partnership in the core operations of PIACL leading to successful closure of the transaction. He told about the statutory provisions of PIACL (Conversion) Act, 2016.
He briefed the restructuring plan of PIACL through which PIA Investment, Hotel and Real Estate which shall be segregated from Aviation, Engineering, Landing & Handling, TES & Healthcare and Flight kitchen. He briefed regarding the core and non-core liabilities of PIACL and options/modes to implement this segregations.
He also briefed the committee about the classification of assets and liabilities contemplated under Section 4 of PIACL (Conversion) Act. He said the current status of PIACL (Transaction) and the efforts for the extension of adviser. He also said the decisions of CCoP regarding the transmission of scheme of Arrangement/Orders to PIACL, pursuant Section 4 of PIAC (Conversion) Act, 2016, valuation of assets pertaining to airline business, advertisement seeking expression of interest of private sector partners, shareholder agreement and PC to re-engage the services of financial advisers under the same terms and conditions.
Source: The News
