The Finance Ministry has finalized the term sheet for re-profiling the debt of Pakistan International Airlines (PIA) with commercial banks, official sources told ProPakistani.
Finance Ministry sources said the banks will issue No Objection Certificates (NOCs) this week and assets will transferred back under PIA ownership.
Banks will provide the loan at an interest rate of approximately 12 percent over 10 years. Sources from within the Privatization Commission said the agreement includes plans to sell up to 51 percent of PIA’s shares, while the government will retain ownership of the remaining 49 percent.
Funds generated from the PIA sale are earmarked for the airline’s rehabilitation. Prospective buyers of PIA will be required to purchase the majority stake (51 percent) in the airline.
A notable aspect of the agreement is the repayment mechanism: if PIA turns profitable, the loan will be repaid to the banks from dividends received. Also, the term sheet allows banks to issue Sukuks and conventional bonds, thus offering flexibility in financial instruments.
