The federal government has approved the eligibility criteria for potential buyers of Pakistan International Airlines (PIA) who want to acquire majority stakes in the flag carrier.
The government is willing to sell 51-100 percent of PIA’s shares, setting a deadline of May 3rd for Statements of Qualification from potential buyers. The criteria demand that bidders have a net worth of at least Rs. 30 billion ($100 million), with those leading a consortium required to possess a net worth of not less than Rs. 8 billion or $25 million.
The ongoing divestment of PIA by June this year includes strict conditions. It mandates that foreign investors must collaborate with local partners since foreign-owned airlines are barred from acquiring majority stakes in Pakistani airlines.
The government has proposed a segregation scheme and a Scheme of Arrangement to alleviate PIA from legacy loans before the sale. The Securities and Exchange Commission of Pakistan (SECP) has recommended that the PIA board seek approval from the Annual General Meeting for the segregation plan. PIA’s financial restructuring entails transferring substantial liabilities to the Holding Company, which would help streamline the airline’s financial burden.
Post-sale, existing shareholders of PIACL will become shareholders of the PIA Holding Company, which will subsequently be listed on the stock exchange.
The privatization process also addresses the welfare of PIA’s employees and pensioners, with liabilities and costs to be transferred to the new Holding Company. Non-core assets are being transferred to the Holding Company to streamline operations.
