Islamabad:
The Board of Directors of the Privatization Commission declared on Tuesday four local parties, including three partners in cement activities, eligible for the submission for the acquisition of Pakistan International Airlines (PIA), approaching the sale of the loss of loss entity.
In a related development, the Cabinet Committee on privatization (CCOP) approved the structure of transactions for the elimination of Roosevelt Hotel, New York, which belongs to PIA. The committee chose the possibility of managing the hotel as a joint venture, which had been suggested by the financial advisor a year ago but was ignored by the government. Vice-Prime Minister Ishaq Dar chaired the CCOP meeting.
The board of directors of the Privatization Commission met under the chairmanship of the Prime Minister’s adviser to Muhammad Ali privatization. He approved the pre-qualification of four interested parties for the disinvestment of Pakistan International Airlines Corporation Limited (Piacl), according to a press release.
The board of directors examined the recommendations of the pre-qualification committee on the basis of the evaluation of qualification statements (SOGS) submitted by five potential investors, in accordance with technical, financial and documentary requirements, defined in the request for qualification statements (RSOQ). The board of directors declared a consortium including lucky cement, Hub Power Holdings, Kohat Cement and Metro Ventures adapted to auction for PIA.
The second consortium included Arif Habib Corporation, Fatima Fertilizer Company, City Schools (Private) Limited and Lake City Holdings (Private) Limited. The Board of Directors also declared Fauji Garilizer Company adapted to the auctions for the PIA, accepting the entity as a private limited company. It belongs to the Fauji Foundation. Airblue (Private) Limited was the only entity that had been declared auction and directed an airline.
The privatization committee said that the pre -qualified parties would now proceed to the reasonable diligence phase of the purchase – a critical step in the transparent and competitive privatization process. A SECURITE & INVESTMENTS AGREEMENTIUM, Serene Air, BAHRIA FOUNDATION, MEGA C&S HOLDING AND EQUITAS CAPITAL LLC could not be eligible for auctions.
The government wishes to sell majority PIA shares as well as management control. During the last attempt, the government had set the minimum price at 85.03 billion rupees with a negative balance sheet of 45 billion rupees. Now the government has taken more debts from the balance sheet, which should have a positive impact on the minimum price.
PIA auctions should take place in the last quarter (October-December) of the current calendar, said Muhammad Ali, adviser to the Prime Minister on privatization.
The privatization committee had invited expressions of interest (EOIS) for the disinvestment of 51 to 100% of Piacl’s share capital as well as management control. This is the second attempt to privatize the airline after the failure of the first offer last year. The Commission said that the CCOP approved Tuesday the structure of transactions of the Roosevelt hotel, New York, as proposed by the board of directors of the privatization committee.
Of the three options evaluated by the financial advisor – outright sale, joint venture with several options and long -term lease – the joint venture model with several options was approved by the CCOP, according to the ad. This option aims to maximize the long-term value for the country, while guaranteeing flexibility, several output opportunities and minimizing the future budgetary exhibition, he added.
These decisions reflect the strong government’s strong commitment to advance its program of economic reform and privatization in a transparent manner, market -oriented and friendly investors, said the Commission.
Pakistan hired Jones Lang Lasalle Americas as a financial advisor with costs of 2.2 billion rupees. According to its report on the structure of transactions, Pakistan will not need to pay additional money for a joint venture, because its contribution will take the form of the value of the hotel. “Based on pre-marketing, reasonable diligence and options’ analysis, the structure of the joint venture achieves the greatest value for the Government of Pakistan,” said the advisor in his report.
In the scenario of Coentreprise, the government will contribute all the value of the land to a partner of joint venture. The value of the land will be calculated according to its full potential, including the 32 -storey building. A contribution agreement will be signed immediately, the joint venture agreement will follow in 2027.
The development partner will make two initial deposits. “This option has the highest risk with the highest net product in Pakistan,” said the advisor in the report submitted last year.
