Most of PIA privatization proceeds to go directly into airline

An amount of 92.5% of the bid value, or PKR 124.875 billion, will be invested in Pakistan International Airlines Corporation Limited (PIACL) through a rights issue of new shares, according to a filing by Pakistan International Airlines Holding Company Limited (PIAHCL) submitted to the Pakistan Stock Exchange.

PIAHCL said the government, through the Privatization Commission, on Dec. 23, conducted a publicly televised and competitive bidding process for the divestment of a 75% stake in PIACL, one of its major subsidiaries. The process was carried out in line with the applicable privatization framework.

Three pre-qualified bidders participated in the auction: a consortium led by Arif Habib Corporation Limited, a consortium led by Lucky Cement Limited, and Airblue (Private) Limited.

Following the opening of sealed bids, disclosure of the reserve price and the competitive bidding phase, the consortium led by Arif Habib Corporation Limited emerged as the successful bidder with the highest offer of PKR 135 billion for a 75% controlling stake in PIACL.

Under the transaction terms, 7.5% of the bid amount, equivalent to PKR 10.125 billion, will be received by the government through PIAHCL. The remaining 92.5%, or PKR 124.875 billion, will be invested directly into PIACL as new equity via a rights issue.

The rights issue will be executed in two tranches: two-thirds of the amount, or PKR 83.25 billion, will be paid upfront, while the remaining one-third, or PKR 41.625 billion, will be invested within 12 months of financial close.

PIAHCL said the privatization transaction is subject to the execution of definitive agreements, fulfillment of conditions precedent, and receipt of all required regulatory, governmental and corporate approvals in accordance with applicable laws and regulations.

The holding company said it will assess and disclose, as appropriate, the impact of the proposed transaction on its ownership and governance structure, management control, financial position and consolidation status of PIACL during the completion and closure process.

Further material developments, including the execution of transaction documents and completion of the share transfer process, will be disclosed to the exchange in due course, the filing said.