ISLAMABAD
\nWith just a few days left for general elections, the Special Investment Facilitation Council (SIFC) \u2014 under the supervision of the caretaker government \u2014 has greenlit the bifurcation of the Pakistan International Airlines (PIA) into two entities, The reported on Saturday.
\nMeanwhile, the national airline\u2019s outstanding liabilities worth Rs830 billion would be parked in the upcoming holding company. However, the bi-furcation has been approved without ascertaining valuation by the financial consultant.
\nThe caretaker federal cabinet is all set to approve the model of transaction for selling out the core operation of the PIA next week. The commercial banks have agreed to the re-profiling of Rs268 billion debt into conventional and Islamic instruments at a rate of 12% capping for 10 years maturity period but it would be in a floating rate. The outstanding amount will be settled through proceeds, privatisation of the PIA, and amounts to be settled through budgetary allocations.
\nSources confirmed to The that Caretaker Minister for Finance Dr Shamshad Akhtar raised some valid questions over the lack of valuation done by the financial consultants. Although the banks have agreed on the re-profiling of PIA debt, they have not yet assented in writing. It was expected that the Privatisation Commission would prepare a detailed summary for the upcoming cabinet meeting expected to be held on Tuesday or Wednesday.
\nWhen The sent written questions to Caretaker Minister for Privatisation Fawad Hasan Fawad, he replied that the SIFC has endorsed the bi-furcation of the PIA into two entities as proposed by the financial advisor.
\nThe SIFC, he said, also approved the valuation methodology of the PIA which is in line with best international practices and guidelines. The valuation methodology is determined based on a weighted average to arrive at the valuation of PIA, he added.
\nIt is not a real estate asset as in transactions like the PIA, the methodology is used to finalise a band which is not disclosed at an early stage. Then the reference band is carved out. This formula has been presented before the SIFC and they granted their nod on it, he added.
\nThe caretaker federal cabinet\u2019s approval will be sought for the whole segregation plan, valuation methodology, including transaction structure, one plus five-year business plan, and how much investment is expected from potential buyers and how much loans will be retained so all such details would be presented before the cabinet for seeking approval.
\nHe said that the government would not take outstanding liabilities on its books but all these liabilities would be transferred to a holding company. These liabilities would be cleared with the sale of assets in due course of time.
\nThe offshore assets, including the Roosevelt Hotel and another one in Paris (Hotel Scribe), would be developed and none of the offshore assets would be sold out along with the sale of the core business of PIA\u2019s transaction.
\nHe said that these two offshore assets would be transferred into a holding company. He also said that buyers are showing their interest in the PIA as they are showing it to the financial advisor.
\n\u201cThe Privatisation Commission welcomes potential investors and facilitates them in terms of sharing information but we want this transaction should be handed off. The financial advisor should do knocking and data sharing,\u201d Fawad said.
\nAfter fair valuation, the federal cabinet\u2019s approval would again be sought. \u201cWe are proposing to sell around 55% shares and remaining to be retained so that after its turn around the government could get its due share in improved entity\u201d, he said and added that as of today it is a negative-equity company as they have worked a lot on it as it was very complicated transaction.
\nIt was not an easy task to structure such transactions as they secured solutions to banks\u2019 outstanding loans, settling international creditors, and now turning into transactions on which they would proceed further, the caretaker minister said.
\nThe SIFC also approved the restructuring plan of the FBR which the Election Commission of Pakistan already directed the interim government to leave its implementation up to the elected government coming into power after the elections.<\/p>\n","protected":false},"excerpt":{"rendered":"
ISLAMABAD With just a few days left for general elections, the Special Investment Facilitation Council (SIFC) \u2014 under the supervision of the caretaker government \u2014 has greenlit the bifurcation of the Pakistan International Airlines (PIA) into two entities, The reported on Saturday. Meanwhile, the national airline\u2019s outstanding liabilities worth Rs830 billion would be parked in […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-385200","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"\n