Govt & PIA Holdco invite bids to sell majority stake in PIACL, deadline May 03

April 02, 2024 (MLN): The government along with PIA Holding Company Limited (PIA Holdco) has invited Expressions of Interest (EOI) from prospective investors to acquire between 51% and 100% share capital of Pakistan International Corporation Limited (PIACL) together with management control with a deadline set for May 03, 2024.

The terms and conditions for the transfer and acquisition of the Equity Stake shall be set out in the bidding documents, which shall be consummated after the sanctioning of SOA and completion of the privatization process.

Interested companies, firms, body corporate, or other legal are asked to submit EOI in duplicate in hard copy to the Privatization Commission with a non-refundable processing fee of $5,000, equivalent to Rs1.4 million.

The EOI must be available with the Privatization Commission and the processing fee must be paid, on or before 16:00 hours, May 03, 2024.

Background of PIA's Privatization

To restructure and privatize PIACL, the government has incorporated a company limited by shares called PIA Holdco.

PIACl and PIA Holdco have filed a Scheme of Arrangement (SOA) with the Securities and Exchange Commission of Pakistan (SECP) for inter alia, the transfer of certain non-core assets and non-core liabilities as set out in the SOA (the Non-Core Undertaking) of PIA Holdco.

According to the SOA, PIACL will continue to hold certain core assets and core liabilities as set out in the SOA (the Core Undertaking).

The Core Undertaking includes assets, liabilities, employees on air transport operations and allied services, rights, and obligations under various operational agreements executed by PIACL including the air services agreements, code sharing agreements, fuel supply agreements, passenger sales agency agreements and foreign loan agreements.

According to the SOA, the existing shareholders of PIACL will become the shareholders of PIA Holdco (in the same proportion they currently hold in PIACI) and PIACI will become a wholly-owned subsidiary of PIA Holdco, with a single class of ordinary shares.

PIA Holdco will be listed on the stock exchange and PIACL will cease to be listed.

The SOA filed with SECP includes the split balance sheet setting out the Core Undertaking and the Non-Core Undertaking.

The scheme sanctioned may vary from the SOA filed with SECP.

PIACL may enter into operational arrangements such as office space and sales offices with PIA Holdco on an arms-length basis if considered necessary for smooth and continued operations, which shall be determined during the privatization process.

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