Govt turns Rs24 bn PIA loan into equity to attract buyers

ISLAMABAD: The government has converted its Rs24 billion loan for the Pakistan International Airlines (PIA) into equity with an immediate effect in a bid to make this entity attractive for potential buyer of 26 percent shares for strategic partnership.
After converting the government’s loan into an equity, PIA’s authorised share of capital increased by Rs24 billion, jacking it up from Rs30 billion to Rs54 billion, in order to averse risk to the company and paving the way for finding out its strategic partner under the privatisation plan.
In order to meet the requirement of making disclosure for the shareholders, a notice was issued on Monday.According to the disclosure notice given to the PIA shareholders, sections 96 and 131 of Securities Act 2015, clause 5,9,13(c) of the Rule Book of the Karachi Stock Exchange Limited, and the applicable regulations of the Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited, the corporation has increased the authorised capital from Rs30 billion to Rs54 billion.
Further, the corporation has allotted and will subsequently issue to the federal government 2,356,543,648 additional ordinary PIA shares of par value of Rs10 each against the Government of Pakistan advance against equity of Rs2,356,536,481.
All legal formalities have been completed, the notice further stated.The government had already promulgated an ordinance to turn the PIA into a company. Now the balance sheet will be cleaned in a bid to make this entity attractive for potential buyers.
PIA was converted into a company in order to remove legal hitches for providing management control to potential buyer with the sale of 26 percent shares.
The government possessed 86 percent shares of PIA and after the sale of 26 percent shares, the government will continue to have 60 percent shares in its control. However, under the plan agreed with the IMF, the government will hand over management control to strategic partner in a bid to bring desired improvements in the national flag carrier.The opposition parties have announced stiff resistance to the government’s move to privatise PIA.