PIA-IL properties come on privatisation list at last

[Abbas Ali]

MUSHTAQ GHUMMAN

ISLAMABAD (December 15 2006): The Cabinet Committee of Privatisation (CCoP) has approved the inclusion of properties of Pakistan International Airlines-Investment Limited (PIA-IL) including Roosevelt Hotel, New York, in the list of entities to be privatised.

Sources told Business Recorder on Thursday that the committee rejected the proposal of Privatisation Commission (PC) of hiring the services of top hotel brokers for valuation.

PC informed the CCoP that according to a decision of the federal government PIA-IL properties were included in the list of future entities to be privatised. The principal activities of the PIA-IL are to carry on business as promoters and investment in projects related to construction, development and operation of hotels, motels and restaurants around the world. The privatisation of Roosevelt Hotel, New York, was to be taken at the first stage.

The sources said, PC had proposed that services of a qualified Financial Advisor (FA) should be acquired for professional valuation, analysis and advice on the best possible transaction structure.

The board of privatisation had recommended to the CCoP to include PIA-IL, its subsidiaries and properties in the privatisation list with the appointment of a FA under the revised ' Hiring of Financial Advisor Regulations, 2006 from among the acclaimed top brokers of hotels.

According to sources, the CCoP, in its meeting on November 30, approved the proposal with the directions that qualified FA be hired from investment banking institutions with expertise in taxation, financial and legal matters instead of a real estate broker.

The PIA-IL is an independent body that is running businesses other than aviation. National flag carrier PIA has a 50 per cent share in the PIA-IL while a Saudi prince owns the remaining 50 per cent shares.

Beside Roosevelt Hotel, the PIA-IL owns three other hotels in Paris, Riyadh and Abu Dhabi. Earlier, The Saudi partner agreed to offload his share at the price of $74 million from PIA-IL. The sources said that PIA was expecting to fetch around $500 million from the sale of the Hotel but the FA would evaluate its price.

Source: Business Recorder

[CombiFan]

Selling assets never saved troubled companies, remember PanAm building.

[tariq-bhx]

It makes good business economics to release tied up equity, obviously bringing down the debt gearing is a critical factor.

But one important area everyone is scared to tackle is the number of employees, it is an absolute nightmare ! This an on-going burden that needs to be drastically reduced, without this all the other measures just feel like sticking a small plaster on a very severe open wound !

[FMC]

It makes good business economics to release tied up equity, obviously bringing down the debt gearing is a critical factor.

But one important area everyone is scared to tackle is the number of employees, it is an absolute nightmare ! This an on-going burden that needs to be drastically reduced, without this all the other measures just feel like sticking a small plaster on a very severe open wound !

Will releasing the tied up equity bring down PIA debt bill? I hope somebody on this forum can give the debt figure.

[zerbaer]

Believe it was well over Rs.100 billion some years back during the times of Chief Debt Generator Ahmed Saeed. It has been the reckless borrowing over the years that continues to snowball with every new Chorman. Think it was during Shahid Khaqan & Shahid Islam that PIA began to pledge its revenues from key traffic sectors against loans for unknown reasons. Now its the turn for Hotels etc., having already received many injections from GOP e.g. Rs.5 billion equity, then some more and then the Rs 15 billion TFC scam etc - All this is in addition to the loans they keep taking & lenders keep giving. Why?

Over staffing, though a problem, is not the prime reason for the present beyond salvage condition of the airline.

[FMC]

Believe it was well over Rs.100 billion some years back during the times of Chief Debt Generator Ahmed Saeed. It has been the reckless borrowing over the years that continues to snowball with every new Chorman. Think it was during Shahid Khaqan & Shahid Islam that PIA began to pledge its revenues from key traffic sectors against loans for unknown reasons. Now its the turn for Hotels etc., having already received many injections from GOP e.g. Rs.5 billion equity, then some more and then the Rs 15 billion TFC scam etc - All this is in addition to the loans they keep taking & lenders keep giving. Why?

Over staffing, though a problem, is not the prime reason for the present beyond salvage condition of the airline.

Thanks zerbaer for the comments. With no more injections from GOP I wonder what's up TK's sleeve. Mind you the 'snake of the sleeve' must be identifed.

[mohammad abdulaziz]

Dear Abbas, Is there any updates on the sale of hotels???

[Abbas Ali]

Dear Abdulaziz, for further updates, I guess we will have to wait till the next meeting of Cabinet Committee of Privatisation. I hope hotels' sale issue will come under discussion in committee’s next meeting.

Abbas

[mohammad abdulaziz]

Many thanks for your prompt response.

Do you have any idea as to when next meeting is expected to be held? Also, any news about other proposals made by PIA management i.e. Fuel Equalization Funds, Financial Restructuring, etc.

[Abbas Ali]

At the moment, no idea when privatisation committee's next meeting is scheduled to take place. As far as proposals like Fuel Equalization Funds, Financial Restructuring forwarded by PIA are concerned, I think these will be discussed by cabinet or senate's defence committee in their future meeting.

I will post here if I get any info about these committees' future meetings.

Abbas