ISLAMABAD: Pakistan’s Cabinet Committee on Privatisation (CCoP) has approved the inclusion of Fauji Fertilizer Company Limited as an additional consortium member in the group acquiring a majority stake in Pakistan International Airlines.
It allowed the fertilizer giant to subscribe to 33.99 percent ordinary shares of PIA Equity Limited, the special-purpose vehicle set up for the airline’s divestment. The decision was taken at a meeting of the CCoP chaired by Deputy Prime Minister/Foreign Minister Ishaq Dar on Wednesday here. The committee endorsed FFC’s inclusion and decided to forward the move to the federal cabinet for final ratification.
The FFC’s entry into the consortium had been widely anticipated after the Privatisation Commission Board earlier approved its participation in the buyer group that won the Rs135 billion ($480 million) bid for a 75 percent stake in PIA. The Arif Habib-led consortium had edged out a rival group backed by Lucky Cement in December, with Arif Habib Corporation maintaining the lead and majority role in the investment structure despite the addition of new partners.
Under the arrangement, the consortium led by Arif Habib Corporation Limited will retain its role as lead consortium member, in line with the bid documents agreed with the government. PIA Equity Limited will serve as the holding vehicle for the acquisition of national carrier, with the expanded investor group now including Fatima Fertilizer, AKD Group, City Schools and Lake City Holdings alongside the incoming FFC stake.
The first financial closing of the transaction is expected in late April, when the consortium must pay two-thirds of the bid value, about Rs83.3 billion and declare whether it will exercise the option to purchase the government’s remaining 25 percent stake at a 12 percent premium. The consortium will inject Rs124.875 billion directly into PIA, a key component of Pakistan’s economic reforms tied to its programme with the International Monetary Fund (IMF).
