In a significant development regarding the privatization of Pakistan International Airlines (PIA), sources from the Ministry of Finance have disclosed that the government has finalized a term sheet with commercial banks for loan reprofiling of national flag carrier, ARY News reported on Thursday.
According to the sources, the term sheet includes provisions for the transfer of NOCs (No Objection Certificates) and assets back to PIA from the commercial banks within the upcoming week.
By signing the term sheet, the banks will secure a loan for PIA spanning a duration of 10 years, with an interest rate pegged at approximately 12 percent.
Under the initial structure outlined in the term sheet, it is indicated that up to 51 percent of PIA’s shares will be put up for sale. However, government ownership of the airline will still retain 49 percent of its shares, as per the plans of the Privatization Commission.
The funds generated from the privatization of PIA are earmarked for the revival of the airline, as revealed by sources familiar with the matter.
Additionally, potential buyers of PIA will be required to inject a minimum of 51 percent investment into the institution, as specified by the Ministry of Finance.
Furthermore, it has been disclosed that the repayment of the loan extended to the banks will be facilitated through dividends received once PIA achieves profitability, as per insider sources.
Moreover, the term sheet allows banks the flexibility to issue Sukuk, Islamic, or conventional bonds as part of the financial arrangement after PIA becomes a profitable entity.
