KARACHI (February 11 2003) : Pakistan International Airlines Term Finance Certificates have been oversubscribed by 40 percent. Against an issue size of Rs 15.14 billion, commitments of Rs 21 billion have been received.
The newly appointed Chairman, PIAC, Ahmed Saeed, described it as the “largest Term Finance Certificates issued by a corporate concern in Pakistan.”
Presiding over a function organised at a local hotel on Monday to celebrate the successful closing of the TFCs, he said, “today we have also completed financial restructuring as planned and committed to the Government of Pakistan.”
The issue had been placed with almost 40 investors comprising banks, developed financial institutions, leasing companies, pension and provident funds and corporates.
National Bank of Pakistan, Habib Bank Ltd and United Bank Limited, besides Global Securities were the major partners who had arranged the sale of TFCs.
Ali Raza, President, NBP, Zakir Mehmud, President, HBL, Mansoor Khan of UBL and Khawaja Iqbal of Global Securities, also made brief speeches paying glowing tributes to the PIA management in lifting the airline to its present position from a place which looked dismal and gloomy.
'LANDMARK ACHIEVEMENT': Ali Raza described PIA's turn around a “landmark achievement.” He said out of the large list of investors only 11 were banks.
Ahmed Saeed, Chairman, PIAC began his speech by showering accolades on Lieutenant General Hamid Nawaz Khan (Retd) from whom he took over on Saturday as Chairman and said that all credit to him for pulling the national carrier out of the morass it was in and the powerful Board of Directors which supported decisions taken by the management.
He said that Hamid Nawaz has played an important role in the revival of PIA. Ahmed Saeed was being humble and naive to transfer all the achievements and credit the success story to the account of the former Chairman.
The Chairman also paid high tributes to its staff, particularly, Chief Operating Officer, Khurshid Anwar whom he described as “the best aviation man in the country today.”
Ahmed Saeed said that the TFC issue is the third and final step of the financial restructuring package. “We received an overwhelming response from the investors for participation in the private placement and total order size exceeded the amount required by PIA.
We are very grateful for the tremendous confidence and trust demonstrated by the banks and investors in the national flag carrier,” he said.
He assured that with this turnaround PIA is now poised to regain its earlier status of a world class airline.
He thanked the President of Pakistan for taking immense interest at the crucial juncture, Shaukat Aziz and his team at the Ministry of Finance for their continued support and expressed gratitude to Dr Ishrat Husain, Governor State Bank, for his total support right from the beginning for the PIA's revival.
Ahmed Saeed also deeply appreciated the efforts of Syed Ali Raza for his outright help and assistance in PIA's financial restructuring efforts at a time when the airline was in a very difficult situation and Khawaja Iqbal Hassan and his associates for their dedication and commitment to PIA's financial restructuring.
“We now consider them as members of PIA's family,” he said. “PIA also values the support of Zakir Mahmud and Amar Zafar Khan who are not only our bankers and advisors but by virtue of their association they have now become our partners, ” he said.
OUT OF CRISIS: Ahmed Saeed also talked about the dark and gloomy days when the present management had taken over in April 2001 and PIA was at the brink of bankruptcy and informed the audience that PIA has now come out of this crisis due to meticulous implementation of various measures such as route restructuring, revenue enhancement and cost cutting.
These efforts have enabled us to bring about the following results:
July-December 2001 profit of Rs 400 million, January-December 2002 profit of Rs 2.4 billion, there was no default on long-term loan borrowings, PIA has been able to retire loans of three A310 aircraft and they have now come under the ownership of the airline, all fuel bills and payments towards sales tax are up to date, engineering supplies are normal and the payments are current with engineering vendors, Citibank loan against Saudi Arabia and UAE receivable stands retired, and successful implementation of fleet insurance strategy.
“Today when the other airlines are making heavy losses and facing bankruptcies, PIA is in the processes of acquiring new aircraft and expanding its operations,” he said and added that now when PIA's fundamental issues have been addressed and put right, we shall move towards solidifying profitability and focus on improving the airline's product and service offering by providing greater conform, more convenience and improved product to our valued travelling public.
With the induction of state-of-the-art fleet of eight Boeing 777 aircraft and fleet replacement plan, he was confident that PIA would be equated with top international airlines and the whole nation would be proud of their national flag carrier.
Director Finance, PIA in his introductory remarks said that the TFC issue will help in strengthening the balance sheet and improving the cash flows of the airline, repayment of short-term debts, establishing new relationships with many financial and corporate sector investors, maintaining PIA's presence in Pakistan's debt capital market, and allowing the airline to embark on its fleet replacement plan.