Pakistan International Airlines Corporation (PIA) has executed facility documentation for a $90 million Shari’a compliant financing facility. The facility was arranged by Abu Dhabi Islamic Bank, Al Hilal Bank, Citibank N.A., and United Bank Limited as Mandated Lead Arrangers and Joint Bookrunners. Citi’s is performing the Account Bank and Security Trustee roles as well.
Clifford Chance and Haidermota & Co. acted as legal counsel to the arrangers. PIA was represented by Mandviwalla & Zafar.
This innovative Islamic transaction is secured by PIA’s ticket sales generated in the UAE and aggregated through IATA’s Billing and Settlement Plan, and through sales by General Sales Agents.
Citi's Managing Director, EMEA Aviation, Munawar Noorani said: "We are delighted to be involved in the first foreign currency commercially syndicated financing by a Pakistani corporate in the international markets since 2007. The transaction is also important for the aviation sector as it uniquely broadens airline corporate credit to regional Islamic financiers ".
The transaction is expected to be upsized to $100 million with Warba Bank in Kuwait joining the facility as a Lead Arranger. The three-year facility will be used for PIA’s general corporate purposes and reflects investor confidence in the airline and its strategic importance to Pakistan.
The facility represents the first syndicated commercial foreign currency financing for a Pakistani obligor since 2007.
PIA’s Deputy Managing Director, M. Salim Sayani, Chief Financial Officer Mr. Nayyar Hayat, and Deputy General Manager, Shahid Munir, were in Dubai for the signing ceremony.
“This facility re-introduces the airline in the international financial markets and further develops our banking relationships in the region” said Sayani. “This funding will allow the airline to implement its five year business plan, which includes financial restructuring and a fleet renewal program through which the airline will add five wide body and thirty nine narrow body modern aircraft” added Sayani.
PIA is the national flag carrier of Pakistan and flies to over 38 international destinations across three continents. The airline also covers 24 local destinations within Pakistan.