Sri Lanka’s aviation minister, Nimal Siripala De Silva has hinted at the restructuring and sale of SriLankan Airlines, according to sources. Multinational finance advisory Lazard is helping to prepare EOI documents regarding the sale of the airline and its subsidiaries. The government is expected participation from other international advisors and banks soon.
Speaking at Sri Lanka’s parliament Siripala said: “The airline is expecting to raise $500 million from the sale of its ground handling and catering subsidiaries. This would cover less than half of SriLankan Airline’s debt. The rest of the debt will have to be borne by the Treasury.”
The Sri Lankan cabinet approved in principle decision to list SriLankan Airlines and its subsidiaries for sale. The sale will be conducted through a competitive bidding process and managed by the Ministry of Finance’s State-Owned Enterprise Restructuring Unit (SRU).
As per media reports, an Indian entity has expressed interest in SriLankan Airlines.
SriLankan Airline currently owes $210 million to banks, $300 million to SriLanka's Bank of Ceylon and People’s Bank; and $325 million to Sri Lanka's fuel company and airport operator.
Speaking to Bloomberg last month, Richard Nuttall, chief executive of SriLankan said: “We’re part of a national restructuring of state-owned enterprises. There’s no equivalent of Chapter 11 in Sri Lanka at the moment, so that’s not an option. We have an airline that brings in, in round numbers, a billion dollars in revenue a year. We plan to make about USD100 million this year, but it’s all going into servicing past debts and has very little to do with running the airline today. If we can restructure the debt, we have a very rosy future."
The Sri Lanka Government is hoping to raise $4.5 billion from the sale of the 17 state-owned entities.
Post which, IMF has signed $2.9 billion loan to Sri Lanka to stabilise its economy and replenish depleted foreign exchange reserves.