Sri Lanka offers 49% stake in SriLankan Catering, Ground Handling to investors.
The Morning: The Sri Lankan Government has decided to call for Expressions of Interest (EOIs) from private investors to invest in a 49% stake and the administration of SriLankan Catering Ltd. and SriLankan Cargo Ground Handling (the airline’s ground handling unit, referred to as Ground Handling), the profit-making arms of SriLankan Airlines, as a part of its restructuring process, said Minister of Shipping and Aviation Nimal Siripala de Silva.
Speaking to reporters recently, he said that the total debt of SriLankan Airlines has reached $ 1.126 billion (Rs. 401 billion), while the funds obtained by selling the shares of SriLankan Catering and its ground handling unit will be only used to reduce the debt burden of the airline.
Accordingly, the Government has decided to issue 49% shares and administration of SriLankan Catering Ltd. to any potential private investor, while keeping a 51% stake with the Government. SriLankan Catering has been a profit-making subsidy of SriLankan Airlines in the last 10 years except in the 2020/21 financial year due to the pandemic.
However, he said that if the investor is a Sri Lankan national, then a higher stake could be given, provided that they can come together as a syndicate or with other airlines and offer a bid.
He said through the funds obtained by selling the shares of SriLankan Catering, they expect to settle a mortgage worth $ 80 million that has been obtained against the shares of SriLankan Catering Ltd. from Bank of Ceylon (BOC), alongside other loans.
Moreover, he said that a separate entity will be created for SriLankan Cargo Ground Handling , transferring the ownership of buildings, mobile and immobile assets and 49% of shares and administration will be offered to private investors.
He added that Ground Handling has earned profits ranging from Rs. 3-7 billion in the last 10 years for SriLankan Airlines.
The Minister said that out of the total debt owed by SriLankan Airlines, the debt owed to BOC and People’s Bank (excluding the $ 80 million mortgage from BOC) amounts to $ 386 million, of which $ 325 million is owed to Ceylon Petroleum Corporation (CPC), Airport and Aviation Services (Pvt.) Ltd., and the Civil Aviation Authority.
Further, he said that a 49% stake and administration will be provided to private investors who would like to invest, only if the investors agree to provide job security and benefits agreed upon to the staff at SriLankan Airlines and its subsidies.
Sri Lanka’s ongoing economic reforms programme has presented many business/investment opportunities for foreign businesses/investors. The government of Sri Lanka is currently looking at restructuring several key state institutions and one of the main areas being considered is the development of public-private partnerships (PPPs) for state owned enterprises (SOEs). The decision to offer a 49% stake of SriLankan Catering and Ground Handling services is one such area earmarked by the Sri Lankan government. Given Sri Lanka’s focus on becoming an emerging business destination in the South Asian region supported by the country’s geographical positioning in the Indian Ocean and many trade agreements as well as trade concessions enjoyed by the country, the growth and business potential in Sri Lanka presents many lucrative business/investment opportunities for the discerning foreign business/investor.
|Article Code :||VBS/AT/23092022/X_4|