Pakistan International Airlines Corporation (PIA) executed documentation for a $90 million Shari'a compliant financing facility, which will be used for general corporate purposes.
The facility has a three-year term and represents the first syndicated commercial foreign currency financing for a Pakistani obligor since 2007. It was arranged by Abu Dhabi Islamic Bank, Al Hilal Bank, Citibank N.A., and United Bank Limited as mandated lead arrangers and joint bookrunners.
The Islamic transaction, which is expected to be upsized to $100 million with Warba Bank in Kuwait joining the facility as a lead arrangers, 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.
Citibank is performing the account bank and security trustee roles. Clifford Chance and Haidermota & Co. acted as legal counsel to the arrangers. PIA was represented by Mandviwalla & Zafar.
"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," commented PIA's chief financial officer Salim Sayani.
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."