Though much talked about, the restructuring of NAC is being executed at last after the Privatization Committee on Wednesday endorsed a restructuring plan and a new prospectus for the airline as a company. [break]The Ministry of Tourism and Civil Aviation (MoTCA) had submitted the restructuring plan with a specific implementation timeline a few months ago.
“The ministry will initiate the process to register NAC as a company as soon as we get the Privatization Committee´s decision letter from the Ministry of Finance (MoF),” said Kishore Thapa, secretary at MoTCA.
The overall process could take just a few weeks, officials told Republica. Once the process is completed, it will automatically kick off capital and organizational restructuring at NAC.
“The registration of the company will instantly annul the existing NAC Act and Regulations and dissolve the existing board,” said Ranjan Krishna Aryal, MoTCA joint-secretary.
A new board headed by senior government officials will then take over NAC operations and execute the restructuring process as per the plan set out by the ministry and completely overhaul the capital and organization structure.
Going by the plan, the government will convert its existing 100 percent stake in NAC into a 49 percent share and invite the strategic partner to invest the equivalent of the additional 51 percent of share capital.
Out of its 49 percent stake also, the government will sell a 15 percentage point equivalent to the public through an Initial Public Offering (IPO). It will further divest another 10 percent share to tourism entrepreneurs and 5 percent to NAC employees.
“Once the plan is executed, the government will have only a 19 percent stake in NAC,” said the source. “NAC´s capital will be more than double the existing amount.”
The company will be run under public-private model. And with the presence of a strategic partner experienced in handling international business, the government expects NAC to become a much stronger and more efficient airline company that will reclaim its goodwill and its business.
“NAC is well known as among the safest airlines. With strong and experienced management, it will surely build a new image, coming out of a long-running depression,” said Thapa.
Latest valuation shows that NAC has assets worth Rs 16 billion. These include its corporate office at New Road, two Boeings and seven Twin Otters, and spares.
Although just endorsed, the idea of converting NAC into a company and inducting a strategic partner is nothing new. Various studies commissioned by the government in the past had put forth suggestions along the same lines.
Since 2000, the government has commissioned six different studies for restructuring and reforming NAC. Even though their major recommendations were almost similar, the government never actually implemented the suggestions.
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