Overseas assets: Sale of PIA hotels likely to rake in $700 million

Published: May 1, 2014
$850m is the amount expected to be raised by issuing OGDC’s Global Depository Receipts on the London Stock Exchange.

$850m is the amount expected to be raised by issuing OGDC’s Global Depository Receipts on the London Stock Exchange.


The government is expecting to get a minimum of $700 million in net proceeds from the sale of Roosevelt Hotel New York and Hotel Scribe Paris, owned by Pakistan International Airlines (PIA), and deals could be struck as early as January next year, says Mohammad Zubair, the prime minister’s privatisation wizard.

The money raised by selling both the assets will be used to clear PIA’s debt, which currently stands at Rs191 billion (about $2 billion).

Zubair, chairman of the Privatisation Commission, was speaking about the government’s privatisation plans during an interaction with media on Wednesday.

He said the deadline of December 2014 for selling a minimum 26% shares of PIA to strategic investors could not be achieved and the date had been extended by another six months.

This is the second extension as under the original plan PIA was to be privatised by June this year. However, the plan to raise at least $430 million by selling 20% shares of United Bank Limited to institutional investors before the end of June remains on track.

According to Zubair, both PIA hotels could be sold by January next year and receipts will be far more than the estimates. The hotels are situated at prime locations in New York and Paris – the cities that are major tourist attraction.

“To kick-start the process, we will hire a financial adviser by mid-May,” he said. The government will not transfer PIA’s liabilities to the buyers and only its core business will be up for grabs.

“My assessment is that if we sell 50% of shares, the airline will become profitable from day one after privatisation,” he said.

Those employees that were not associated with the core business would be kept in the PIA holding company and nobody would be laid off before and after privatisation, he added.

Over the years, PIA’s cumulative losses have swelled to Rs191 billion. In 2013, the national flag carrier posted a loss of Rs43.65 billion.

However, it reduced losses by 77% in the first quarter (January-March) of this year as they came down to Rs1.98 billion compared to Rs8.62 billion in the comparative period in 2013.

The focus was on restructuring and privatisation at the same time, Zubair said.


From next week, the government will kick off the process to sell 20% shares of United Bank Limited. The Privatisation Commission chairman will hold roadshows in seven major cities around the world and at least $430 million is expected to be collected in revenue. This offer will be closed by the first week of June.

The government is running against time to earn a minimum of $850 million by issuing Global Depository Receipts equal to 10% shares of Oil and Gas Development Company on the London Stock Exchange.

Zubair acknowledged that there were difficulties in meeting regulatory requirements of London authorities by May 15 and if the deadline was missed, the share float would be delayed until September.

However, the government was confident of finalising the deal for offloading 5% shares of Pakistan Petroleum Limited in domestic capital markets by the third week of June.

Power plants

Discussing the privatisation of power companies, Zubair stressed that the sell-off alone would not solve the problems, but agreed that privatisation was an important part of power sector reforms.

He said they were also focusing on the post-privatisation regulatory framework for the sector.

He pointed out that the government had advanced the privatisation calendar of power distribution companies and now the process would begin next year. The Faisalabad Electricity Supply Company will be privatised by March 2015.

Published in The Express Tribune, May 1st, 2014.

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Reader Comments (48)

  • ahmedG
    May 1, 2014 - 2:38AM

    Please don’t sell. This is an excellent PIA asset. Just ban free lodging there.


  • just_someone
    May 1, 2014 - 2:42AM

    I would be shocked if the Roosevelt would sell for anything less than a billion dollars. Anyone who has been to NYC and seen the Roosevelt knows that there can be no more a prime land than the Roosevelt’s and it is one of the most historical hotels in NYC.
    It is immensely profitable because it is a prestigious hotel in the US. It is run very professionally!


  • Fawad Azam
    May 1, 2014 - 2:58AM

    Buying assets is credibility. Selling assets, specially by the known corrupt, is devastation.Recommend

  • Abdullah
    May 1, 2014 - 3:09AM

    Oh God, Please don’t sell the Roosevelt Hotel. It’s the most luxurious hotel in New York.


  • Nadir
    May 1, 2014 - 3:26AM

    And now for some warped notion of nationalism these hotels too will become “institutions” and “strategic assets”.


  • sid rush
    May 1, 2014 - 3:34AM

    Roosvelt can fetch 400-450,000/room, so the value of it alone close more than 500mm.


  • av
    May 1, 2014 - 6:07AM

    $159 a night does not sound luxurious to me. It costs $100 a night for a stay in a 5 star hotel in a third world country. New York is supposed to be one of the most expensive cities in the world so it sounds like a cheap hotel to me.


  • sabi
    May 1, 2014 - 6:30AM

    What’s the use of that “luxury” hotel when that hasn’t helped save PIA from near bankruptcy don’t say “corrupt” politicians are responsible as it’s a long story which include powerful characters such as”dedicated” Generals.


  • Saif
    May 1, 2014 - 6:33AM

    May be Mr Zubair does not know that there is lot of real estate owned by Pakistan; there are embassies (and High Commissions) almost in every country; and real estate market is booming!
    Sale through “right” agency will generate quite few multi millionaire Pakistanis!


  • May 1, 2014 - 6:53AM

    So, it has come down to selling the state’s family silver….And some one in the governing family is going to get a hefty financial reward for this…!


  • GS@Y
    May 1, 2014 - 7:00AM

    Roosevelt is such a prestige asset that I don’t want our public sector to divest it. Anyone who has been to midtown Manhattan would know that it’s mind boggling that a building like that at a location like that is owned by the government of Pakistan. If it’s privatized, it’ll probably be given to someone like Mian Mansha for next to nothing.


  • NoSharif
    May 1, 2014 - 8:04AM

    don’t sell the hotel


  • hmm
    May 1, 2014 - 8:14AM

    Yes, sell everything! I guess all of Pakistan is now up for sale just to provide for these petty politicians & their businesses! Just look at British Airways, it is still owned by the Government, so why can’t we turnaround PIA into a profitable entity? Because this government does not want to. If all of our assets are sold then the private sector will dictate the terms & consumers will suffer. Most of the assets will be sold of to people like Mansha who will buy shares of PIA or UBL through a front man & nobody is going to question. Government has to keep few important assets such as airlines, railways, bank, electric company etc for its national interest. Already this government has issued bonds at such a high rate of interest that we’re going to have a hard time in the near future to pay them off. Should we sell off this Government too since they’re just increasing our internal & external debt while they’re living like kings & people are suffering???


  • sohail osman ali
    May 1, 2014 - 9:53AM

    This refers to the news in your paper that the Roosevelt hotel may be up for sale. The Roosevelt is spread over 1 acre of prime real estate in the heart of Manhattan at Madisson Avenue. At the time the lease was acquired by PIA Investments it was the 10th largest hotel in the world. Many factors need consideration before rushing into a sale of this asset. To value the property, ensure a transparent procedure is followed to get a valuation of the property, and consider the option both of selling it as a running hotel versus real estate. The real estate value also depends on the amount of air rights available which dictates how many additional stories any future project can go on the site. Second, it should be remembered in order to ease the tax bill of the seller, PIA acquired the hotel by leasing it at a nominal rental over 15 or so years with a balloon payment at the end of the deal. The way the news has been given implies that the total payment will be received in one go up front which may not be the case for tax reasons. Finally, I understand the hotel is running at a profit. That being so, PIA should consider retaining the property and instead raise money against the future income stream of the hotel over the next 10 or 15 years. This will give PIA a lot of flexibility, it could raise hundreds of millions of dollars and yet retain this valuable prestigious asset. Much more needs to be done to stop PIA’s financial bleeding than one sale of a hotel. In this context government must remember that despite one payment of many billions for the circular debt some months ago, the circular debt is back again at the same alarming level.


  • An Observer
    May 1, 2014 - 10:21AM

    The Pakistani tax payer finds itself between the devil and the deep sea. To sell to the tax-evading, cost cutting “private sector” ( read a few ultra rich individuals) or to free riding, inefficient and ruthlessly corrupt public sector infested with political and bureaucratic parasites.

    In my opinion it is better to sell. PIA will NEVER RETURN to its former glory. We do not have the right type of leaders and managers to look beyond the horizon for the sake of the country or the organisation.

    True, even with this sale of PIA some individuals would become millionaires overnight.


  • Bilal
    May 1, 2014 - 10:59AM

    @Hmmm you know BA is not government owned it was privatised in 87 with alot of government owned British companies


  • Muhammad Rahim
    May 1, 2014 - 11:12AM

    Good move by the govt as we need to generate revenue and dispose of some assets to enhance the core business of the organisations that own them. It sounds like an excellent plan.


  • faisal
    May 1, 2014 - 11:47AM

    Sell everything cuz its running on subsidy and at the same time run more metro buses which takes 1 billion/month from govt’s pocket in Lahore alone. Isn’t it ironic?


  • hmm
    May 1, 2014 - 11:59AM

    Thanks you for the correction. But it did well before its shares were floated in london stock exchange. With PIA, government is trying to sell its shares to one individual i.e. Mansha group ( just rumors ) whereas BA is public limited company & probably some shares held by the govt.


  • M.A.S
    May 1, 2014 - 12:06PM

    Sell off all the assets so that we are only left with just first 3 letters.Recommend

  • kaka
    May 1, 2014 - 12:06PM

    Precious assets will be sold to build and subsidize metro buses


  • Saad
    May 1, 2014 - 1:18PM

    Instead of reducing the unneeded workforce, most of whom were employed on political bases, they’ve resorted to selling these assets


  • antanu
    May 1, 2014 - 1:19PM

    then you don’t know anything about Roosevelt hotel…It is a historical hotel located in a prime area. There are accommodation in the hotel ranging from 159 dollars to 1100 dollars.just don’t try to demean it because you can’t tolerate a pakistani hotel in US.Recommend

  • Parvez
    May 1, 2014 - 1:56PM

    ……..and PIA will not be privatised…….it has made and is making many very rich.
    If is does get privatised it will make a handful very, very rich, but in the end the nation will be better off.


  • crazy
    May 1, 2014 - 3:57PM

    “pakistan on sale” now plz hold tight your briefs


  • Ali Pakistani
    May 1, 2014 - 4:26PM

    I wonder what gives PML-N the notion that they can sell Pakistan at its whims?
    PML-N should know that Pakistan is not their fiefdom.
    Mohammad Zubair can be taken to court for taking such dubious decisions.


  • Jonaid Iqbal
    May 1, 2014 - 5:41PM

    It would be bad policy to sell these valuable PIA assets, and the government should heed this friendly advice


  • ufaquarian
    May 1, 2014 - 5:52PM

    @av – $159 off season on the smallest room can be rented at a 5 star hotel. the competition is intense in a city which attracts so many tourists. the rooms for which they charge $1100 are the ones which bring in the big money. Also its a hotel you would not reserve through discount websites as the rates are still high for an average consumer.


  • Realist Mark 2
    May 1, 2014 - 6:37PM

    All those in favour of keeping this hotel need to start contributing money to the PIA bailout fund. I for one am not interested in paying for that.


  • av
    May 1, 2014 - 7:05PM

    As a resident Pakistani who has never visited the US I can only judge from afar based on the pictures of the hotel rooms and the prices that I see online. As far as I’m concerned it is not the government’s business to be running hotels in the US using tax payer’s money. If you and your buddies in the US are so eager to keep the hotel in Pakistani hands then please arrange the funds and buy it.

    It’s funny how all this patriotic pride for Pakistan never translates into actually living in Pakistan. It also never shows up as pride in the national dress. I bet you’ve never worn a shalwar kameez while in the US have you? You’d probably would feel ashamed wearing one.


  • MJ
    May 1, 2014 - 7:20PM

    I don’t know how the laptop warriors sitting behind their computers are coming up with these numbers but Roosevelt is an amazing hotel, just a few blocks from Times Square & Rockefeller Center and I have never seen regular rooms go for less than $350 during summer season. Most of the double occupancy rooms go for $430 plus. Yes the service can be improved and is not the same as before but the appointments are top notch. Coming from someone who has been visiting NYC frequently for the past 23 years.


  • romm
    May 1, 2014 - 8:01PM

    For heaven sake Don’t sell Roosevelt Hotel. It’s priceless asset.Recommend

  • longislander
    May 1, 2014 - 8:09PM

    why would they sell roosevelt hotel at such a low price. unbelieveable.


  • SA
    May 1, 2014 - 8:33PM

    You forget there are scavengers in power who will sell it to themselves at the lowest possible price. truly a sad state of affairs. pakistanis are the most corrupt people on this planet, whoever gets a chance will steal whatever he can. Zardari a son of a cenima owner is worth 5 billon dollars, Sharif’s and many others with modest backgrounds are now worth billions of dollars, surely they didn’t make that kind of money selling cinema tickets. LOL


  • Maulana Diesel
    May 1, 2014 - 8:34PM

    will the PM sell his own assets in dubai, saudia, usa and uk. I request him not to put Pakistan on sale.


  • Maulana Diesel
    May 1, 2014 - 8:36PM

    yes they are and please don’t advocate selling. these are the assets of 200 million people. don’t confuse things.


    May 1, 2014 - 8:49PM

    Mr. Sharif what a POLICY first sell and then BUY.

  • String theory.
    May 1, 2014 - 9:20PM

    Mr Sharif family is really doing all what they think we can do to accumulate money and win next election.


  • Waseem
    May 1, 2014 - 9:23PM

    It is so sad…. We r just doing every thing just for no reason or public are not familiar to this economics.


  • jamshed kharian-pak
    May 1, 2014 - 9:36PM

    Ir Pakistan’s assets must be protected by all means govts comes & go but Pakistan is here to stay in business ups & downs are normal so no panic! long live Ir Pakistan


  • lol
    May 1, 2014 - 11:12PM

    They’re selling our assets but don’t want bring their own money back, which by the way they looted & invested in other countries. Politicians make me sick at times with the way they manipulate & play with their own country!


  • Saif
    May 2, 2014 - 5:51AM

    If the only tool you have is hammer, everything looks like nail.
    How could high spending “royals” resist their urges to sale family silver to live a high life?
    Sale, sale and sale it is!


  • Ufaquarian
    May 2, 2014 - 7:58AM

    @av – stop generalizing , Pakistanis in US are equally as patriotic as Pakistanis in Pakistan. We wear shalwar kameez when we have to and don’t shy away from telling our nationality. If we were not concerned about Pakistan we would not be following news from Pakistan . We do out part in whatever means we have . It’s not like there are dollars on trees here not every Pakistani has lots of them to buy out the hotel


  • inflation
    May 2, 2014 - 9:19AM

    No one in Pakistan cares about a luxury hotel on the other side of the planet. <0.1% of the population can afford to stay in it. But everyone has to bear the burden of PIA’s debts because it is a public sector enterprise. Sell the hotel and pay off the debts so that the vast majority can save money. Otherwise please explain to the poor labourers how their purchasing power is being eroded through chronic inflation caused by rampant note printing by the government so that it can finance PIA’s debts.


  • ch asad
    May 2, 2014 - 2:29PM

    PIA should sell hotel immediately ,it would be very positive for country and airline


  • Shakil Khan
    May 3, 2014 - 5:59AM

    Question: is Roosevelt Hotel making loss? Answer is no! then why you selling it to cronies, PIA will be back to square one within weeks! every sham democratic government in the past always had wet dreams of selling this Hotel instead of fixing th PIA properly or even privatising it!

    Nishat Hotels will add another prestegious hotel to their St James collection after London and Lahore!


  • Shakil Khan
    May 3, 2014 - 6:04AM

    Selling assets and taking loans is the formula this government has for the economic recovery!
    Pathetically pushing Pakistan into more debt.


  • derby
    May 5, 2014 - 12:08PM

    I’m really not surprised, I’ve been to NYC once and it was so expensive, especially the hotels. We went out of our way to find something cheap like http://new-york.hotelscheap.org/ but it was again almost affordable. The accommodation prices in the bigger cities of the USA are ridiculous.


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