Royal Jordanian to Go IPO, Prior to Privatization
As part of a plan for the privatization of Royal Jordanian (RJ), the airline will be transformed into a public shareholding company fully owned and operated by the Jordanian government, reported Jordan Times.
An unnamed source at the airline told the daily that the resulting company, which is to be formally registered with the Ministry of Trade and Industry next week, will have initial paid-up capital of JD40 million.
Once this step has been taken, the company's privatization unit will look for a strategic partner to acquire a 40 percent share of the company, according to the report.
The paper added that preliminary negotiations are underway between RJ and British Airways and the US-based Continental Airlines which are each bidding for the 40 percent equity in the partnership, but no deal is expected before a full assessment of RJ's financial assets has been completed.
The source told Jordan Times that the preliminary negotiations only focus on technical matters like the company's future operational policies among other points, “but these negotiations have not yet been completed.”
The source did not rule out the possibility of other world airlines in Europe, America and Asia submitting bids for the strategic partnership deal once the last stage of studies on the privatization process has been completed and RJ's assets are fully assessed.
In a Letter of Intent of the government of Jordan to International Monetary Fund (IMF) last July, the government described the policies that Jordan intends to implement in the context of its request for financial support from the IMF. The document, published on IMF’s website, said that “Concerning RJ, we hope to complete the sale of its duty free subsidiary by end-July, of the flight training subsidiary by end-September, and of its catering, engine overhaul, and aircraft maintenance subsidiaries, as well as of various shareholdings by the end of the year. Proceeds from these sales will go to retire RJ's domestic debt. RJ flight operations were profitable in 1999, and we are continuing to improve its route structure and financial structure so as to increase future profitability. We are actively marketing the airline to potential strategic partners, but if no attractive partner can be found we will pursue the option of offering shares to a consortium of financial investors and airline management consultants. In the near future we expect parliament to revoke Decree Number 10 of 1969 (which chartered RJ as a public entity), so that RJ can be formally corporatized prior to privatization.” – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)