Vietnam's Pacific Air to sell 30% to temasek
HANOI - Vietnam's Pacific Airlines will sell a 30% stake to Temasek Holdings Pte., Singapore's state-owned investment company, in the second half of this year, company Director Luong Hoai Nam told Dow Jones Newswires Monday.Pacific Airlines is Vietnam's second-biggest carrier after Vietnam Airlines .
"We have agreed to sell the stake to Temasek; the Ministry of Finance is working on the details of the deal," Nam said.
Temasak officials were not immediately available for comment on the investment.
A Ministry of Finance official said Pacific Airlines is now valued at $167 million, and Temasek will invest $50 million to acquire the 30% stake.
With the cash injection from Temasek, Pacific Airlines, which has accumulated debts of VND215 billion ($14 million) after more than 10 years in operation, will be able to pay off its debts and prepare for new developments, he said.
To support Pacific Airlines, Vietnam won't open its civil aviation market to foreign carriers for at least the next three years, meaning the country will have only three airlines - Vietnam Airlines, Pacific Airlines and Vasco, Nam said.
"In the long term, we will begin to open up the airline market by selling further stakes in the country's airlines to foreign investors, or by allowing new companies to be established," he said.
Currently Vietnam investment laws allow state-owned firms to sell a maximum stake of 30% to foreign investors, but this cap is expected to be removed next year if Vietnam becomes a member of the World Trade Organization, he noted.
Vietnam, which is under pressure from WTO members to open it's market to foreign investment, hopes to join the trade body by the end of this year.
Pacific Airlines' has seven shareholders, all of which are state-owned companies - Air Import-Export Co., Saigon Tourism Co., Southern Airport Services Co., Trading & Transport Investment Co., Vietnam Airlines, Vietnam Air Petro Co. and Vietnam Air Services Co.
Dow Jones - June 06, 2005.
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