Kuwait's Cabinet Backs New Law to Privatise Airline
Kuwait's cabinet approved a plan for privatisation of Kuwait Airways within three years; after carrier restructuring delayed the original plans
April 23, 2012 9:05 by kippreport
Kuwait’s cabinet approved an amended draft law on Sunday, paving the way for the privatisation of Kuwait Airways within three years, state-run news agency KUNA reported, after a bout of restructuring at the troubled carrier delayed the original plan.
Kuwait’s parliament first approved a plan to privatise Kuwait Airways Corp. (KAC) in 2008, but the process has been repeatedly held up. The committee responsible for the privatisation last delayed the plan in October, saying the company would concentrate on restructuring first.
Under the new draft law, which still needs to be approved by the National Assembly, the government plans to offer a 35 percent stake in the airline to companies on the country’s stock exchange and to specialised local or international firms, KUNA said.
This auction should happen within the next three years, according to communications minister Salem al-Athaina.
The stake would go to the highest bidder and the shares would not be allowed to be traded for three years. The carrier will change its name to Kuwait Airways Company and be a shareholding firm “which would consequently own all assets and properties of KAC,” KUNA said.
The government will retain a 20 percent stake, as previously planned, while five percent will be distributed to KAC employees “equally and for free,” the agency said.
A further 40 percent will be allotted in the same way to citizens registered with the Public Authority for Civil Information, the Kuwaiti body that issues civil identity cards. They would not be allowed to trade the shares for one year.
The original plan had proposed selling a 40 percent stake to the public. It had also envisioned a price of around $282 million for the 35 percent stake offered to a long-term investor, seen by some analysts as too high.
(Reporting by Sylvia Westall; Editing by Andrew Osborn)