PNG Air not performing: Fund
THE National Superannuation Fund Ltd (Nasfund) has described PNG Air as a non-performing, illiquid and non-yielding investment for the fund.
Nasfund holds 39.29 per cent of the total shares on issue and is the largest institutional investor in the airline.
On May 27, Link PNG made known its intention to buy Nasfund’s shareholding in PNG Air.
The company statement said: “Nasfund’s total investment in PNG Air is K76 million, compromising K31 million in equity and K45 million as a loan provided to PNG Air as part of a rescue package given between 2016 and 2017 by the major shareholders.
“Nasfund has not received a single dividend payment from the company since its initial investment in 2008, while its share price from the initial float of K1 per share has declined to K0.12 toea per share before PNG Air’s suspension from trading on the PNG Stock Exchange.
“PNG Air is a non-performing, illiquid and non-yielding investment for Nasfund.”
Nasfund’s board has accepted in principle Link PNG’s offer.
Chief executive Ian Tarutia said: “We view the proposal as a win-win for all parties involved.
“Firstly, Nasfund protects the investment value of its members.
“Secondly, no PNG Air citizen staff will lose their jobs.
“Finally, it is in the country’s interest to have one strong airline providing efficient and cost-effective air services for our people rather than two under-performing carriers.
“PNG Air has better change of survival if it partners with Link PNG under a more efficient operating model.”
Tarutia said the proposal deal would bring much-needed stability to the domestic airline industry, protect jobs and ensure the continuance of reliable, safe and affordable air services in the country.
“The completion of the transaction is conditional upon a number of procedural and regulatory approval including ICCC (Independent Consumer and Competition Commission) clearance.
“This is work in progress. The public and more importantly Nasfund members will be kept informed.”
7 comments
Nasfund CEO today revealed its bad investment K76 million to PNG Air Ltd comprising K31 million in shares and K45 million as debenture (loan) to the air line company. If the Nasfiund CEO says that its total investment is non-performing or iliquid and not yielding income for the fund, what component of investment asset as he referring to? Is he talking to equity component or debenture component? If its to equity investment, then that’s that’s fine because it depends on the company’s performance. But if PNG Air Ltd has defaulted in repaying its debenture (loan) investment with interest and charges, why not take PNG Air Ltd to the Court for liquidation proceeding to head on. For the interest every Nasfund member, Nasfund CEO and its Board should not strike a deal to to sell of its stake to another nonperforming airline company identified as PNG Link Ltd, a subsidiary of Air Niugini Ltd. If Air Niugini Ltd has recently asked the Government for K300 million recovery package, how will Nasfund yield dividend and income from Air Nigini Ltd which has never paid any good returns to the State for many many years.
Good point.
Sell the shares and get the money back to invest elsewhere to make money. Since 2008 not paying any divident on investment is just hopeless. There should be major shake up at the board and management level and bring in good people to make the airline profitable. Is the loan component being repaid already or still paying or not paid at all..??
The airline needs brilliant minds to overhaul it and make it profitable.
Introduce VIP lounge, VIP membership etc…..ANG is subsidised by the govt with peoples 300m, thanks nasfund for your support of 70m, get your new board in and new ideas and revive for the betterment of our people
Non performing share since 2008??? Share price fallen a 90%, yet loaned a whopping K45mil.
Absolute disgrace!!! Do you even care???
All the decision makers should be penalised and held responsible. Look at their personal assets, sure you will see the difference. This is a private super fund, sure employees would have sweat for every penny.
MAKE THE RESPONSIBLE ANSWERABLE.
Market in PNG is very volatile or is taken up by it’s competitor. The Airline company’s priority is SAFETY… If PNG Air has been marketed wrongly at first, in performance, accident records, and employee attitude, what kind of sane people would want to make their number one choice of flight as PNG Air Ltd…. How much effort in employee performance, how much effort have the Air Line in totality have they convinced the travelling public? NIL… I am not convinced, first with the attitude of the employees, they have NOT marketed their company well. How can I risk my life and fly in an un-trusted Airline? Life is not for gamble…. We live once and to choose an Airline that has safety issues compromised, I can’t even think about flying with this….
Therefore, smart brains who wants to resuscitate a person in comma, the person must first think SAFETY and convince Papua New Guinea that it is SAFE to travel followed by the attitude of all it’s employees….and robust marketing…. Otherwise, declare insolvent and take it for liquidation…
Thank you CEO Tarutia, for coming out with some honest statements. The Truth always comes out one way or another. We have all known that since the bell rang to subscribe the company on public share listing in FY 2008, no dividend has been paid. Two things are wrong here for the company (PNG Air). They have huge overhead expenses exacerbated by foreign employees who should have been replaced long ago with national employees. Secondly, smart marketing which is sorely missing is an avenue which can bring in millions of kina annually. Also why has the Government not been too keen on having PNG Air Limited, go into partnership with some well known regional airlines within the Asia Pacific sphere. Couple of years back the Government declares a free sky policy for other players in the industry to come in but has largely protected by a huge and contradictory decision to cushion Air Niugini. These same policy has badly impacted PNG Air to a heavy degree thus making the Airline company non-profitable. If the Government is truly interested in developing our air travel industry, then let PNG Air go into partnership with some other world renown regional players who have the financial resource and power to bring in much need injection of foreign capital this country needs. Enough of protecting the Air Niugini.
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