on the newspaper dated 19 feb 07
Govt stake to go up to 80pc
Oman Aviation to conduct EGM to raise capital
By Our Business Reporter
MUSCAT — Oman Aviation Services, which operates national carrier Oman Air, is planning to raise its paid up capital to RO 50 million from RO 13.28 million by privately placing shares in favour of the government. After the private placement, the government’s stake in the airline will go up to 80 per cent from 34 per cent now. The company, which will place 36.72 million shares in favour of the government at a price of RO 1.546, is conducting an extraordinary general meeting on February 28 at 5 pm at the Crowne Plaza Hotel to seek approval from shareholders for enhancing capital.
“The EGM shall discuss, among other agenda items, the proposal for increasing the company’s share capital from RO 13,282,500 to RO 50,000,000 by private placement of the increased shares to the government, and amendment of the Articles of Association accordingly. The government shall disburse the full amount in cash and thus, be possessing more than 80 per cent stake. The issue price of the company share shall be RO 1.546 and the additionally placed shares shall be 36,717,500,” explained Ziad Karim al Haremi, CEO of OAS.
“The company is planning to operate long-haul routes which necessitate the purchase of wide-bodied aircraft, together with connected logistic support, to facilitate Oman Air to perform efficiently, taking into consideration that the average price of such aircraft amounts to $90 million, he said. “With the government policy towards endorsing tourism, it has appreciatively expressed eagerness to fully support the company so as to implement its future operational plans. Consequently, the board of directors was convinced that the government is the most apposite partner to augment the company’s share capital,” he added.
Al Haremi also said that the move would positively reflected in the company’s ability to grow, expand, and meet up the mounting competition from the regional carriers. Several financial institutions, including local and international banks, have suggested for raising the company’s capital to fund aircraft acquisition by way of outright purchase or on long lease.
“By raising the capital, we will continue to be in a firm position to achieve our anticipated goals and objectives — that is presenting Oman Air as an international carrier, but the restraint of capital has been always a real challenge obstructing our capacity to grow and expand through a well planned commercial strategy,” he added. “That the increase of the capital to RO 50 million by issue of new shares came after conducting lengthy and comprehensive studies based on sterilised economic perspectives, thus reflecting our actual cost of operations, which records RO 100 million,” noted Al Haremi.
“Our future strategies focus on precautious economically planned growth, which shall contribute positively towards the support of the national economy in general, and the promotion of tourism in particular. The company shall focus on plans to achieve more profits to the shareholders and increase the number of professions to Omani youth.
By the government possessing the additional shares, the company shall be in a position to boost up its existing fleet. Moreover, the wide-bodied aircraft shall facilitate the capacity increase on our present routes whenever required. In general, our initial strategic plan requires the establishment of an extended route network,” he added.