AIRLINES PNG looks set to become 41 per cent government-owned as the result of a shareholder shake-up following the death of company founder and majority stakeholder Sir John Wild.

The State-owned Mineral Resources Development Company (MRDC) and the private National Superannuation Fund (NASFUND) will each buy up K10 million of new shares in the company, leaving them with a combined interest of 81%.

Sir John, who died in October after a long illness, had agreed to the company buying back a majority of his personal stake in the group, equal to 54% stake of its total issued capital.

His estate’s total interest in the company will fall from 60.87% to about 5.2%, while MRDC’s stake will rise from 11% to 41.1% and NASFUND’s would increase from 9.4% to about 40%.

“After the [buy-back] and the [share issues] are completed, the company would be 81% owned by two of PNG’s major institutions,” an Airlines PNG statement said.

“The capital raised from the share issues will provide the company with needed working capital as it continues to provide safe, high quality and competitive regular air services to the people of PNG.”

In a letter to shareholders, Sir John’s son and Airlines PNG chairman Simon Wild said his father allowed the company to buy back his shares “essentially for nothing”.

“My father viewed Airlines PNG as the family’s legacy to Papua New Guinea, and as he said at the time of the announcement of the buy-back, ‘In order to ensure the long term sustainability of Airlines PNG and facilitate further capital raising by the company I am happy to gift a significant portion of my shares back to the airline.

“‘This fulfils a dream of mine to see the airline majority owned for the people of PNG and strongly positioned to carry on its services to the country’.”

Mr Wild said all regulatory approvals for the share buy-back and option issues had been obtained.

“That leaves the final decision on the buy-back and share and option issues to the company’s shareholders,” Mr Wild said.

A shareholder meeting will be held in Port Moresby on 18 December where shareholders will be asked to consider the proposal.

Other Airlines PNG shareholders will be able to participate in the deal through an entitlements offer, to be made on terms to those agreed on for MRDC and NASFUND.

“Capital raised from the entitlement offer will be used for reduction of debts of the company to existing lenders,” the company said.

Mr Wild also announced that the company would acquire six new ATR 72-600 aircraft over the next three years.

“ATRs will decrease ongoing maintenance costs, fly more and improve on-time performance – at similar per sector operating costs and much lower per seat operating costs than the airline’s existing Dash 8 fleet,” Mr Wild said.

“They also lower the age of the airline’s fleet. The airline’s future profitability is very much tied to these aircraft”

Airlines PNG will rent the new planes from a leasing company which will make the actual purchase.

“Recapitalisation of the company through the share issues to NASFUND and MRDC, re-fleeting with ATRs and rebranding the airline are all part of the board and management’s strategic plan for the airline, under which the airline continues to play an integral part in PNG aviation and linking many of the rural and regional centres to provincial and national capitals,” Mr Wild said.