* Sri Lanka aims to sell 49 pct stake in loss-making airline
* Buyer would have management control
* Sources say government indicated it would take big chunk
* Half dozen firms show preliminary interest - sources
(Adds comments from SriLankan Airlines CEO, names of advisors)
By Anshuman Daga and Shihar Aneez
SINGAPORE/COLOMBO, Oct 5 Private equity firm TPG
and fund company BlackRock Inc are among half a dozen
firms which have shown preliminary interest in a 49 percent
stake in loss-making SriLankan Airlines Ltd, people familiar
with the matter said.
They said Sri Lanka is looking to sell the stake in the
national carrier along with management control.
The restructuring is part of a broader move by the
government to reduce support for state-owned firms and cut debt.
In July, a unit of state-run National Savings Bank, the lead
manager overseeing SriLankan Airlines' revamp, invited offers
from strategic investors who would assume responsibility for
turning around the airline and its budget subsidiary Mihin
A senior Sri Lankan finance ministry official said TPG and
BlackRock were the two top international firms among the
bidders. He declined to be identified as the bids are still
"The government is looking at someone to solve the airline's
struggles," said another source familiar with the matter, who
declined to be identified as they were not authorised to speak
to the media.
BlackRock and TPG declined to comment. It was not
immediately clear who the other bidders were.
BNP Paribas and KPMG are the financial and transaction
advisors on the airline's restructuring.
SriLankan Airlines was a profitable 10-year joint venture
with Emirates Airline until the pair split in 2008.
Subsequent mismanagement left the airline saddled with debt
of around $3.25 billion, according to Prime Minister Ranil
"The expectation from the partner is capital. If you keep
the debt out, it will have a positive valuation," Suren
Ratwatte, CEO of SriLankan Airlines told Reuters on Wednesday.
He declined to go into details.
According to the sources, the government has indicated it
would take on a substantial portion of the debt.
They said the government is expected to draw a shortlist and
pick a final bidder in the next couple of months. It was
premature to estimate the potential value of any deal, they
SriLankan Airlines has attractive routes to India and
analysts have said potential investors could be drawn to the
prospect of turning around the carrier, which has about 21
leased Airbus planes.
Srilankan Airlines reported a net loss of 16.33 billion
rupees ($112 million) for the year to March 31, narrower than
its 31.4 billion rupees a loss year earlier on lower oil prices.
It last made a profit in 2009, a year after Emirates sold its
Ratwatte said the partner will have to decide on any lay
offs among the 7,000-strong staff.
($1 = 146.1800 Sri Lankan rupees)
(Reporting by Anshuman Daga and Shihar Aneez; Additional
reporting by Trevor Hunnicutt in NEW YORK; Editing by Edwina
Gibbs and Simon Cameron-Moore)