The State Assets Management Agency of the Republic of Uzbekistan (hereinafter – the UzSAMA/The Customer) announces the selection of a professional consulting company (hereinafter – Consultant) to develop a strategy for the privatization of the JSC “Uzbekistan airways” (hereinafter – Asset) in accordance with the relevant privatization programs.

All interested local and foreign applicants are invited to submit their commercial proposals based on this Request for Proposals (RfP) no later than 18:00 PM (Tashkent time) 17 September, 2022.

If a joint proposal is submitted, a key consultant must be named who is also responsible for coordinating the work of the consulting partner involved.

Interested Consultants are asked to deliver a commercial offer to the contact addresses listed below:

Shokhrukh Okhunov, Head of the department for ensuring the coordinated actions of the State Assets Management Agency of the Republic of Uzbekistan;

Tel.: +998-71-259-21-87; e-mail: tender@davaktiv.uz.

It is expected that the work on the Transaction will be carried out in close cooperation between the representatives of the Consultant, the Client and the Asset, if necessary, with a visit to the Asset and providing practical assistance to the Asset team in data collection.

Disclaimer

This request does not constitute a commitment to submit an offer, the Customer does not give any obligation to accept any offer or conclude any contract in accordance with this Request. Accordingly, this Request does not imply the conclusion of a contract by virtue of the publication of this Request and/or receipt of applications in connection with it, or through negotiations or discussions with one or more selection participants regarding the Project.

The materials and information contained in this document are intended to serve as a preliminary summary of only the most important aspects of the Project and a general indication of the scope of work that can be expected from the Consultant in developing the privatisation strategy.

Selectors cannot and should not rely on anything other than the sole limited purpose of preparing initial presentations and proposals for the Purchaser in connection with the selection process.

Request for Proposals (RfP) on the development of a strategy for the privatization of JSC “Uzbekistan airways” (RfP)

In order to implement the Development Strategy of New Uzbekistan 2022 - 2026 years, in particular, by ensuring competition in the economy, creating equal conditions for business entities, accelerating the full transition to market relations, increasing the competitiveness of the national economy, as well as increasing the volume of private investment, Presidential Decree No.PD-101 of April 8, 2022 provides (clause 10 c):

"c) within the period until September 1, 2022 to begin work on the auction of the state share of 51 percent or more in the authorized capital "Uzbekistan Airways" JSC, including through public offering (IPO) of shares";

In this connection, the State Assets Management Agency intends to attract, on the basis of a competitive procedure, a consultant to develop a strategy for the privatization of JSC "Uzbekistan airways" (hereinafter - the "Consultant").

Privatization of assets in the civil aviation sector of the Republic of Uzbekistan is aimed at achieving the following goals:

• developing competition in the sector and reducing state participation in it;
• increasing the efficiency of all factors of production, including material, human and financial resources;
• increasing the volume of private investment for the development of the sector.

Briefly about the asset

Uzbekistan Airways JSC provides air transport services for passengers, baggage, cargo of any type and post, in accordance with the provisions of international regulations and the Aviation Regulations of the Republic of Uzbekistan.

The Company as the legal successor is the owner of the exclusive right to the trademark and service mark of the National Airline of the Republic of Uzbekistan "Uzbekistan Airways".

Uzbekistan Airways JSC operates scheduled flights to more than 50 destinations, including European, Asian and North American countries. The airline has representative offices in over 20 cities worldwide.

In addition to the main activity of the Company, the Uzbekistan airways JSC includes UZBEKISTAN AIRWAYS TECHNICS LLC (aircraft maintenance), UZBEKISTAN HELICOPTERS LLC (special aviation), O'QUV-MASHGULOT MARKAZI LLC (educational activity) and KETRING LLC (in-flight catering).

At the end of 2021, the Company generated net income of UZS 6.3 trillion and net profit of UZS 53.7 billion, and a charter capital of UZS 4.2 trillion.

The company's head office is located in Tashkent, Mirabad district, A.Temur street.

Scope of Consultant's Services:

The scope of Consultant's services under this Project will be divided into 2 phases:

Step 1: Analysis of the civil aviation sector of the Republic of Uzbekistan, the region and the world, including but not limited to:

1. Perform an analysis of the civil aviation market of the Republic of Uzbekistan and air transport in the countries of the region, including:

1.1 Overview and characteristics of air transport markets in the countries of the region (CIS countries, Eastern Europe, Central Asia, South Asia, Middle East, China, etc.), the experience of individual countries in the region in the implementation of transport policy in the field of civil aviation.

1.2 Analysis of the market of passenger and cargo air transportation of Uzbekistan by air carriers and prospects for its development, analysis and synthesis of the available forecasts of passenger and cargo transportation for Uzbekistan and the region (CIS countries, Eastern Europe, Central Asia, South Asia, Middle East, China, etc.) as a whole.

2. To review the current regulatory framework of the Republic of Uzbekistan regulating the activities of enterprises in the civil aviation sector with a focus on licensing mechanisms, as well as issues of regulating access to the air transport market and recommendations to improve the regulatory framework for further development of competition in this sector.

3. Analysis of bilateral and multilateral (if any) interstate and intergovernmental agreements on air communication concluded between Uzbekistan and other countries, assessment of observed trends in the liberalization of air transport markets in the world, European and Asian countries, including the Central Asian region.

4. Review measures to reform the sector, measures already announced by government agencies to reform the civil aviation sector and develop civil aviation infrastructure; their potential impact on the development of competition in the sector and the processes of privatization of assets.

5. Conduct a review of international practice and applied in different countries (at least three) countries) models of market regulation in the field of civil aviation.

6. Analysis of examples of successful privatization of similar companies in the world with an indication of the main parameters of privatization (tasks of privatization, characteristics of objects to be privatized, privatization method, overview of investors involved, conditions of transactions, investment obligations, government support measures and other applicable aspects of privatization to be taken into account for the privatization in Uzbekistan) and the results obtained.

7. Based on the entire analysis, propose recommendations for transport policy in the civil aviation sector of Uzbekistan. Recommendations should be aimed at developing a reliable and competitive sector in civil aviation, capable of providing services at affordable prices. and improving the regulatory framework for the development of competition in this sector.

As part of Stage 1, a Working Group will be created, including representatives of relevant ministries and agencies, as well as leading actors in civil aviation. The main task of the Working Group will be to provide the Consultant with the necessary information about the current state of the industry and to discuss with the Consultant the hypotheses and conclusions obtained.

Based on the results of Stage 1, the Consultant shall submit an analytical report, including analysis and recommendations in accordance with items. 1-7. The report shall be prepared in Russian and English in PDF format (MS Word format obligatory, and where applicable, MS Excel, PowerPoint).

Stage 2: Development of a strategy for the privatization of  "Uzbekistan airways" JSC:

The consultant will proceed to Phase 2 after the Client approves the Phase 1 report

The Customer reserves the right to adjust the scope of work within the framework of Stage 2 (including downwards) depending on the results of Stage 1. However, changes in the scope of work and the Consultant's fee may not be increased without the conclusion of an additional annex to the Contract between the Client and the Consultant.

The scope of work for Phase 2 will include:

1. Pre-investment diagnostics of Uzbekistan airways JSC, including:

1. Analysis of the organizational structure of the company and its constituent structural enterprises;
2. analysis of financial position and financial results for the last 3 years both at the consolidation level and in the context of subsidiaries and/or business segments (based on management accounting data, UAS and/or IFRS);
3. Analysis of key performance indicators and their comparison with the indicators of similar companies in other countries (including the type and number of aircraft, passenger turnover, number of services, the extent of the route network);
4. Analysis of the availability of the company's competitive position in certain segments of the airline market in the region;
5. Upper-level analysis of the company's compliance with the requirements of international stock exchanges and capital markets;
6. Analysis of the company's current operating model and identification of constraints that negatively affect the company's development (the analysis should include a review of route network planning processes; fleet planning and implementation of that plan; revenue management; management of individual sales channels and their effectiveness; flight crew management; aircraft maintenance process management, etc.).

2. Based on the results of the analysis of Item 1 and Stage 1, the Consultant shall:

Provide recommendations regarding the sale of the state share of "Uzbekistan airways" JSC. The Consultant's opinion should include an analysis of the feasibility of selling the share at the consolidated level, with recommendation of optimal sale share and possible indicative cost of sale.

3. In the event that the Consultant concludes that the sale of the state share of "Uzbekistan airways" JSC at the consolidated level is inadvisable, the Consultant shall provide recommendations for further sale of state share at individual asset level. In this case, all subsidiaries shall be segmented into three groups:

• Enterprises that are already ready for privatization (Group "1);
• Enterprises that are to undergo pre-sale preparation (Group "2);
• Enterprises, the privatization of which seems inexpedient (Group "3").

4. For each of the Group 1 entities, the Consultant shall prepare a Privatization Roadmap reflecting the following issues:

1. Rationale for the feasibility of the sale and a proposal for the optimum percentage of the sale;
2. Analysis of indicative value;
3. Recommendations on the best way to sell the assets (IPO or sale to a strategic investor);
4. Recommendations on further organization of the process and possible terms of sale.

In the event that the Consultant will recommend the sale by IPO, the Consultant's opinion should include:

• Clear and definitive recommendations on the size of each company's stake for the IPO sale and the stock exchange (platform) for the IPO;
• Recommendations for determining the size of the potential premium/discount on the selling price when the company is placed in a competitive environment, taking into account a comparative analysis of the value of the company and the value of comparable public companies;
• Review potential market demand for IPOs by analyzing recent offerings of comparable companies.

5. For each of the Group 2 entities, the Consultant should create a Privatization Roadmap reflecting the following issues:

1. A justification for the conclusion that the asset is not currently ready for sale, including an analysis of the financial condition of the enterprise, the presence of tax, legal and environmental risks;
2. Recommendations on possible changes to the legal framework that would allow the asset to be privatized (if necessary)
3. Recommendations on non-core assets that can be sold separately from the main asset;

6. For each of the above options for the implementation of the state share, the Consultant estimates the effect of privatization on the country's economy in the form of an indicative amount of cash receipts;

7. For Group 3, the Consultant should provide an analysis of the reasons that indicate the inexpediency of selling the enterprises in the medium/long term, as well as a calculation of the economic effect of keeping the asset in state ownership.

The results of Phase 2 are:

• Pre-investment diagnostics of "Uzbekistan airways" JSC with an analysis of the feasibility of privatization of the state share at the consolidated or asset level.
• Roadmaps for the sale of the state share at the consolidated or asset level.

All documents must be provided in Russian and English in PDF format.

This terms of reference does not include the implementation/implementation phase of the recommendations proposed in Phase 1 and Phase 2.

Requirements for a Consultants:

1. The consultant must demonstrate sufficient experience in implementing consulting services for the civil aviation sector, primarily for airlines, and present the key team members assigned to perform the tasks described. The team must include at least 1 person meeting at least one of the following conditions:

• personal participation as a decision maker, consultant or member of the bodies of an aviation company that has undergone an in-depth restructuring process in preparation for privatization or in a protection proceeding from creditors;
• A civil aviation professional/consultant with experience in advising airlines, and/or actively publishing on current issues and prospects for the development of the industry.

2. The consultant should demonstrate sufficient experience in supporting transactions in the CIS privatization processes.
3. The consultant should demonstrate sufficient experience in the capital market and sufficient knowledge of the rules and practices related to public offerings.
4. The consultant must ensure that it has sufficient material and human resources to complete the task in a timely manner.
5. For member companies of an international network, it is permissible to specify the experience of several legal entities affiliated affiliated with the Consultant through membership in a single international network.

The Consultant shall be entitled to subcontract The Consultant has the right to engage a subcontractor to perform as specified in the Terms of Reference, however, the Consultant shall be responsible for the subcontractor's work.

The consultant may further be engaged as a consultant for the privatization of this asset in accordance with the decision of the authorized body.