Parties asked to deposit $30m bid money: Pakistan Steel privatization by 31st
By Ihtasham ul Haque
ISLAMABAD, Jan 16: A pre-bid conference for the privatization of Pakistan Steel Mills Corporation (PSMC) was held here on Monday.
The five pre-qualified bidders, who attended the conference, were informed that they would have to deposit $30 million four days before the bidding to become eligible to participate in the process.
However, the Employment Management Group (EMG) of Pakistan Steel was not invited in the pre-bid conference. “The EMG has failed to fulfil the required criteria to participate in the bidding process,” an official said.
However, according to the minutes of a meeting held on January 5 between the EMG and officials of the Privatization Commission as well as management of the mills, and made available to Dawn, the representatives of the EMG were assured that they would be given a written response for helping them take part in the privatization process.
During the Monday’s meeting, the bidders were assured that the whole process of the mills’ privatization would be completed by January 31, 2006 and that there would be no delay in it.
The bidding process would comprise of two rounds. In the first round, sealed bids will be dropped in the transparent bid box, which will be opened and read over by the representatives of print and electronic media, while in the second open bid round, the three highest bidders will be asked to compete.
The successful bidder will be required to deposit 25 per cent of the bid price within 20 days after the issuance of letter of acceptance (LoA). For the remaining amount 60 days will be given from the date of issuance of LoA.
The bidders were also assured that the core land would be transferred to the successful bidder and that the GoP would fund any privatization package offer to the employees. It was also clarified that 75 per cent shares offer of Pakistan Steel were entirely a strategic stake.
M. Tahsin Khan Iqbal, Secretary of the Privatization Commission, said on this occasion that all the potential bidders would be given an equal and level-playing field. However, if any bidder intends to make full upfront payment it will be acceptable to the government.
Mr Iqbal asked the financial advisers to prepare the bid documents and Pakistan Steel management to amend the article of association in the light of discussions and observations conveyed by the bidders after completing the due diligence of the transaction, which should be made available to all concerned by the next week.
The Privatization Commission has offered to qualified strategic investors interested for acquiring 75 per cent equity stake in Pakistan Steel Mills Corporation (Pvt) Ltd, or the company, together with management control on an “as is, where is” basis. A consortium led by Citigroup Global Markets Limited is advising the Privatization Commission on the sale.
Dr Abdul Hafeez Shaikh, Minister for Privatization and Investment, said on the occasion that all stakeholders were working together for satisfactory closure of Pakistan Steel transaction by January 31, 2006, which was very important transaction for the government.
The pre-qualified parties have completed the due diligence of the transaction through plant visits, physical and virtual data room. They have also conveyed their comments on bidding documents.
The five pre-qualified parties, which participated in the pre-bid conference, included: Al-Tuwairqi Group of Companies, Saudi Arabia, with Arif Habib Group of Companies, Pakistan; Government of Ras Al Khaimah (UAE); International Industries Ltd (Pakistan) and Industrial Union of Donbass (Ukraine); Magnitogorsk Iron & Steel Works Open JSC, Russia; and Noor Financial Investment Company, Kuwait.
Pakistan Steel is the country’s largest and only integrated steel manufacturing plant, with an annual designed production capacity of 1.1 million tons. It was incorporated as a private limited company in 1968 and commenced full-scale commercial operations in 1984. The PSMC complex includes coke oven batteries, a sintering plant, blast furnaces, steel converters, bloom and slab casters, billet mill, hot and cold rolling mills, galvanizing unit and 165mw of own power generation units, supported by various other ancillary units.
PSMC manufactures a wide mix of products, which includes both flat and long products.
http://www.dawn.com/2006/01/17/ebr2.htm