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CIRC to be launched next week

TAHIR DHINDSA

ISLAMABAD: Corporate Industrial Restructuring Corporation (CIRC) will be launched next week. This was stated by Finance Minister Shaukat Aziz on Tuesday after briefing Chief Executive General Pervez Musharraf about the a salient features of the body.

The body which has been formed with a base fund of about Rs 80 million, is headed by Tarique Hamid (of Packages) a Lahore based businessman, will provide support to those small and medium corporations, which have become insolvent due to lack of working capital and front loaded loan, and which can not support themselves internally.

The idea of creating CIRC was floated by the former Finance Minister Shahid Javed Burki, during the caretaker government of President Farooq Leghari. The corporation was named Resolution Trust Corporation (RTC) then, but it could not actually be formed after Sartaj Aziz opposed it on grounds of possible corruption during its operations. Due to his written comments on the file, Ishaq Dar also could not make it happen.

For the budgetory support of the corporation government is looking forward to float medium term bonds in the form of public debt.

The corporation will transfer private losses into public debt, which the government hopes to take care of once the industry is out of its present condition of near-insolvency, sources told Business Recorder.

CIRC will acquire sick units and evaluate their present worth with the help of private experts on its board. Once the prices of a sick unit is determined, the government will ask the bank to write-off the outstanding loan in the form of principle and mark-up which will be in excess to the said prices.

The banks will correct the balance sheets of such industrial units according to their newly evaluated worth. And, as a result adjust their own balance sheet as well by showing all such non-performing loans as written off loans.

The CIRC will find out the correct method of revival of the sick units after it is acquired by the government. The method could be their straight away sale, BMR (Balancing Modernisation and rehabilitation) and then sale or, BMR after the sale.

The chairman of the corporation would take any decision in this regard on an individual case basis.

The establishment of the corporation will be announced by its chairman designate, Tarique Hamid in a press conference . But before that, the government has to prepare the necessary legal infrastructure and same has to be made into a law through a presidential proclamation, which has not yet come.