960413

Govt plan to raise $200m loan

on PTC receivables security

RECORDER REPORT

ISLAMABAD: The Federal Government is contemplating raising $200 million by way of securitisation of future foreign currency receivables of Pakistan Telecommunication Corporation (PTC).

The PTC Board, it is learnt, is meeting to hear a presentation of the proposal from Citibank on Sunday, for which experts have flown in from abroad.

Even though the government is hard pressed to boost its foreign currency reserves through long-term loans of over 36 months tenure, the moot point in the proposal is:

"(a) How would this affect from the privatisation of PTC presently underway; (b) Whether this would enhance or diminish the value of PTC share for the strategic investor seeking management stake in the Pak Telecom giant; and (c) Can a structure be put in place in the next 10 weeks to implement the scheme to obtain $200 million when the State Bank has to meet the performance criteria of the International Monetary Fund?

The proposal envisages undertaking a due diligence exercise of PTC shares by an international credit rating agency such as Moodys or Standards & Poors and creation of a company abroad to act as a conduit for receipts of PTCs offshore receivables.

It is said that the incoming calls from overseas far outnumber the outgoing calls; and as such the net inflow of receivables is around $400 million per year.

After credit rating of PTC as an investment grade, the government can discount the future receivables by obtaining $200 million in forex funds by deadline of end June, 1996 for a tenure of five to seven years and pay off gradually on a rate to be determined on the basis of the strength of PTC's balance-sheet, taking into account the ageing of various loans and write-offs of the telecom giant, instead of lenders taking a position on the country's (Pakistan) fiscal, monetary and political situation.

It is said that a similar exercise was undertaken in two other Latin American countries in the pre-privatisation phase of their telecom networks.

Citibank is regarded as a leader in the global securitisation field with 56 percent of the market share, followed by Morgan Stanley at 14 percent.