960416

Emirates group

offers highest bid

for Pak-Saudi Fertilizer

RECORDER REPORT

ISLAMABAD: The auctioneer's gavel came down at Rs 109 per share (face value Rs 10) offer for Pak Saudi Fertilizer Limited (PSFL) when other bidders refrained from improving on the offer given by Messrs Emirates Investment Group of UAE in the bidding held at the Privatisation Commission on Tuesday afternoon. At this rate the exchequer would gain by Rs 5886 million.

As soon as the officials of the commission announced the closure of the auction round, the Employees Group of PSAL asserted their right to match the offer, but were told that their matching bid could not be entertained as this right had been withdrawn since they could not provide the commission with verifiable information about the source of their funds. The commission would now send its recommendation to the Cabinet Committee on Privatisation (CCOP) for its final approval.

According to the Pak Saudi Fertilizers Employees Union office bearers, they were verbally informed one hour before the bidding process scheduled for Tuesday noon, that the Commission had sent them a Fax communication that while their right to match the highest bid stood revoked, as they were providing a bid bond of Rs 36m (same as other bidders) they could participate in the auction. The office bearers reportedly replied that they had not received any communication as they were away from their office during the last eight days to generate funds for the buyout and the question about source of funds was irrelevant as in the pre-bid conference the Commission officials had confirmed that this was not a material factor and the invitation for bids document also explicitly said the same.

When the bidding commenced with chairman Naveed Qamar presiding, the CBA (union) of the Fertilizer Unit opened the bid with an offer of Rs 50 per share. As against 35 parties which had purchased the tender documents only six participated. With bids inching by a rupee upward the first to drop off was M/s Salsabil Group formed by Dewan Group the bidding when reached Rs 91 per share.

After a few more shouts, Engro Chemical Company Limited dropped out after offering Rs 105 per share. Dawood Hercules offered Rs 106 to be countered by Pak Saudi Employees Management Group with an offer of Rs 107 per share.

The employees' offer was improved up by M/s Hakas Group who are in road building activity, with an offer of Rs 108.50. Before the final gavel could be sounded Khalid Mumtaz and Tahir Hussain (Schon Group) countered with an offer of Rs 109 per share.

Chairman Naveed Qamar banged the gavel once and left the auction room and Shahid Salaam of the commission waited over 20 minutes for the bidders to improve on the offer. As soon as he called Rs 109 one, two and three - the Pak Saudi Employees Management Group offered to match the Emirates offer of Rs 109. After their matching offer was refused, the employees have sent the following to Naveed Qamar through their representative Mohammad Amin Soomro (President) and Muneer Ahmad Ramejo (General Secretary):

"We would like to bring to your notice the malicious act of high-handedness wherein today's bid instituted for the sale of the shares of Pak Saudi Fertilizer Limited, we were deprived of our right to match the highest bid. This has been the past practice and has been done in all the previous privatization cases and is legally covered under the rules by which Privatization Commission makes offer for sale of shares. We seek your assistance in rectifying this injustice done to us.

However, we would like to inform you that if no decision to taken immediately by the Privatization Commission, we will be constrained to seek the assistance of the higher courts of the country, so that justice is done.

We feel that there are certain vested interests due to which the erstwhile defaulter and the party which has pushed the other fertilizer company (Pak China Fertilizer) privatized earlier by your Commission to bankruptcy, resulting in unemployment of all the workers and officers. We do not see any justice, fair play or honesty in awarding this bid to a party who has demonstrated a track of bad faith in previous privatizations where they have also ruined other companies which they took over the National Fibres which is closed for quite some time now.

We urge you to take immediate steps to correct this situation or we will have no other choice but to knock at the doors of courts so that justice and fair play may prevail.

PSFL: Privatisation Commission (PC) had offered 80 percent shares of PSFL alongwith transfer of management control of the company which is one of the five urea manufacturing plants operating in the public sector, and a wholly-owned subsidiary of National Fertilizer Company (NFC).

M/s Emirates Investment Group offered Rs 109 per share for a total of 60,000,000 shares out of which 80 percent i.e., 48,000,000 shares were put on sale. Ten percent is reserved for the employees of the unit.

The employees are required to respond within 30 days. In case they fail to do so, the shares will be purchased by the highest bidder. The remaining 10 percent shares are for mutual funds.

PSFL plant is located at Mirpur Mathelo with an annual production capacity of 557,000 metric tonnes of urea. The project was completed with a total cost of Rs 2,080 million which include major financing from the Saudi Government. It started its commercial production in October, 1980.

The PSFL mainly comprises ammonia and urea plants. The daily production capacity of these plants is 1740 metric tons of urea and 100 metric tonnes of ammonia per day.

It has shown a good record of growth in its turnover which increased from Rs 1.35 billion (88-89) to Rs 2.00 billion (93-94). It is equipped with the facility of generating power for its own requirements. It has a total land area of about 566.17 acres and is at a distance of 104 km from Sukkur.

According to the sources, the successful bidder is required to deposit five percent within seven days after the receipt of letter of intent. Twenty one percent of the sale price shall be paid within 14 days and 14 percent of the sale price shall be deposited within a period of 16 days of the last payment. An irrevocable and unconditional bank guarantee for the balance 60 percent of the sale price plus the 16 percent mark up on the outstanding amount is also to be paid. Five percent discount is allowed on the total sale price to the bidders in case of the entire payment within 30 days of the acceptance of the LOI.

Golden handshake and voluntary separation scheme is applicable to the employees and the officers respectively, this liability will be borne by the buyer and Privatisation Commission.

Successful bidder will be required to list the company on the stock exchanges within three years.

The Chairman Privatisation Commission, Syed Naveed Qamar, Vice Chairman, Senator Ihsan-ul-Haq Piracha, Secretary, Abdullah Yusaf, and senior officials of the P.D. were also present in the bidding along with the members.