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Dr. Abdul Hafeez Shaikh Federal Minister for Privatisation and Investment
has said that all stakeholders were working together for satisfactory closure
of Pakistan Steel Mills Corporation (PSMC) transaction by January 31, 2006,
which was very important transaction for the Government and the Privatisation
Commission. The Minister was addressing a pre-bid conference being held here
today for clear understanding of the PSMC transaction and the bidding process
and to respond to the queries of the bidders.
Dr. Hafeez Shaikh expressed his appreciation over the cooperation extended by
Ministry of Industries, Production & Special Initiatives and the management of
PSMC for bringing the transaction closer to the bidding, which he termed was
very near and directed that all the stakeholders to respond to the questions
of the participating potential bidders with clarity in order to resolve the
issues, if any remaining before the final bidding.
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.
Five (5) pre-qualified parties, which participated in the pre-bid conference,
included 1. Al-Tuwairqi Group of Companies, Kingdom of Saudi Arabia with Arif
Habib Group of Companies, Pakistan. 2. Government of Ras Al Khaimah (UAE), 3.
International Industries Ltd (Pakistan) and Industrial Union of Donbass
(Ukraine), 4. Magnitogorsk Iron & Steel Works Open JSC, Russia and 5. Noor
Financial Investment Company, Kuwait.
The bidders were informed that they have to deposit US $ 30 million four days
prior to the bidding date for becoming eligible to participate in the bidding
process, which 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 % 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 assured that the core land would be transferred to the
successful bidder and that the GoP would fund any privatisation package offer
to the employees.
It was also clarified that 75% shares offer of PSMC were entirely a strategic
stake. Mr. M. Tahsin Khan Iqbal Secretary Privatisation Commission said on
this occasion that all the potential bidders would be given equal and level
playing field, however, if any bidder intended to make full upfront payment it
would be acceptable to the government. The government was determined to get
out of doing the businesses
Mr. Tahsin Khan Iqbal directed the Financial Advisors to prepare the bid
documents and Pakistan Steel management to amend the Article of Association in
the light of today's discussions and the 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 Privatisation Commission has offered to qualify strategic Investors
interested for acquiring 75% equity stake in Pakistan Steel Mills Corporation
(Pvt) Ltd. ("PSMC" 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 PC on the sale.
PSMC is the country's largest and only integrated steel manufacturing plant,
with an annual designed production capacity of 1.1 million tonnes. It was
incorporated as a private limited company in 1968 and commenced full-scale
commercial operations in 1984. 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 165 MW of own
power generation units, supported by various other ancillary units. It is
located 40 km south east of the coastal city of Karachi, in close proximity to
Port Bin Qasim, with access to a dedicated jetty, which facilitates import of
raw materials, PSMC manufactures a wide mix of products, which includes both
flat and long products, PSMC effectively enjoys a captive domestic market due
to the prevalent demand-supply imbalance in the country's steel industry,
where demand has historically exceeded local supply.
The Secretary Ministry of Industries, Production & Special Initiatives, the
Chairman PSMC, senior officials of the respective departments and the
representatives of the Financial Advisors were present during the meeting.