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AZGARD-9 & Jahangir Siddiqui Capital Market Ltd Consortium has today
deposited with the Privatisation Commission the remaining bid amount of
Rs.11.732 billion with Rs.153.975 million as markup for the extended time
period from June 2,2006 to July 15, 2006 at the rate of 11.14 % per annum –
(KIBOR+2.75%) for the privatisation of Pakistan’s first fertilizer
manufacturing concern Pak American Fertilizers Limited (PAFL) established in
1959.
A Share Purchase Agreement (SPA) handing over ceremony was held here today in
the presence of Mr. Zahid Hamid Federal Minister for Privatisation &
Investment and Mr. Ali Siddiqui Chairman and Mr. Ahmed Sheikh CEO AZGARD-9
authorized representatives of AZGARD-9.
Addressing the participants of the ceremony Mr. Zahid Hamid said that the
successful privatisation of PAFL was a reflection of the government’s
continued commitment to the privatisation policy, process and program, the
importance and benefits of which have been highlighted recently by President
Pervez Musharraf. Privatisation was a cornerstone of the government’s highly
succsseful economic reforms which had been introduced in 1999 by the then
Finnance Minister now Prime Minister Mr. Shaukat Aziz.
He said that it was the first transaction, which has been completed, in the
current Financial Year 2006-07 and this would be followed by a series of other
transaction with proper sequencing. The Privatisation Commission would
vigorously pursue and implement the privatisation program with utmost
transparency in an open, fair and competitive manner to maximize the proceeds
of from national assets, he said.
The Minister appreciated cooperation and support from Ministry of Industries,
Special Initiatives and Production and NFC in making the transaction a
success. He also appreciated the dedication and hard work displayed by
officers and staff pf the Privatisation Commission involved in the
transaction.
Mr. Ahmed Sheikh on behalf of the buyer state that they would make fresh
investment for expansion of plant capacity and to increase the production in
order to bridge the short fall in the demand and supply of the urea, which
would also generate employment opportunities in the area.
The Privatisation Commission received the first installment of 25 % the bid
amount from the successful bidder AZGARD-9 amounting to Rs.4.027 billion for
the strategic sale of Pak American Fertilizers Ltd (PAFL) as per the terms of
the bid documents. The remaining amount of the price was to be paid within 60
days after the issuance date of LOA. The Privatisation Commission issued the
Letter of Acceptance (LOA) on April 17, 2006 in favour of the second highest
bidder i.e. AZGARD-9 & Jehangir Siddiqui Securities Consortium for the
strategic sale of Pak American Fertilizers Ltd (PAFL) at their offer of
Rs.16.11 billion at the rate of Rs.537 per share.
It may be recalled that pursuant to the Cabinet Committee on Privatisation (CCOP)
decision on March 31, 2006 AZGARD-9 the second highest bidder was issued
Letter of Acceptance (LoA) after the first bidder failed to meet with the
terms of the bid as per the terms of the LoA. In June 2006 the CCOP approved
the recommendation of the PC Board for grant of extension to Azgard – 9 in the
final payment date upto July 15, 2006 keeping in view the fact Azgard 9 had
deposited Earnest Money and first installment total sum of Rs. 4.377 billion.
Azgard 9 had committed to pay the markup from the due date June 02, 2006 to
the date of July 15, 2006 being committed by them at the rate of 11.14 % per
annum – KIBOR+2.75%, and the next bidder (which was lower by Rs.2.52 billion)
had not extended the validility of the bid.
The Privatisation Commission had invited Expressions of Interest (EOI) from
fertilizers companies, industrial companies and groups, consortium of
investors on September 30, 2005 for the privatization of Pak American
Fertilizers Limited (PAFL) and the bidding was held on February 28, 2006.
Pak American Fertilizers Limited (PAFL) is an unquoted Public Limited Company
wholly owned subsidiary of National Fertilizer Corporation of Pakistan (Pvt)
Limited. PAFL was incorporated on December 15, 1959. The authorized, issued
and paid up share capital is 30 Million ordinary shares of Rs. 100/- each. The
plant is financed by Japan Bank of International Corporation (JBIC).
The bidding for this transaction was held in Karachi on February 28, 2006.
Ibrahim Fibres Limited the first highest bidder informed the Privatisation
Commission vide their letter of March 21, 2006 that they are no longer
interested in the transaction of Pak American Fertilizers Limited (PAFL). The
Privatisation Commission in terms of the Bid Documents therefore forfeited an
amount of Rs 350 million deposited as Earnest Money and offered the
transaction to the next highest bidder.
Pak American Fertilizers Limited (PAFL) is located at Iskanderabad (Daudkhel),
Distt: Mianwali and produces 1050 metric tons of urea per day. PAFL is the
subsidiary of National Fertilizer Corporation of Pakistan (NFC). Japan Bank of
International Cooperation (JBIC) provided loan for setting up the fertilizer
plant. The plant was commissioned in 1999. The old plant was closed down in
1997 and a new Ammonia/Urea Plant commenced commercial production in 1999. The
new plant is designed to produce 600 Ton/Day Ammonia and 1,050 Ton/Day urea
using natural gas as feed and fuel. Both plants have been designed by TOYO
Engineering Japan. Ammonia plant is under license from Kellogg International,
USA, while urea plant is TEC's own.
Mr. Ahmed Shaikh of AZGARD-9 hoped that through this acquisition his group has
embarked with public private partnership. He expressed the intentions to make
fresh investment for expansion of plant capacity and to increase the
production in order to bridge the short fall in the demand and supply of the
urea. We were determined to work in order to create a win win scenario for
both the public and private sectors and operate in a highly socially
responsible manner supporting the community, the environment and our
workforce, he added. He assured AZGARD-9 assured that anybody who wishes to
work on the merit basis would be retained. He
termed the privatisation process of PAFL as completely transparent and fair.
Azgard is a leading value added textile exporter form vertical, spinning,
weaving and garments with expected sales of Rs.7 billion this year. AZGARD-9
has acquired PAFL in partnership with Jehangir Siddiqui Securities, one of the
leading groups of Pakistan in financial sector.