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The final round of bidding for a 75% strategic Stake (1,290,487,275 shares)
of Pakistan Steel Mills Corporation (PSMC) fetched the highest offer of
Rs.16.80 per share making a total of Rs.21.680 billion i.e equivalent to US $
362 million offered by Consortium of Magnitogorsk Iron & Steel Works (Russia),
Tuwairqi Steel Mills (Saudi Arabia) and Arif Habib Securities. The bidding was
held here today under the chairmanship of Mr. Awais Ahmed Khan Leghari
Federal Minister for Privatisation & Investment and Information
Technology while Mr. Jehangir Khan Tareen Federal Minister for Industries,
Production & Special Initiatives witnessed the proceedings.
Earlier, both the bidder consortiums who became eligible for participating in
the bidding after depositing earnest money of US $ 30 million each within the
stipulated time dropped their sealed bids in front of the large number of the
representatives of print and electronic media. The bids were opened and read
out by two senior journalists during the first round. The Consortium of
Magnitogorsk Iron & Steel Works (Russia), TuwairqiSteel Mills (Saudi Arabia)
and Arif Habib Securities gave offer of Rs.11.67 per share amounting to
Rs.15.059 billion while the offer of the Consortium of Noor Financial
(Kuwait), Industrial Union of Donbass (Ukraine), Government of Ras Al Khaimah
and Al-Jomaih Holdings (Saudi Arabia) was Rs.10.17 per share with a total of
Rs.13.124 billion.
During the second open bidding round bidders were asked for a minimum raise of
paisa 25 to improve their offer. This round created a competitive and
transparent atmosphere, which generated interest among the participants and
the audience.
Addressing on this occasion Mr. Awais Ahmed Khan Leghari Federal Minister for
Privatisation & Investment and Information Technology said that the Cabinet
Committee on Privatisation has authorised Privatisation Commission to issue
Letter of Acceptance (LOA) to the successful bidder Consortium of Magnitogorsk
Iron & Steel Works (Russia), TuwairqiSteel Mills (Saudi Arabia) and Arif Habib
Securities whose offer was within the acceptable range. As per payment
schedule the successful Consortium would deposit 25 % of the total bid offer
within next 20 days and remaining amount of the total offer within 60 days
after the issuance of LOA, which was to be issued to today, he said.
Mr. Awais Ahmed Khan Leghari further stated that the bidding, which took place
in a very transparent way in front of the media, has determined the value of
Pakistan Steel Mills 100 assets to US $ 482 million. Out of 19000 acres of the
land of PSMC around 14500 acres worth about US $ 800 million has been
separated from the transaction, which would be used by the government for
appropriate project, he added.
He also informed that an agreement has been reached with the employees and
they were being offered a package, which he said was never given to the
employees of any other entity. Today's bidding was a great success of the
present political and democratic government, he stated.
Mr. Jahangir Khan Tareen Federal Minister for Industries, Production & Special
Initiatives said that the handing over of PSMC to the private sector would
attract fresh investment to modernize the Mill and to turn it as world-class
player. He termed the bidding process as transparent and fair.
Later the representatives of both the Consortiums termed the bidding process
as satisfactory, open and very transparent and appreciated the efforts of the
Privatisation Commission for conducting the transaction in a smooth manner.
Mr. M. Tahsin Khan Iqbal Secretary Privatisation Commission conducted
the bidding process. The Privatisation Commission Secretariat has issued the
LOA today.
Nine parties had been pre-qualified out of which 8 conducted active due
diligence. Out of these five parties attended the pre-bid meeting. The
pre-qualified parties completed their due diligence of the transaction
including plant visits and physical / virtual data room. Six pre- qualified
parties joined to form two strong bidding consortiums. 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.