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No decision has been taken to sell the Roosevelt Hotel jointly owned by PIA-IL
and so the figure of US $400 million mentioned as the selling price in a
report published in the DAWN on August 25 and its editorial of August 27, is
not true.
Contradicting the report, a spokesman for the Privatization Commission
regretted that both the report published on August 25 and the consequent
editorial published today, on the subject are not only incorrect and not based
on facts but unfortunately, also misleading. The spokesman explained that a
decision to sell or retain the Roosevelt Hotel would only be taken after the
property has been properly and duly valuated and all aspects of a possible
transaction taken into full consideration in accordance with the Privatization
Ordinance, 2000 and the laid down procedure.
The spokesman said that the decision to initiate the process leading to the
appointment of a Financial Advisor was taken in November 2006. The
Privatization Commission invited bids from 10 top investment banks ranked (on
Global Lodging and Leisure Merger & Acquisition as of December 2006) as per
procedures in December 2006. Only two banks, Citigroup and Deutsche Bank
tendered their offers. The offer of Deutsche Bank was non-conforming and only
one offer was found valid. Hence it was decided to invite fresh tenders in
January, 2007. This time four banks participated, namely Merrill Lynch, JP
Morgan, Citigroup and Cushman Wakefield and Deutsche Bank. After an open, fair
and transparent competitive bidding process, as laid down in the HIRING OF
FINANCIAL ADVISORS REGULATIONS, framed under the PRIVATIZATION COMMISSION
ORDINANCE, 2000 Citigroup and Cushman Wakefield were declared top ranked by
the PC Board and appointed Financial Advisor in June 2007. The Financial
Advisor will be paid a fee of US $500,000 subject to achievement of agreed
milestones. The Advisory Services fee of US $ 4.1 million in addition to
success fee (1%) as reported in the news item and the editorial are,
therefore, incorrect.
The spokesman further clarified that as the Term of Reference precludes the
Financial Advisor to act as advisor to any prospective buyer, the question of
conflict of interest does not arise. According to the Term of Reference, the
Financial Advisors are required to carry out an analysis of whether the Hotel
should be retained or sold and if the recommendation is to sell, to examine
all possible methods such as sale of shares, sale of assets, long term lease
etc; to help facilitate a decision as to which will be the most appropriate
transaction structure yielding maximum proceeds to the owner, PIA-IL.
With regard to the valuation of the property, he stated that this is yet to be
finalized and so the figure of US $400 million mentioned in the report and
reproduced in the editorial is pure speculation. The recommendation of the
Financial Advisors in this regard will be examined by the PC Secretariat, the
PC Board and approved by the CCOP, if a decision is taken to proceed with the
transaction.
A clarification mentioning the correct facts relating to the appointment of FA
was issued on August 25, 2007, but regrettably it was not carried by Dawn.
It is regrettable that a newspaper of such standing should not only publish a
report but also an editorial comment without checking the facts from the
Privatization Commission.