OGDCL divestment: government to press ahead with planned roadshows
The government has decided to press ahead with planned roadshows for sale of Oil and Gas Development Company Limited (OGDCL) shares to raise about $850 million, amidst serious challenge to the privatisation policy in the face of a deepening political crisis. A Privatisation Commission (PC) official said a PC team is likely to proceed aboard in the second week of October with the objective of holding roadshows and conferences to offload the government shares in OGDCL.
Copyright Business Recorder, 2014
The official maintained that the team would proceed abroad after taking approval from the PC Board which is yet to be scheduled. The roadshows, aimed at encouraging foreign investors, had been delayed by three weeks as previously the date of departure was set at 18 or 19 September, 2014. "The government will complete the OGDCL share sale with only a slight delay," the official said.
The international market roadshows will be held in Hong Kong, Singapore, UAE, Frankfurt, Stockholm, London, New York, Boston and Chicago. Global Depository Receipts (GDRs) of the company are expected to be issued by the end of October against the previous plan to complete the offer by early October, the official added.
The Cabinet Committee on Privatisation (CCoP) had given approval for the transaction structure for divestment of up to 10 percent government shares in OGDCL through capital markets. The recommended Capital Market Transaction Structure approved by the CCoP envisages offering shares to institutional international and domestic investors through a combined international book building process. International investors will get an option to buy either ordinary shares or GDRs or both. The offering to international investors will be done through an offering circular, fully compliant to Reg S/144 A of the US Securities Act 1933.
The PC Board in its meeting held on April 22, 2014 had approved the appointment of consortium comprising of M/s Merrill Lynch International, Citigroup and KASB Bank to act as Financial Advisor (FA) for the transaction. Sources said the PC had plans to complete the share sale in June 2014, but could not meet the regulatory requirements of the London Stock Exchange. The exchange's conditions include an oil and gas reserve certification and audit of financial results by an international firm.
The government is expected to raise $850 million by selling the company's shares. However, the PC board will likely offer a discount on the share price, the official said. From 2003 to 2007, the Musharraf government sold 15 percent shares of OGDCL in domestic and international markets in three phases and earned Rs 56.25 billion. "The political uncertainty stemming from the ongoing sit-ins staged by the Pakistan Tehreek-e-Insaf and Pakistan Awami Tehreek have adversely affected the country's position in currency and stock markets," a PC Board member said.