WEDNESDAY MARCH 09: Exchangeable bond: PC told to carry out transaction

ISLAMABAD: The Cabinet Committee on Privatisation (CCoP) which met here on Tuesday with Federal Minister for Privatisation, Senator Abdul Hafeez Shaikh in the chair directed the Privatisation Commission to actively carry out exchangeable bond transaction along with the roadmap presented for capital market transactions.
The CCoP also approved hiring of Financial Advisor (FA) and holding of non-deal roadshows as soon as possible. However, this should be done in consultation with FAs as close to the proposed dates as possible, it added.
Secretary PC Muhammad Ejaz Chaudhry informed the CCoP that the subcommittee of the CCoP was required to deliberate on the structuring and the size of the transaction, including the timeline, the selection of state owned entities for equity linked bonds, summarised term sheets for convenience of the committee, institutional arrangements, comprehensive plan for issuance of GDRs, IPOs and SPOs. The proposed plan will be of 2 years and includes a separate break-up for current financial year (ending June 30, 2011).
The Secretary informed the CCoP that a roadmap for capital market transactions has been prepared, which is based on extensive consultation with major financial institutions. Secretary Privatisation emphasised the need for market listings of SOEs to raise proceeds for the GoP including exchangeable bond in respect of OGDCL. The subcommittee while approving the roadmap presented by the Privatisation Commission agreed in principle on the issuance of the exchangeable bonds for OGDCL. The transaction will be jointly executed by the Privatisation Commission and the FD.
In view of the work already undertaken by the Privatisation Commission and due to its robust procedures and expertise, FD agreed that the process should be continued in the Privatisation Commission. The subcommittee also directed that the other capital market transactions as proposed in the roadmap may also be undertaken on priority subject to market conditions ensuring best deal.
The secretary presented the roadmap prepared by the PC based on extensive consultation with major financial institutions, which includes transactions for financial year 2011 & 2012 of power, oil & gas, insurance and banking sectors, namely OGDCL, Slic, PPL, Iesco, Fesco, Kapco, NICL, HBL and NBP.
The Secretary Privatisation Commission informed the CCoP that a couple of attempts made in the past to privatise the asset have not been successful due to downturn in the global real estate market. The Secretary also apprised the CCoP about a government decision whereby it was decided to delist the Roosevelt Hotel. The Privatisation Commission Board has approved the proposal and recommended to the CCoP to allow delisting and terminating the contract with the FA hired for the transaction after clearing the dues payable under the contract. The minister for privatisation added that the current idea is to leverage the balance sheet of the hotel and use it to buy airplanes for PIA.
The chair approved the Privatisation Commission proposal subject to concurrence by the Cabinet Committee on Restructuring (CCoR) to revisit the privatisation of Roosevelt Hotel and suggested that a new attempt should be made to privatise the asset as global real estate markets have improved and this will allow PIA to focus on its core business. The Minister for Privatisation informed the CCoP that the platform to decide this issue should be CCoR and any review taken by the Privatisation Commission should be on the recommendation of CCoR.