Revised valuation of core and non-core assets: PC convenes PSM Board meeting today

ISLAMABAD: The Privatisation Commission (PC) has convened its Board meeting on Monday (today) to approve revised valuation of core and non-core assets of Pakistan Steel Mills (PSM) and issuance of Letter of Intent (LoI), well informed sources in Ministry of Industries and Production told Business Recorder.

To be presided over by Minister for Privatisation, Mohammedmian Soomro, the meeting will go through PSMs entire documents prepared on valuation and revaluation as such matters always land in NAB for inquiry and no member of Board want to be in hot water.

PC Board in its recent meeting expressed serious concerns at the anomalies pointed out by the FA and noted that variations in assets valuation are material in nature and amounts. The Board unanimously agreed to refer the matter back to the PSMC Board for detailed examination and rectification/ approval of audited accounts of PSMC up to Dec 31 , 2020. The Board approved the revised valuation in its last meeting.

The PC Board was scheduled to meet on Friday ( July 16, 2021) but postponed it due to non-availability of all relevant documents to be presented for approval.

According to PC spokesperson, the Board will approve audited accounts and list of assets to be transferred to the subsidiary.

Chairman PSM, Board, Aamir Mumtaz who has disassociated himself from Transaction Committee on PSM due to differences with respect to different decisions taken by the PC on PSM 's revival plan.

PSM Stakeholders Group, led by Mumrez Khan has announced it would challenge the entire process of PSM valuation and privatisation on all the relevant forums and that thr plan is based on malafide intention.

The PC Board directed the MoI&P and PSMC to provide the following: (i) audited accounts up to December 31, 2020 duly approved by PSMC Board and signed by CEO and one nominated Director; and (ii) itemized list of Key Operating Assets (KOA) along with corresponding Fair Market Value (FMV) of each listed item to be transferred to the new subsidiary namely Steel Corp (Pvt) Ltd, duly approved by PSMC Board, signed & stamped by CEO of PSMC and initialed by the valuer and the PSMC Auditor. This will form an integral component of the Scheme of Arrangement (SoA) to be submitted to the SECP after requisite approvals.

PC Board has also endorsed PSMC Board's decision of May 6, 2021 regarding core land comprising 1,228 acres to be leased to Steel Corp (Pvt) Ltd and requested PSMC to provide amended decision of the PSMC Board revising core land to 1 ,229 acres.

PC Board, endorsed the PSMC Board decision of May 6, 2021 stating that the "the Right of use of land (1229 acres) to be awarded without entering into a lease agreement as per the standard terms to subsidiary until the strategic partner comes in, thereafter the terms and conditions of the land lease will be decided at arm's length principle with the strategic partner;" besides the lease agreement will be finalized upon buy-side due diligence and prior to conducting bidding.

The source said, jetty and Right of Way (Ro)W agreement with the Steel Corp (Pvt) Ltd including terms and conditions at arm's length principle will be finalized after due diligence and prior to conducting the bidding. Transfer of existing utility connections and power generation licence to Steel Corp (Pvt) Ltd, unencumbered will be also be finalised.

According to sources, the effective date of Scheme of Arrangement to be January 01, 2021 and ownership of Steel Corp. (Pvt) Ltd to be retained by PSMC in light of the approval of PSMC Board approval. The PC Board has also approved divestment of 51-74% equity stakes of Steel Corp. (Pvt) Ltd and paid up capital of Steel Corp. (Pvt) Ltd to be equal to net equity as on December 31,2020.

Copyright Business Recorder, 2021