PC Board allows Services Hotel sell-off

Also clears 12 bidders to bid for an iconic building of Islamabad

ISLAMABAD:

The board of Privatisation Commission on Friday approved to give away a prized property in the heart of Lahore at just Rs2 million above the downward revised minimum price of Rs1.94 billion and also cleared 12 bidders to bid for an iconic building of Islamabad.

The price at which the PC board allowed to sell the Services International Hotel - a over 15 kanal 3 marla property located at Mall Road Lahore, was Rs300 million lower than originally approved price of Rs2.25 billion by the PC board in March this year. However, subsequently, the PC downward revised the minimum price to Rs1.949 billion in June this year.

Headed by Privatisation Minister Mohammad Mian Soomro, the Privatisation Board “recommended highest bidder, for Service International Hotel (SIH), - Faisal Town Pvt Ltd along with an offered bid which is higher than the reserved price”, stated the privatisation ministry after the meeting.

The letter of acceptance to the successful bidder will be issued after seeking approval of the cabinet.

The reference price of Rs1.949 billion for privatisation of Services International Hotel, Lahore was approved by the cabinet last month. Only two parties namely MCB and Faisal Town Pvt Ltd participated in the bidding process, it added.

MCB did not match the bid amount. While, Faisal Town Pvt Ltd submitted bid amounting to Rs1.951 billion, just Rs2 million above the reference price.

The PC Board was also apprised that maximum efforts were made by the financial advisers who reached out maximum potential investors but due to resource mobilization, liquidity constraints and overall macro-economic outlook in the backdrop of Covid-19 pandemic the response of the potential bidders appears lacklustre, said the privatisation ministry.

The privatisation ministry widely publicised the open auction of SIH transactions in all the leading newspapers and social and electronic media was also used for the wider circulation to make the process open and transparent, it added.

Earlier, the government had sold 23 properties at a total cost of Rs1.11 billion. However, only 10 buyers submitted the bid money of Rs920.8 million in respect of 10 auctioned properties. The Pakistan Tehreek-e-Insaf (PTI) government has remained unable to privatise any of the lossmaking enterprises and is rather largely focusing on giving away real estate jewels.

The ministry said that the board also approved 12 pre-qualified parties for bidding for Jinnah Convention Centre (JCC) - an iconic building in the heart of Islamabad. The pre-qualified bidders are Abid Danish Consortium, Arif Habib Dolmen REIT Management Ltd, ARY Consortium, Bismillah Textiles Limited, ISE Towers REIT Management Company Limited, Pak Gulf Construction (Pvt) Limited, Randhawa Family Consortium, Sachal Consortium, Silver Oaks, Shahid Ahmed Khan, TPL Properties and Zahir Khan and Brothers (ZKB).

The PC Board approved the RSOQ and Expression of Interest (EOI) documents for privatisation of the Pakistan Steel Mills (PSM). The Ministry of Privatisation will publish the advertisement and invite the EOI after filing a scheme of arrangement (SOA) by Pakistan Steel Mills (PSM) with the Securities and Exchange Commission of Pakistan (SECP).

The right of use of land (1,228 acres) will 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. Further, the lease agreement will be finalised upon buy-side due diligence and prior to conducting bidding.

The use of jetty and conveyor belt system is to be made available to Steel Corp on arm’s length basis. The draft jetty-related agreement including the commercial terms and conditions will be made available to the pre-qualified bidders as part of the bidding documents for their review and comments.

The document will be finalised prior to the bidding process.

In view of the decision of the cabinet committee, EOI for investors would be invited, for the purpose of pre-qualification of investors. The draft document containing eligibility criteria along with a basis of disqualification for the potential investors was placed before the PC Board for deliberation and approval.

According to the approved transaction features approved by the Cabinet Committee on Privatisation, the identified core operating assets would be transferred to the new subsidiary owned by PSMC named Steel Corp (Pvt) Ltd, and then the divestment of equity stakes of the subsidiary shall be 51-74% through bidding process.

The revival of PSM is one of the important objectives of the privatisation plan, as the mill has not been working since 2015 hence the government planned to bring foreign and domestic investors for the revival of the largest industrial corporation of Pakistan, said the ministry.

Published in The Express Tribune, August 28^th, 2021.

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