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HPFL sale attracts highest bid of Rs 1.34 billion

By Sajid Chaudhry

ISLAMABAD: The open bidding for the sale of a minimum of 90 percent shares of Hazara Phosphate Fertilizers (Private) Limited (HPFL) here on Thursday received the highest offer of Rs 1.34 billion by the Pak American Fertilizers Limited, Lahore at the rate of Rs 70 per share for 100 percent shares.

In October 2008, the Privatisation Commission (PC) had intended to carry out three transactions namely the SME Bank, Heavy Electrical Complex (HEC) and National Power Construction Company (NPCC), whereas efforts were being made to bring forward 16 transactions for privatisation within the current year.

The bidding was supervised by PC Secretary Ahmed Jawad and the bidders including Consortium of Akbar Brothers and Green Force Limited, Multan, Consortium of Kissan Chemicals and Fertilizers and Chaudhary Steel Re-Rolling Mills Limited, Lahore, Pak American Fertilizers Limited, Lahore and Warble (Pvt) Limited, Lahore became eligible for participating in the bidding process after depositing earnest money of Rs 40 million each. The bidding was held in the presence of all the stakeholders and a large number of the representatives of the print and electronic media.

During the first round of the bidding process, the authorised representatives of the bidders deposited their sealed bids in the transparent box in the presence of the media, all stakeholders and the general public, which were later opened and read over by the representatives of the media. The offers received during first phase the Consortium of Akbar Brothers and Green Force Limited, Multan offered the highest bid of Rs 69 per share making a total offer as Rs 1.32 billion.

The Pak American Fertilizers Limited, Lahore remained second with an offer of Rs 48 amounting to a total offer of Rs 918 million and Warble (Pvt) Limited, Lahore stood third with an offer of Rs 31 per share amounting to a total offer of Rs 593 million.

The lowest offer of Rs 21.44 per share amounting to a total offer of Rs 410 million came from Consortium of Kissan Chemicals and Fertilizers and Chaudhary Steel Re-Rolling Mills Limited, Lahore.

Later, the three highest bidders were asked to improve with a Rs 1 or multiple thereof the highest offer of Rs 69 per share received from the Consortium of Akbar Brothers and Green Force Limited, Multan, considering it as base price. Pak American Fertilizers Limited, Lahore improved their offer to Rs 70 per share making the total offer as Rs 1.34 billon.

The remaining parties after detailed consultations with their consortium partners decided not to proceed further and to withdraw in favour of the highest bidder while congratulating them. All participants termed the bidding process as transparent, highly professional and above board and lauded the services extended by the Privatisation Commission officials during the pre-bid process, in general and Transaction Manager Zahid Aziz, in particular.

The authorised representative of Pak American Fertilizers Limited, Lahore Ahmed Jauded Bilal elaborated the plans to enhance the efficiency and the profitability of the plan by making further expansion in the plant and to curtail the cost by adopting certain technologies by improving the plant.

While talking to the media representatives the PC secretary informed that the highest offer would be considered by the PC Board to formulate recommendations for a decision by the Cabinet Committee on Privatisation (CCOP). According to the standard procedure the successful bidder will be issued letter of acceptance (LOA) after PC Board and CCOP’s approval and the buyer is bound to deposit 25 percent of the bid price within 14 days after the issuance of LOA while remaining 75 percent of the bid price is to be paid within 60 days, he said. The PC had invited EOIs from prospective investors i.e. companies or consortia engaged in manufacturing or engineering business who can demonstrate the ability to own and efficiently manage and operate the Company. The plant is located at Haripur (NWFP) – 75km from Islamabad. The factory is situated on 57 acres of developed land and includes plant, housing and ancillary facilities.

The National Fertilizer Corporation of Pakistan (Private) Limited (NFC) owns Hazara Phosphate Fertilizers (Private) Limited. HPFL is a state owned private limited company, registered under the Companies Ordinance 1984. The authorised share capital of the company is Rs 200 million divided into 20 million ordinary shares of Rs 10 each whereas the issued, subscribed and paid up capital of the company is Rs 191.143 million comprising 19.143 million ordinary shares of Rs 10 each.

The National Fertilizer Marketing Limited (NFML) is currently carrying out marketing of the product of HPFL. The Purchaser shall, however, be free to market the product using its own arrangement. The Government of Pakistan in order to encourage use of Phosphatic Fertilizers is currently providing a subsidy of Rs 956 per bag effective from July 1, 2008. To improve the profitability of HPFL, Government of Pakistan and Government of NWFP are endeavoring to make available local phosphate rock as raw material through enabling environments from the private sector mining companies.

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