The Privatisation Commission (PC) has obtained clearance from the government to sell 8016 PTCL ordinary shares in Carrier Telephone Industries (CTI) to Siemens at approximately Rs 62.375 per share against the reference price of Rs 60.20 per share, fearing that the future of the company would be in jeopardy after privatisation of PTCL, sources in Finance Ministry told Business Recorder.
Earlier, PC had turned down a higher offer from Siemens twice, as the mode of payment was not in line with government strategy, sources said.
The Cabinet Committee on Privatisation (CCoP), headed by Prime Minister Shaukat Aziz, on April 11 had approved CTI's sell-off plan, fixing Rs 60.20 per share reference price, without taking into account surplus land, and had also constituted a committee under the chairmanship of Privatisation Minister Hafeez Shaikh, with Dr Salman Shah, P M Advisor on Finance, Dr Tariq Hasan, and Chairman SECP as members to further examine the price in the light of 7251 preference shares of CTI, held by Siemens, sources added.
After discussion, committee members were of the view that the value of 7251 CTI preference shares, held by Siemens, should be subtracted from the total value of Rs 868 million (as per the valuation report) to get the amount to be distributed among ordinary shareholders.
The total value attributable to ordinary shareholders worked out accordingly was approximately Rs 860 million and in accordance with the methodology the value of each of the 8016 ordinary shares has been worked out at Rs 107.378.
The rationale for committee decision was based on the premise that 7251 preference shares held by Siemens did not form part of the equity capital for the purposes of valuation, and hence the per share value of an ordinary share held by PTCL worked out to be Rs 107.378.
Siemens made a revised final cash offer of Rs 500 million, which according to PC, translates to approximately Rs 62.375 per share, higher than the price of Rs 60.200 per share as earlier recommended by PC board.
According to revised offer, Siemens would have to pay Rs 300 million on the signing of the Share Purchase Agreement (SPA) and Rs 200 million after execution of TIP board resolution.
CCoP, in its previous meeting approved the proposal submitted by the PC board, sources said.
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