January 30, 2002	Wednesday	Ziqa’ad 15, 1422

KARACHI, Jan 29: Bestway Cement Limited has called an Extraordinary general meeting of the members on Thursday, January 31. The one point agenda is to seek shareholders approval for investment in 12.75 per cent equity of United Bank Limited (UBL), should its Parent-Abu Dhabi Group consortium succeed in making the winner bid; Privatisation Commission has reiterated its commitment to put the 51 per cent shares of UBL on the auction block, just as soon as the three pre-qualified parties signal the completion of their ‘due diligence’ exercise. All three parties are currently understood to be pouring over the Reports and records of UBL at the Privatisation Commission’s ‘data room’, to work out the ‘fair value’ of the Bank’s share of the par value of Rs10 each.

Originally as many as 21 parties from UK, USA, Middle East and Pakistan, had submitted Expressions of Interests (EoIs) to compete for the pre-qualification for bidding for UBL. But only three stood pre-qualified: Consortium of Bestway Group of UK (the parent company of Bestway Cement Limited) and an Abu Dhabi Group; Consortium of Muslim Commercial Bank & Associates and Union Bank Limited & Associates.

According to the terms of agreement, if the Group’s bid for UBL was successful, the Abu Dhabi and Bestway Group would split the acquired shareholding between the two (25.5 per cent each). And one-half of that (12.75 per cent) would pass on to the Bestway Cement Limited.

The company says that the acquisition of shares in UBL would be financed by arranging loans from financial institutions. That would mean an increase in debt obligations and a squeeze on company’s profit margin. Financial charges for the year ended June 30, 2001 amounted to Rs354 million, which measured up to 82 per cent of the year’s operating profit of Rs431 million.

The company argues that investment in UBL provides “an attractive opportunity which should, in the medium to long term, significantly enhance the return to the shareholders of the company”. Directors said in their 2001 annual report that the company’s liquidity position had improved. It discharged repayment obligations of all types of loans on time and had retired both long- and short-term debts amounting to Rs398 million.

The shareholders meeting has been convened at the company’s registered office in Islamabad. It is reckoned that most of the 732 ‘individual’ shareholders and many of the interested investors would miss the proceedings, for their inability to travel to the Capital to attend the meeting. It would be interesting to learn how the directors’ project the benefits of buying into the equity of a currently nationalised bank, to blend with its own business of producing cement.

But some analysts contend that although Bestway Group’s only venture in Pakistan is the 1.2 million tons per annual cement manufacturing plant at Hattar in NWFP, the Group holds interests in diversified fields in the UK. It is the second largest distributor of grocery and drinks products in the UK cash and carry sector. The Group’s total sales stood in excess of Pound Sterlin