KARACHI, May 30: Fauji Fertilizer Company on Thursday made a payment of Rs5 billion to the Privatization Commission out of Rs7.3 billion that it has to pay for the state-run Pak Saudi Fertilizer Company. The company would pay the remaining Rs2.3 billion on Friday and take over Pak Saudi Fertilizer Company.

Senior bankers said a banking syndicate led by ABN Amro has lent to FFC more than Rs7.3 billion to buy Pak Saudi Fertilizer Company. They said that the syndicate disbursed Rs5 billion on Thursday adding that the remaining amount would be paid on Friday.

Sources in fertilizer industry said FFC has credited the Rs5 billion it received from the banking syndicate into the account of Privatization Commission. The company would credit another Rs2.3 billion into the PC account on Friday when they would formally announce the takeover of Pak Saudi Fertilizer Company.

Last month FFC purchased 90 per cent (54 million) of Pak Saudi shares for Rs7.3 billion at a price of over Rs135 per share in a major privatization deal after a long time.

Immediately after concluding the deal FFC approached leading banks for a syndicated loan under the lead of ABN Amro. Banking sources say since FFC has a strong balance sheet a number of local and foreign banks agreed to join in the syndicated loan.

The list of the banks include (i) Muslim Commercial Bank (ii) Citibank (iii) Bank Alfalah (iv) Union Bank (v) Askari Bank (vi) Habib Bank AG Zurich and others.

No official word was available about the structure of the syndicated loan but sources in these banks said the facility carried different annual interest rates to be charged by the members of the syndicate—ranging between 8.75-9.50 per cent.

According to the first quarterly report (January/March 2002), FFC claimed 48 per cent share of the fertilizer industry and its decision to buy Pak Saudi Fertilizer Company was aimed at improving profit margins through economies of scale and pooling of resources.

FFC posted a net after-tax profit of Rs762 million in the first quarter of 2001 down from Rs833 million earned in a year- ago period. Company officials link this 9 per cent decline in the profit to imposition of general sales tax on fertilizers and lower investment income due to the fall of the US dollar against Pakistan rupee.