ISLAMABAD, Jan 1: The Aga Khan Fund for Economic Development (AKFED) would pay in two tranches the Rs22.409 billion bid money for the 51 per cent shares and management control of Habib Bank Limited (HBL) over a period of two years, Dawn has learnt.
The AKFED would make an upfront payment equivalent to 26 per cent share price at the time of sale and purchase agreement (SPA) next month and clear remaining payment for 25 per cent share in two years, sources in the Privatization Commission told Dawn.
The sources said the deferred payment was an option given to all the three pre-qualified bidders of the HBL. Although, supreme council of economic affairs of the State of Qatar wanted to improve its bid in case of second round of bidding but refused to avail the option of deferred payments.
Under terms of the agreement, AKFED would pay an interest at the rate of LIBOR plus 2.5 per cent on the deferred amount. In case, the company fails to make total payment within two years, it would be liable to heavy penalties and resell the HBL shares to the government at discounted rates.
Also, the new buyer is required to pay at least half of the remaining 25 per cent share price in the first year and remaining during the next year. The sources said the option of delayed payments was an extraordinary offer which was not given to buyer of any other state-owned enterprise in the history of Pakistan and was particularly designed keeping in mind the huge size of the HBL.
Accordingly, the transfer of 25 per cent shares of the HBL to the new buyer would take place at the time of final payment. These clauses have been included in the SPA to guarantee that the government of Pakistan does not lose in case of default by the buyer, although all the pre-qualified bidders had the credit rating of AAA.
Responding to a question, the sources said, there was no chance of default in view of the international repute of the buyer, although the banking rules 41, 42 and 47 empowered the State Bank of Pakistan to take over management of any commercial bank in case of any deviation from the agreement or in case of default.
These sources said interest payments would yield around Rs400 million higher than the bid price. CCoP: An official statement said the Cabinet Committee on Privatisation (CCoP) on Thursday approved the recommendations of Privatization Commission board for approval of the highest bid of Rs22.409 billion offered by Aga Khan Fund for Economic Development (AKFED) and declared the party as successful bidder for acquiring 51 per cent stake in Habib Bank Limited (HBL).
The price offered is higher than the minimum acceptable price of the Bank determined by the government. The CCoP considered that the success of HBL transaction would auger well for other major upcoming transactions.
The CCoP was of the opinion that HBL was expected to be run more efficiently by AKFED and it would improve the value of 49 per cent balance shares of the government, which will be to the benefit of the nation and the government, the statement said.
