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Banking crisis stalls privatisation as prefer and reserve bidders for SACHOL cannot raise funds

The impact of the Central Bank of Nigeria’s banking reforms has started taking its toll as the Federal Government agency saddled with the sale of government interests in businesses in Nigeria, Bureau of Public Enterprises, BPE, has  found that buyers of some of the companies it has sold cannot raise the money to effect payment .

Disclosing this in Lagos at an interactive session with journalists, the Director-General of the BPE, Dr. Christopher Anyanwu said that because of the crisis in the banking sector, the preferred and reserved bidders for Skypower Aviation Handling Company, SAHCOL had both failed to pay for the company because they could not raise funds from the banks to meet the payment deadline.

Since August 14, when Sanusi Lamido Sanusi sacked the managing directors of five Nigerian banks and the audit of the others just concluded, banks have been restrained  from lending and have refused to give even overdraft facilities to any company. Foreign credit lines have also dried up making it difficult for companies to operate smoothly in the country in the last one month.

Giving details of the transactions, Dr. Anyanwu said that “at the Financial Bids Opening ceremony, Eraskorp Consortium offering a bid of N13, 458, 000, 000 emerged the preferred bidder while Pan Express Services Limited with a bid price of N10, 400, 000, 000 was declared the reserved bidder.

“Following the withdrawal of the offer made to Eraskorp Consortium on account of their failure to make payment as stipulated in the terms of sale made to them, the National Council on Privatisation, NCP, approved that Skypower Aviation Handling Company, SAHCOL, be offered to Pan Express Services Limited, the reserve bidder, at the offer price of N10.4 billion. In a letter dated August 31, 2009, to the Managing Director of Pan Express Services Limited, the BPE informed the firm that it had up to 15th September, 2009 to make the initial payment of N3, 120,000,000.

The reserve bidder has also failed to meet the payment terms. Following the failure of both preferred and reserved bidders to pay, the BPE has written to the NCP seeking its approval for a formal closure of that transaction process and approve that a new transaction process is started”.

He said, however, that the bids have been validated that the BPE is now negotiating with Pan Express Services for the payment.

Continuing he said that the Bureau of Public Enterprises had on June 30, 2009 opened the financial bids submitted by six pre-qualified prospective core investors for 100 per cent government’s equity in Skypower Aviation Handling Company (SAHCOL). SAHCOL is a 100 per cent subsidiary of Nigerian Airways Limited (NAL) in liquidation.

The Federal Government of Nigeria (FGN) is divesting it’s entire 100 per cent equity with the intention that 49 per cent interest will be divested to the Nigerian public under the supervision of BPE at a time that will be mutually agreed upon in the Share Sales and Purchase Agreement (SSPA). The divestment process is supervised by the Bureau of Public Enterprises in collaboration with the liquidator for Nigerian Airways Limited; Babington Ashaye & Co.

The transaction process began in November 2008, with the National Council for Privatisation calling for Expressions of Interest (EOls) from the prospective core investors. The advert was published in seven national Newspapers. From the 20 EOis received, 14 firms that were pre-qualified were granted access to the data room and participated in the physical due diligence process that held between April 6 and 24,2009.

Following the deadline for the submission of technical and financial bids on the 22nd of May, 2009, eight bids were received.

The technical bids were evaluated, from which six scored above the minimum requirements of 70% as stipulated in the Request for Proposals (RFP). The successful bidders were: Moore Associates Limited, TAK Continental Limited,Pan Express Services LimitedEraskorp Consortium, Skyway Aviation Handling Company Limited, Aviation Handling Partners Limited.

In the case of NITEL Dr. Anyanwu said that 13 applications were received at the deadline for receipt of Expressions of Interest (EOls) from prospective investors for the acquisition of at least 75 per cent equity in Nigerian Telecommunications Limited (NITEL.) The companies are Etisalat Nigeria (EMTS); Omen International Limited (BVI); Summit Group; MTI Consortium; Finetek.Com/Ericsson Consortium; MTNL Limited, India; and Globalcom Ltd. Others are MTN Nigeria Communications Limited; Anas Network Services Limited; Telefonica Consortium; Metro PCS Communications Inc; Brymedia (W.A) Limited; and Galaxy Backbone Pic.

However, an additional application was received from Conau Limited. It is important to emphasize that in accordance with the advertisement; interested bidders may elect not to participate in the data room process and are therefore free to submit technical and financial bids by the deadline of October 2, 2009.

“Following receipt of the proposals, an evaluation committee has been constituted whose mandate is to independently assess the submissions of each consortium in line with the advertisement and the pre-qualification criteria.

The consortia that are pre-qualified for the next stage are expected to pay a non-refundable fee of $25, 000 for bidding documents and execute the confidentiality and non-disclosure agreement.

“The Nigerian Communications Commission (NCC). as part of the evaluation of the prospective bidders, is expected to conduct a lit and proper’ test on each bidding consortium to participate in the bidding exercise.

He said that  in the advertisement, prospective investors were invited to apply to acquire either at least 75 per cent equity in the entire NITEL conglomerate or a stake in one or several of its components, namely, SAT-3; domestic fixed line telephony; national fibre-optic transmission backbone; CDMA network; MTEL (GSM). Preference would be given to bidders who desire to acquire NITEL fixed lines, -transmission backbone, MTEL and SAT-3 components together while those-bidding separately for MTEL must be ready to make necessary investments to detach M-TEL from the NITEL networks.

The Bureau has so far received $25, 000 for the bidding documents from eight prospective bidders, who have also executed the Confidentiality and Non Disclosure Agreement with the Bureau

The Data Room for due diligence opened on the 23rd September and those that have been pre-qualified were given their unique codes to access the virtual data room. Bidding and other transaction documents (including the Information Memoranda and Requests for Proposal) will be given to those that have paid the $25, 000 and executed the Confidentiality and Non Disclosure Agreement” he stated.


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