RIYADH, 2 September 2005 — Bids for acquiring 51 percent of the government’s stake in the Turkish refinery “Tupras” should be submitted in closed envelops to the Turkish Privatization Agency (PA) by today at 16:00. The tender shall be realized by receiving bids in a sealed envelope and by bargaining method through negotiations.
If deemed necessary by the Tender Commission, the tender may be finalized through a public auction attended by the bidders with whom negotiations are continuing.
After collecting bids on Friday, PA will review them next Monday and will invite bidders for negotiations between Sep. 6-9 and ask them to revise their bid if on the low side.
Bidding process is expected to be finished between Sept. 12-16. At least three top bidders will be invited to the final bidding day and last bids will be given in front of media and will be televised live.
According to Basil Al-Ghalayini, CEO of BMG Financial Group, “we are in the last stages of concluding a deal with one of the biding consortia. We have to make sure that the terms of the chosen consortium and the investment objectives of our GCC-based investor group are compatible”.
“The investment climate in Turkey is encouraging in view of its privatization initiative, getting closer to joining the EU, free movement of capital, law capital gain tax and zero tax if equity investment is held for more than two years” Al Ghalayini added.
“In addition to Tupras, the state-owned steel company and Turkish airlines are next in the privatization pipeline” according to Al-Ghalayini.
The list of prequalified bidders for Tupras privatization includes ENI Refining and Market Division from Italy, OMV Aktiengesellschaft from Austria, Shell, Repsol YPF S.A. from Spain, PKN ORLEN SA from Poland, Indian Oil Corp. Ltd., MOL from Hungary, Zorlu Group, Petrol Ofisi, Anadolu Tasm, Energy Group and Oyak from Turkey.
Tupras is attractive to these consortia due to Turkey’s high geopolitical significance since the winning consortium will have the opportunity to access Caspian oil, as well as heading for the European market.
The market capitalization of Tupras is estimated to be over $3.9 billion, which drives the market value of the stake offered thorough privatization to around $2 billion. The GCC investor group is aiming for 12.5% of the total company shares.
Tupras is considered the seven largest oil refining company in Europe containing 4 refineries with a total capacity of 27.6MT/Year. In addition, Tupras owns a petrochemical industrial complex in Korfez consisting of 5 production units with a total 153,000-ton capacity.
The available data point to an expected P/E of 11.7, EV/Sales of 0.3, and EV/EBITDA 4.7. The company’s exports are expected to reach 9% of its total sales, while forecasted return on equity to be 10%. As for profitability, Tupras’ net margin is expected to be 3% and the EBITDA margin 7%. Finally, the company had earned $218million net for the first half of this year.
