Financial Times

Bids shortlisted in CWE privatization deal

Asia Capital Consortium and Cargills Ceylon Ltd have been shortlisted by the Cabinet Appointed Tender Board (CATB) as the successful two bidders in the CWE privatization transaction, according to a report in the BOI website.

Unnamed sources are quoted as saying that the Asia Capital Consortium (consisting of John Keells, Carsons Cumberbatch and Ceylon Biscuits) was the best value added proposal on offer. The deal will be completed in four weeks, they said. Tenders were called for the purchase of 40% of the share capital of the CWE in November 2002. Bids were evaluated by the CATB. A 40% stake in Sathosa Retail Ltd (SRL) was valued at Rs. 400 million by Ernst and Young, consultants to the project. As significant value addition had taken place with the refurbishment of several outlets, revised bids were called for from all parties on May 13, 2003.

They were asked to consider employment of 4,600 workers employed at the CWE, They were also asked to state the management fee that would be levied, the maximum “upfront” price payable and to indicate the name of a foreign collaborator.

Proceeds from the sale will help reduce liabilities of the CWE as would the profit share attributable to the parent company from the profits realized by the subsidiaries, the BOI report said. The proposed privatisation deal has been criticised by the industry for lack of transparency.

President Chandrika Kumaratunga has asked the cabinet to halt the process, cancel the tender and call for fresh offers. Commerce Minister Ravi Karunanayake has denied allegations of wrongdoing in the proposed deal.