Kazakhstan plans to sell state owned blocks of stocks of some major joint stock companies

/Almaty office of REUTERS, Sep.07, 99/ - Kazakhstan, which is having difficulties with replenishment of its budget, intends to sell part of state owned blocks in major metallurgical and oil companies and of joint stock company Kazakhtelecom and People's bank to strategic investors. Vice minister of finance of Kazakhstan, chairman of the committee for privatization and state assets management Daniar Abulgazin said at the press conference last week tender had been announced to select an advisor on sale of state owned blocks of five major enterprises to strategic investors. Investors will be offered: - 30% of Mangistaumunaigaz oil company, - 25.2% of Aktobemunaigaz oil company, - 15.5% of Ust-Kamenogorsk titan-magnesium combine, - 27.64% of Kazzinc, - 35% of Kazakhmys copper corporation. As Abulgazin says proposals from potential tender participants have been already received, and they have to submit projects of their selling strategies till September 20. Earlier, these enterprises as potential "blue chips" were offered for tenders to portfolio investors, but due to financial crisis on international stock market selling strategies have been changed. Now the blocks will be offered to strategic investors. Abulgazin said deal on selling part of state owned blocks in Tengizchevroil joint stock company had not been made yet. At this moment only possibilities of selling 40 percent of 25 percent state owned blocks, which is 10 percent of total assets, in Tengizchevroil are considered. Rumors on possible sale of state owned block of stocks in Tengizchevroil by the government were accepted negatively in Kazakhstan. Many politicians called government's policy short sighted, which attempts to find money through privatization and exports. Value of state owned block of stocks is estimated at $1.0-1.5 billion, and it could double next year. "As far as advisors concerned, several requests were sent to oil companies. This is a normal process to attract investors' attention to Kazakhstan", said Abulgazin. As he says, government made a decision to sell part of state owned block of stocks of People's savings bank, thereof government's share will be reduced down to 50 percent plus one stock of 80 percent of shares. Sale of state owned block of stocks will be carried out in two ways. First of all, by issuing additional shares which will be directed to increase bank's owners' equity. Second part of state owned block of shares will be sold to an investor, and money received from this deal will be sent to the budget. Abulgazin did not mention proportions of People's bank's shares to be sold, and did not specify whether an investor will be domestic or foreign. Vice minister also said government hoped to sell 15 percent of state owned block of stocks of Kazakhtelecom this year. Moreover, Kazkommertsbank wants to sell its share - 30 percent of Kazakhtelecom. "Talks with European Bank for Reconstruction and Development is held at this time, which is looking for a strategic investor, and we have some certain proposals already. However, these shares will be sold on a mandatory return basis, where an investor should return them if he does not fulfill his obligations", said Abulgazin. The government also works on sale terms of state owned blocks of stocks of additional 218 less attractive to investors companies whose privatization to be completed by the end of 2000. Abulgazin informed republican budget received 29 billion tenge from privatization during eight months of this year, which is 49.6 percent of 58 billion tenge planned for this year. Dividends on state owned blocks of stocks have made about 1 billion tenge during seven months of this year or 82 percent of planned amount in 1999.