Iran to Sell Shares of 30 Government-Owned Companies to Pay Back Debts

Text of news item headlined: “The council of ministers’ approval announced: Selling the state companies to pay the debts” published by Iranian newspaper Mardom-Salari website on 8 April

The economic desk: Nearly 80 per cent of the Iranian economy is state-owned. The government is the main employer and owner of major and large private companies, and those companies perform some of the duties of the government.

The government’s debt to those companies is something in excess of 5,000 bn tumans [each tuman is 10 rials], while in the current year the entire fund allocated to development projects has been about 14,000 bn tumans. In other words, the government owes those companies a sum equivalent to about a third of the entire development budget for this year. This large and unbelievable figure has meant that some of those companies have faced a number of problems in performing their duties.

The government owes some of those companies much more than the loans that they have received. However, as the government has not paid its debts to them, those companies are forced to postpone their debts on a higher interest rate [sentence as published, presumably because the government does not pay her debt the companies are forced to borrow money at a high rate of interest]. On some occasions, the managers of those companies have been put under pressure by the banks to pay their debts to the banks. Otherwise, the assets that they have put forward as surety for their debts would be sold [to cover their debts to the banks]. Consequently, their future work would be put at risk. Under these circumstances, and due to the intensification of similar problems in the government sector, yesterday the council of ministers [the cabinet] approved a resolution on the basis of which the shares of 30 major government [owned] companies would be sold in order to pay for government debts.

According to the resolution passed by the council of ministers, the names of 30 government [owned] companies whose shares are to be sold have been announced. All or some parts of the shares of those companies will be sold in order to pay for government debts to financial organizations [sanduqha-ye zakhireh] and to military and civilian pension funds, as well as to provide for the welfare costs of various foundations [nahadha] and organizations and [the upkeep of] the Holy Razavi Shrine [the Shrine of Imam Reza in Mashhad].

According to the report of the correspondent of Mardom Salari, on the basis of that resolution, 100 per cent of the shares of Khorasan petrochemical company, 39 per cent of the shares of Dana insurance company, 20 per cent of the shares of Asia insurance company, 20 per cent of the shares of Alborz insurance company, 25 per cent of the shares of Mellat [Nation] Bank, 20 per cent of the shares of Esfahan oil refining company, 20 per cent of the shares of Tabriz oil refining company, 15 per cent of the shares of Fanavaran petrochemical company, 17.7 per cent of the shares of Amir Kabir petrochemical company, 20 per cent of the shares of Tabriz petrochemical company, 20 per cent of the shares of Marun petrochemical company, 66.16 per cent of the shares of Iran wood panels [rukash-e chubi] company, 41 per cent of the shares of Bidboland gas company, 49.1 per cent of the shares of Hamedan gas company, 45.6 per cent of the shares of Ahvaz Navard and Luleh [iron beams and pipes] company, 10 per cent of the shares of the Shomal [Northern] drilling company, eight per cent of the shares of al- Mahdi aluminium complex, the remaining government shares in Iran Khodrow Lent [Iran car company] company, 10 per cent of the shares of Farasahel [beyond the shores or overseas] industries company, 15 per cent of the shares of Amuzeshy [Educational or Training] industries company, 100 per cent of the shares of scientific amusements of Amuzeshy industries company, the remaining government shares in Offset company, the remaining government shares in Fars and Khuzestan cement factories, 12.3 per cent of the shares of Afshar-e Yazd woollen clothes company, 10 per cent of the shares of Arak (Iraco) [the item in the round brackets could also be Arako or Arakco] aluminium company, 30.1 per cent of the shares of Iran- Shindler company, 43 per cent of the shares of Ta’sis building installations company, 36.9 per cent of the shares of Kashan silk and velvet company, 14.12 per cent of the shares of Tehran chalk company will be sold off in order to pay for the confirmed government debts.

On this basis, the sums in rials of each of the foundations and companies to which the government owes money (the companies which will receive the shares) out of all the government debts [to them] will be paid on the basis of paragraph v [vav] of note 4 of the national budget law for the year 1386 [the year that started on 20th March 2007]. It will also be in keeping with the method set out for allocating [presumably the shares of] the companies as approved in article one of resolution, number 188308/t, and 418/h, dated 20/11/ 1386 [8 February 2007].

Also, according to that resolution, government shares (shares that belong to the relevant, specialized mother companies) in 30 companies a percentage of whose shares will be sold off, will be sold in order to pay for government debts. Those companies would be run by those who receive them [to whom they are sold] according to regulations.

Also if the value of the shares that have been allocated is higher than the government debt to any of the companies that receive those shares, on the basis of the paragraph 2 of distribution [allocation of shares] the excess value will be sold to those companies according to the regulations that will be formulated by the supreme body in charge of allocations [selling the shares]. Those excess amounts would be paid for either in cash or by instalments. Otherwise, the amount of the shares will be reduced, based on the priorities of the companies involved, up to the ceiling that has been set out in order to cover [presumably the excess amount more than what the government owes them].

On the basis of that resolution, the shares that will be sold off in keeping with the provisions of that resolution will be sold after deducting the preferential shares [saham-e tarjihi]. In case those who are qualified [presumably to receive those shares] do not come forward, or the workers or employees of the companies that are allocated do not absorb [presumably buy] the preferential shares up to the ceiling that has been set, the number of shares that have been allocated would be increased in accordance with the regulations set out in that resolution.

After this resolution is communicated and the contents of paragraph 2 of the resolution have been implemented, each of those who have received the shares will replace the owners of government shares as shareholders, in keeping with the number of shares that they have been allocated. The managers of the companies that have been sold, and the owners of the relevant government shares are duty- bound to immediately take necessary steps in order to transfer the ownership of their shares to those who have been given those shares.

This resolution adds: “The value of the shares of the companies that are traded on the stock market will be fixed on the basis of the value of those shares in the stock market on the date when this resolution has been approved. The value of the shares of the companies whose allocation has been decided on the basis of the resolution of the council of ministers, which are at the stage of being admitted to the stock market and the value of whose shares has been accepted by the stock market, will be the average price of the value tabled at the stock market at the end of the 15 days of trading in the stock market after the value of the shares has been known [sentence as published]. Also the value of the companies that are not in the stock market will be based on the combination of the profit rates and the net value of their assets, on the basis of the resolution number 29203/T/33099/H dated 11/5/1384 [1 August 2005] by the Council of Ministers. The value of the shares of the companies that are not traded on the stock market must be announced three months after the appointment of experts. In the case of the shares of the companies that are traded on the stock market or which have been accepted by the stock market [to trade on it], their value must be announced immediately after they have been selected. This must be sent to the supreme council [hey'at-e ali] in charge of the allocation for its final approval. After they have approved the value of those shares it will be communicated to the national treasury for implementation in the case of the relevant accounts and for the information of those who will benefit from them.

Also, the Ministry of Economic Affairs and Finance (the chief national treasury) [the words inside the brackets as published] is required to announce the relevant organizations [dastgah-ha-ye marbuteh], and to distribute the total amount of the funds from the shares that have been allocated among those who will be given those shares as payment in return for government debts. The equivalent amount of the registered value of the shares of the companies that fall within the provisions of this resolution should be deducted from the government assets in the relevant specialized mother company [sherkat-e takhassosi-ye madar]. All the managers of the companies whose shares will be allocated in accordance with this resolution are required to place all the relevant information and the necessary documents at the disposal of the experts selected in accordance with paragraph six and of the privatization organization within two weeks.

According to this resolution, the relevant expenses for carrying out the legal work and the costs of expert works and other expenses connected with the resolution that has been approved will be provided and paid for by those who receive the shares [enteqal- girandeh-ye saham].

This resolution has been communicated on 10/1/1387 [29th March 2008] in the letter number 696 by the first vice-president to all the executive organizations.”

Originally published by Mardom-Salari website, Tehran, in Persian, 8 Apr 08, pp 1, 7.

(c) 2008 BBC Monitoring Middle East. Provided by ProQuest Information and Learning. All rights Reserved.