The sale is the most advanced in a Ministry of Finance bundle that also includes the Electricity Authority of Cyprus (EAC), the National Lottery, some state-owned real estate, the trademarks and logos of the now-defunct Cyprus Airways and the Cyprus Stock Exchange. Separately, theMinistry of Transport, Communications and Works will privatise Limassol Port and sell the licence for a super casino on the outskirts of Larnaca.
The whole privatisation package needs to raise €1.4 billion by 2018 as part of the conditions of the 2013 €10 billion bailout from the Troika of international lenders – the European Union, the International Monetary Fund and the European Central Bank – that saved the island’s economy from collapse after its banks failed.
“In terms of our preparations to launch the transactions, from a timetable perspective we are on track,” said Herodotou, who spent more than 11 years as an investment banker at UBS in London before taking up the role of Commissioner of Privatisation under the Minister of Finance in June last year. “Cyta is the most advanced from our perspective, we have all the advisors on board,” he added.
There are three phases in the privatisation process – request for expressions of interest, non-binding offers and binding offers.
Cyta is currently at the preparation stage before the launch of the request for expressions of interest. According to the terms of the law on privatisations, the government will decide when the launch should happen. The law also states that the privatisation will take the form of a strategic investor acquiring a majority stake, rather than a listing.
“It’s not about privatisation per se, it’s about bringing in a strategic investor to enhance the organisation, that’s what we’re targeting,” Herodotou said.
The sole financial advisor and lead for the Cyta sale is Citigroup. Accounting and due diligence is coming from PwC and the technical advisor is Roland Berger. Legal advice is being provided by a consortium comprising local law firm Antis Triantafyllides & Sons LLC andmultinational Shearman & Sterling LLP.
The privatisation law specifies that employees’ rights must be secured through consultations between the interministerial privatisations committee and unions, and Herodotou said the committee has already held a number of meetings with the Cyta unions.
“We have a technical support role in these discussions. It’s between the unions and the ministers and we’re just supporting and saying if you want to establish that, this is potentially how it could work mechanically,” he said.
Privatisation of EAC is slated for 2018, and the authority’s four unions have already organised a series of planned power stoppages in protest.
The call for expression of interest in Limassol Port should be launched this month, according to Transport Minister Marios Demetriades. The management of the port’s commercial activities will be granted to a private company for between 25 and 30 years.
Herodotou said the privatisations unit will launch the request for the expression of interest for the use of Cyprus Airways trademarks and logos within a week or two and should be signing with the advisors on the study and analysis of candidate state-owned real estate for private-sector investment within two weeks.
“Our duty in the privatisation unit for real estate is the study that will be done by independent advisors and which will analyse the candidate real estate plots, and depending on what the study says per item it will be the Council of Ministers that will decide and the relevant ministries that will implement,” he added.
Next on the list will be the National Lottery, and finally the EAC, the procedure for which still requires a lot of work. “On the basis of what’s on the list for the programme I’m confident that everything is doable,” Herodotou said.