The government has been embarrassed by the collapse of negotiations for the privatisation of Sumerbank, the second deal in a privatisation drive aiming to net around $5,000 million in 1995. The first deal, for airports ground handler Havas, has been concluded successfully with the local Yazeks Industry & Trade (MEED 7:4:95;10:2:95; 20:1:95).

The highest bid of $45.2 million submitted for Sumerbank by Cingilli Holdings, has proved unacceptable to the High Board on Privatisation, according to Ali Sevki Erek, State Minister responsible for privatisation. Financial sources say the government had expected to raise around $60 million from the block sale of 60 per cent of Sumerbank’s equity. The government has not yet publicly announced what it plans to do next with Sumerbank. Cingilli says it will consider making a new offer if invited.

Evaluation by the government’s Privatisation Administration (OIB) had narrowed six bids down to two before Ceylan Holding pulled out, leaving Cingilli alone, say the sources. Ceylan decided to withdraw after it had concluded a separate deal valued at around $8 million for the purchase of the Turkish operations of Banque Indosuez, subsequently to be renamed as Capital Bank. Cingilli wished to purchase Sumerbank with its 49 branches countrywide to expand on its existing ownership of Demirbank, say the sources.

After concluding the Havas deal for around $36 million, Yazeks plans to invest $12 million in upgrading its new subsidiary’s operations. Yazeks also says it will try to resolve a strike by Havas workers over pay.

Attention is now focusing on the next major block sale in the OIB’s calendar, probably of around 30 per cent of the government’s 51.66 per cent share in the Black Sea Eregli Iron & Steelworks (Erdemir). The deal could fetch about $180 million (MEED 17:2:94).

Industry sources say one of the favourites is a group of Turkish private sector steelmakers led by Colakoglu Metallurji. However, social opposition is growing against denationalisation amongst Erdemir’s management and employees, and in the town of Eregli itself, largely dependent on the plant and Erdemir subsidies for its livelihood.

Erdemir itself has announced profits totalling TL 2.2 million million ($57.8 million at end-year exchange rates) in 1994, an increase of 429 per cent over 1993. Wholesale inflation in 1994 worked out at 149.6 per cent.