TURKEY'S Privatisation Administration (OIB) is speeding up the government's state assets sale programme, which aims to generate $5,000 million in 1995 and up to $20,000 million in 1996 (MEED 9:12:94, Cover Story). Bids have been invited from both international and local strategic investors for 60 per cent blocks in airport ground handler Havas and Sumerbank.

The acceleration in the process followed the passage in late November of a fundamental privatisation law, after the programme was held up in the constitutional court.

'They have turned on the green light,' says Mehmet Kutman, chairman of the leading Istanbul brokerage house Global Securities. It is sole advisor and global administrator to the OIB for the Havas sale. While the court cases delayed the programme of actual sales, a lot of preparatory work was being done in the background, he points out.

Bids for the block offers in Havas and Sumerbank must be in by 23 January and 30 January respectively. Their remaining shares will be sold through public offerings by the end of March to be listed on the Istanbul stock exchange.

The sale of Havas, with a market capitalisation of about $100 million, has attracted keen international interest. So much so, that no roadshow is considered necessary for the half of the total public offering, valued at $20 million-25 million, to be sold abroad. The company has a good management record and steady workload, even though it incurred losses of TL 2,000 million ($50,000) in first-half 1994. At present, 51 per cent of its shares are held by the OIB, and the remainder by Turk Hava Yollari (THY - Turkish Airlines).

Global estimates that the foreign portion will be oversubscribed by up to 20-30 per cent. Prior to the issuing of technical information, it has received firm purchase inquiries for a value totalling around $15 million. About 50 per cent of the global offering will probably be placed in the UK, about 30 per cent in the US, and the remainder in the rest of the world.

Interest may not be so strong from abroad in Sumerbank, although its balance sheet has been put in order. It made profits of TL 1.2 million million ($30 million) in 1994, and is in the process of raising its capital to TL 1.6 million million ($40 million) from TL 850,000 million ($21.25 million) prior to the sale. The deal is being arranged by another state institution, Vakifbank, and is expected to fetch up to $100 million.

Brokers have expressed doubts as to the viability of a sale of state banks, as many have a large debt burden. All state banks must be sold off within two years according to the privatisation law, with the exceptions of the central bank, Ziraat Bankasi (Agricultural Bank), Turk Eximbank, and Halk Bankasi.

However, the programme has much to offer in other sectors. A week after Havas and Sumerbank, the OIB was expected to invite bids from strategic investors for around 30 per cent of the state's 51.66 per cent stake in Eregli Iron & Steelworks (Erdemir). The total applied cash value for the company is estimated at $1,200 million, but the present market valuation according to shares already traded on the Istanbul stock exchange is around 50 per cent that figure.

Erdemir will be followed, probably in February, by a private placement open to foreign and local investors of around 20 per cent of refined products distributor Petrol Ofisi. A further 50-55 per cent may be made available through block sales and public offerings within six months. The total proceeds could reach $1,000 million.

Other sizable deals this year include the Turkish Petroleum Refineries Corporation (Tupras), petrochemical giant Petkim, and THY. Smaller offerings will include a block sale of the whole of the Nimsa fruit juice factory, and of the Cesme hotel on the Aegean operated by the Turban resort chain. By the end of January, OIB is likely also to invite bids from strategic investors for a percentage, yet to be fixed, of electronics manufacturer Testas.

The government is waiting for the statement by the constitutional court on the blocking of the sale of Turk Telecom, created from the telecommunications division of the posts, telegraphs & telecommunications (PTT) administration. It will then incorporate the court's decisions into a new law.

A consultant can then be appointed for the sale which is expected to contribute between $8,000 million-23,000 million of the figure expected from privatisations in 1996. Some 30 foreign concerns are already lining up to bid, some in consortia including local institutions (MEED 13:1:95; 16:12:94). The award of the Turk Telecom consultancy will be decided between the OIB, the treasury, and the Transport & Communications Ministry.