When Ireland announced that the IMF was being called in to provide assistance via a bailout program, the first thing that hit my mind was what were they after. We know from economic hitmen like John Perkins that the IMF leaves a country so hocked up in debt that it has to sell of its assets. Skills that were developed in Africa and South America are now coming to Europe. Ireland has already announced what is to be stripped as agreed to with the IMF and now one of the most profitable companies(Bord Gais) is about to floated.
When Ireland floated the national telephone company (Telecom Eireann) in 1999 now called eircom, it turned out to be a disaster. The employees were given 15% of the company as a sweetener not to strike and block the floatation thus denying further revenue for the state. The IPO price was way to high, causing many Irish investors (entire country encouraged to get involved) to lose their shirts. Then after a series of companies took it over including Vodafone, the company was asset stripped and now finds itself bankrupt.
So what can we expect? Well the irish taxpayer will get screwed, the asset will be floated or sold at the worst possible time, foreign companies will take advantage to strip it and finally the taxpayer will be left to pick up the pieces minus a great asset that pays a dividend.
THE Government is set to tender for advisers to manage the flotation of Bord Gais Energy later this year or early next year.
The tender will pave the way for the biggest initial public offering since the privatisation of Eircom back in 1999 and generate millions of euro for Dublin’s hard-pressed stockbroking and legal communities.
The National Treasury Management Agency, which is managing the sale of state-owned assets on behalf of the Government, will put up a detailed tender on the Government’s tender website as well as tendering at European level. Investment bank Barclays Capital was hired by the NTMA earlier this year to advise on the sale options for Bord Gais but the work for the entire project must now be put up for tender.
The Government must sell state assets under the terms of the 2010 bailout deal which called on the State to raise at least €2bn from the sale of state-owned assets. Some of the money will be used for job creation schemes while the rest will be used to repay debt.
Energy Minister Pat Rabbitte plans to sell Bord Gais Energy which buys gas and electricity on the wholesale markets, sells power to homes and businesses and operates energy plants. Solicitors William Fry estimates that the units will raise €1.5bn.
Interesting that one of the assets for sale is Coillte (national forestry) which owns 7% of the state. Former Taoiseach (Prime Minister) Bertie Ahern had a massive study into what minerals etc were under the land. He refused to have the study published so he obviously know where the “good stuff” is. Guess who is chairperson of the International Forestry Fund, which has expressed an interest in buying Coillte lands should they come on to the market. You got it, Bertie Ahern. Hmm, a cynic might say that he compiled the study a few years before things went bad, putting himself in a great position to take advantage, bearing in mind he never published the study.
The State will retain ownership of the gas transmission and distribution systems and the two gas interconnectors which link the UK and Ireland. The Government is also considering the sale of the remaining stake in Aer Lingus and forests belonging to Coillte.
Managing a share offering is big business for the financial, legal and public relations advisers that help shepherd a company on to the stock exchange.
The flotation of Eircom cost the government of the day £80m (€101m) some 13 years ago. The flotation of Aer Lingus in 2006 was another bonanza for advisers with the State shelling out €18m.
Source: Irish Independent