[Intl-tobacco] Turkey unveils 2004 privatization plans: Japan Tobacco Noncommital

[rob@essential.org]

Turkey unveils 2004 privatization plans
But major us pension fund pulls out of turkish stocks
Officials in Ankara say those who follow Calpers example will lose out,
adding that
confidence is coming back strongly
Daily Star (Lebanon)
12 Feb. 04

Compiled by Daily Star staff

Turkey on Wednesday unveiled ambitious plans to push through privatizations
in 2004
ranging from tobacco and sugar to telecoms and power firms, undaunted by
failure to
meet privatization targets in past years. The announcement came a day after
an
influential US pension fund said it would no longer be investing in Turkey=
=92s
stock
markets. In a sign of greater caution on sell-off prospects, however,
Finance
Minister Kemal Unakitan gave no target for 2004 privatization revenues.

He said Ankara, which is seeking to accelerate a faltering International
Monetary
Fund (IMF) backed sell-off program, would complete work on a strategy to
privatize
the Tekel tobacco company in March and then announce a timetable for its
sale. An
initial attempt to sell the tobacco firm last year failed as bids fell shor=
t
of
official expectations. Ankara has pledged to advance privatization under a
$19
billion loan accord with the IMF.

In a news conference to detail the sell-off program for 2004, Unakitan also
said
there were plans to sell off the state power company Tedas and some
affiliated
firms this year. Though the minister provided no overall target for 2004
privatizations, the treasury previously said Turkey is looking to raise som=
e
1,600
trillion lira ($1.19 billion) from sell-offs this year.
Unakitan said Turkey was planning to make a public offering of 15 percent i=
n
Turkish Airlines. The flagship airline is 98.17 percent state-owned. He gav=
e
no
details on the plan.
The government is also looking at making a public offering of shares in the
leading
steel producer Erdemir.

The minister said that analytical work on the planned block sale of a 51
percent
stake in landline phone company Turk Telekom had been completed and that an
invitation for bids would be issued by the end of May, as previously
scheduled.
Turkey has carried out privatizations worth $2.2 billion since the start of
2003
and has collected $248 million in revenues over the same period, the
minister said.
Of 53 tenders offered last year, 50 were completed.

Turkey had previously set a target of starting privatizations worth $4
billion in
2003.
Unakitan said some factories belonging to the state sugar concern Turk Seke=
r
would
soon be included in the sell-off program. Turkey=92s High Privatization Boa=
rd
this
week approved the $1.3 billion sale of a controlling stake in state oil
refiner
Tupras, boosting trust in sell-off plans.

The Privatization Administration said in January it had cancelled a tender
for
state-run petrochemicals firm Petkim after it failed to attract enough bids=
.
Unakitan said there were plans to sell Petkim this year and that Turkish
officials
would hold talks with possible investors in the company. It was announced
this week
that Turkey has failed to meet the strict investment standards of an
influential US
pension fund, California Public Employees=92 Retirement System (Calpers), b=
ut
other
investors said Wednesday the EU-candidate country has made progress in some
areas.
Improvements have come on both the political and economic front, they said,
although the state of Turkish corporate governance remains very poor.

Turkey, a major debtor of the IMF, was dropped Tuesday from a list of stock
markets
that =AD pending final approval =AD the $164 billion Calpers can invest in.
Calpers
gave no specific reason for Turkey=92s fall from grace, but the fund ranks
countries
for investment based on criteria that include market efficiency, corporate
governance, political stability and human rights.
Investors =AD though reluctant or unwilling to comment on Calpers =AD said
Turkey had
been making great strides in both political and economic reforms as it
worked
toward EU membership.
=93Macro economic improvement seems to be continuing and also the talks on
Cyprus,
smoothing the way for (EU) accession, are progressing,=94 said Philip Ehrma=
nn,
emerging markets chief at Gartmore Investment Management. =93All of which h=
ave
given
comfort to the credit markets, which tend to give direction to the equity
markets.=94

Jacqueline Aldous, head of offshore equity analysis at fund researcher and
fund-of-funds manager Forsyth Partners, agreed. =93There is general
bullishness. The
political situation has stabilized =85 and with the political risk, the equ=
ity
risk
has come down,=94 she said. But analysts said Turkey=92s record of corporat=
e
governance =AD a major Calpers consideration =AD left much to be desired.
=93The standards are very low,=94 said Maarten de Kok, senior portfolio man=
ager
for
investor Robeco=92s emerging market fund.

Turkish firms have been criticized for lack of disclosure and many are
tightly run
by families, factors which often drive away investors seeking well run
firms. But
even here, there was some sign of slow progress.  =93The financial crisis o=
f
2001 has
forced some of the worst corporate (offenders) out of the market,=94 de Kok
said. A
$19-billion IMF loan is helping Turkey recover from the 2001 crisis in whic=
h
the
lira collapsed amid soaring inflation. In an initial reaction from Ankara t=
o
the
Calpers move, a Turkish government official told Reuters Calpers informatio=
n
about
his country appeared to be =93obsolete.=94 =93Confidence is coming back ver=
y
strongly,=94
he said. =93Investors acting on the basis of this report will lose because
Turkey is
a big, dynamic market.=94 =AD Agencies


Japan Tobacco says no decision yet on Tekel bid
Reuters, 02.11.04, 11:55 PM ET

TOKYO, Feb 12 (Reuters) - Japan Tobacco Inc (JT) <2914.T>, the world's
third-largest tobacco group, said on Thursday it has not made a decision on
whether
to join a fresh bid for the tobacco unit of Turkey's state-owned giant
Tekel.

JT -- best known for its Camel, Winston, Salem and Mild Seven global
flagship brand
cigarettes -- in November filed the highest bid, at $1.15 billion, for
Tekel's
tobacco business, which controls nearly 60 percent of Turkey's cigarette
market.

But the Turkish government shelved its attempt to sell the firm after bids
fell
short of market and government expectations for up to $3 billion.

"We would like to come up with a decision after confirming conditions and
other
details planned for the Tekel bid," said JT spokeswoman Yukiko Seto. "We
cannot say
at this moment whether we will participate in the bid.

Turkey said on Wednesday that it planned to complete work on its strategy
for
privatising Tekel's tobacco arm in March and would then announce a timetabl=
e
for a
fresh tender, a centrepiece of its IMF-backed privatisation programme.

Faced with slackening domestic cigarette sales, JT aims to cut costs throug=
h
a
sweeping restructuring at home while boosting its presence in overseas
markets,
where it currently generates about 16 percent of its total revenue.

The former Japanese state monopoly, still two-thirds owned by the
government, has a
powerful presence in Japan, the world's third-largest tobacco market after
China
and the United States, and in the rest of Asia with its Mild Seven
cigarettes.

It was little known outside the region until its 1999 takeover of the
non-U.S.
operations of R.J. Reynolds Tobacco Holdings (nyse: RJR - news - people),
which
made it the world's No.3 tobacco firm after Philip Morris (nyse: RJR - news
-
people) and British American Tobacco <BATS.L>.

In mid-afternoon trade on Thursday, JT's shares were up 4.61 percent at
772,000 yen
versus a rise of 1.34 percent in the Nikkei average <.N225>.

Copyright 2004, Reuters News