Southern States - Andhra Pradesh

Yanamala decries YSR remarks on NSL units

By Our Special Correspondent

HYDERABAD MAY 25. The Finance Minister, Yanamala Ramakrishnudu, has urged the Leader of the Opposition, Y.S.Rajasekhara Reddy, to desist from making wild allegations with regard to the privatisation of four undertakings at Shakarnagar, Madhunagar, Metpalli and a distillery at Shakarnagar of the Nizam Sugar Limited on a joint venture basis.

In his reply to Dr. Rajasekhara Reddy, Mr. Ramakrishnudu has said that the joint venture proposal is backed by normal securities and commercial guarantees with adequate control on the new company by the Government to ensure that the privatisation takes place smoothly and as per the time-bound programme envisaged.

Mr. Ramakrishnudu has said that the Nizam Sugars Limited will float a Company (not Delta Paper Mills, the purchaser) and will continue to have a 49 per cent shareholding with substantial presence on the board to monitor and control the activities till the redemption of preference shares, debentures and acquisition of shares by the purchaser.

While debentures are secured by the assets of one of the undertakings, the purchaser will provide a corporate guarantee for payment of interest, redemption of debentures and preference share capital. Obtaining bank guarantee in a privatisation transaction involving subscription equity and preference share capital is not a normal practice, and no banker will come forward to issue such a guarantee.

Since the Government has taken all precautions that are possible for a privatisation transaction, it will amount to spread misleading information to say that "the Government has gifted away free of cost the aforesaid assets,'' Mr. Ramakrishnudu has said.

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