Online edition of Daily News

Commenting on this strategic purchase, Ibis Transport Project Director Ian Bulley told the Daily News yesterday that the bidding was done yesterday and it was legally binding and that the payment will be made to the Government of Sri Lanka within the next three months. He said that the British investor will be infusing new capital in the form of vehicles and training and with overall improvements to the business with the clear mandate of providing a modern transport service to the company.

Responding to a question as to whether there will be the import of British buses into Sri Lanka, he said: "We will be bringing in a fleet of double deckers which will be around 15-20 for a start which will meet the transport requirements of the heavily congested areas of Colombo. He said that the company will also brining in luxury buses from the UK. It will also have special buses for school children at concessioary rates.

He said that this strategic purchase was going to be a Government- private sector partnership with the objective of meeting the ever growing demands of the transport sector and that he was confident that there would be a growth of the transport sector with the current peace process widely believed to be on the right track.

Asked whether there would be expatriate Directors and staff on the Board of these companies, he replied in the affirmative. He said that there will be a total expatriate staff of over 20 which includes Directors and Senior Managers, some of whom will be based in Colombo and the other in the outstations.

Asked how the operations were going to take place, he said:" Transbus of UK will be supplying the bus bodies. Tata of India will supply the bus chassis. The assembly will be done locally. This is the start of a long process."

He said that as the transportation sector, Ibis had rich and diverse experiences in Africa and the Far East and the strength of the company was in management expertise."

Asked how long it would take the consortium to reach the Break Even Point and turn around these six companies, he said:" We are in Sri Lanka on the long term."

The single largest transaction in the century-old Colombo Stock Exchange (CSE) took place yesterday with the British consortium of Ibis Transport consultants with technical collaboration from Transbus International (a member of the giant May Flower Corporation of which former British Prime Minister John Major is a Director) buying the 39 percent equity stakes in six of Sri Lanka's 13 Peoplised Transport Companies for a consolidated value of Rs. 1.45 billion.

The sale conducted on the: "All Or None Board" saw the 39 percent equity stakes of the Colombo Metropolitan Bus Company Ltd, Mahanuwara Bus Company Ltd, Kalutara Bus Company Ltd, Gampaha Bus Company Ltd, Sabaragamuwa Bus Company Ltd and Rajarata Bus Company Ltd being sold on the floor of the Colombo bourse. This is in accordance with the Government's policy of divesting the bus companies in parcels of six at a time.

The sale of the 39 percent equity stakes of the bus companies saw the sale of 423,247,793 shares of the Colombo Metropolitan Bus Company Ltd for Rs.432.2 million, 189,767,351 shares of the Mahanuwara Bus Company Ltd for Rs. 189.6 million, 147,147,761 shares of the Kalutara Bus Company Ltd for Rs. 147.1 million, 17,550,000 shares of the Gampaha Bus Company Ltd for Rs. 251.2 million, 17,867,850 shares of the Sabaragamuwa Bus Company Ltd for Rs. 249.8 million and 13,650,000 shares of the Rajarata Bus Company Ltd for Rs. 147.1 million.

The opening bid value per share of the six companies as placed on the Colombo Stock Exchange were: Colombo Metropolitan Bus Company Ltd - Rs. 19.75, Mahanuwara Bus Company Ltd - Rs. 19.50, Kalutara Bus Company Ltd-Rs.15.25, Gampaha Bus Company Ltd - Rs. 14.50, Sabaragamuwa Bus Company Ltd - Rs.14 and Rajarata Bus Company Ltd- Rs. 11. The par value of all the shares is Rs. 10.

A further salient feature was that the British Consortium was the lone bidder in the purchase of these six bus companies. It was the only bidder to satisfy the criteria set out by the Public Enterprises Reforms Commission (PERC) and also pay the bid bond of Rs. 100 million.

He also commended the Government for accepting the consortium as a partner. He also thanked the local partners- Hatton National Bank, HNB Stock Brokers (Pvt) Ltd and Free Lanka Trading Co. Ltd.

Latec Engineering and Management Services ( Pvt) Ltd Managing Director Ravi Wettasinghe said: "The British Consortium will be working very closely with Latec in that the two subsidiaries of Latec will be providing all the support services in terms of repairs, assembly and the local supplies. The two subsidiaries are: Werahera Engineering Services Co. Ltd (WESCO) and Kahagolla Engineering Services Co. Ltd at Kahagolla, Embilipitiya.

WESCO Managing Director S.A.P. Sooriyapperuma said:" There are around 1,500 buses in these six companies which need urgent repairs and that the estimates in this direction have not been prepared. Both the WESCO plant at Werahera and the KESCO plant at Kahagolla had a capacity of repairing 300 buses per month and that these two companies will add around one thousand employees more to the existing staff strength of 1,200 employees, he said

HNB Stockbrokers (Pvt) Ltd CEO/General Manager, Deva Ellepola said that the issue would provide the much needed boost to the Colombo bourse and would increase foreign investor confidence.

The Government will hand over the new management to the new investor and we'll enter into a shareholders' agreement and the management contract entered into with the new operator and the company. In view of the urgency of this investment, it is proposed to address the regulatory issues through the contractual arrangements until the Transport Regulator is sufficiently, Chairman of the Public Enterprises Reforms Commission (PERC) Dr. P.B. Jayasundera said.

The land and the building and the immovable assets/ property used by the bus operators will remain as Government property and will be leased on a long term basis in the form of an annual rental for operational requirements, he said. The employees will be assured of continuity of employment and there will not be any retrenchments, the Government has assured.

Dr. Jayasundera also said that the valuations of these companies will also enable to realise what capital input will be required of the private sector which will mean that they will be run more efficiently as the private sector will ensure the efficient running of these services.

The financial inputs into these companies will be mandatory as the Government infuses over Rs. 3 billion annually and this has not been instrumental in saving these companies from the disastrous situations that they have been in over the years. Thus, this process of restructuring has been mandatory where there are financial inputs from the private sector, he said.

Asked about the collaboration, he said that there was no limit to the joint ventures. It could be one partner or it could be even more than that, he said.