forestryprivatizationinsouthafrica.docVIP

Forestry Privatization in South Africa Saurav Ganguly yawned sleepily and looked at his watch. It was 1.30am. Looking around the hotel room he spotted a clock – 9.30pm. Saurav rubbed his eyes and checked his watch again. He suddenly realized he was still on Indian Standard Time. It was a long flight from Mumbai and he was exhausted. He hit the bed hoping to tie up the matter he was in Johannesburg for. It was mid-September 2001 and there were just a few weeks left before the due date for bid submission, and the point when the South African Timber Company Limited (SAT) opened its “Data Room”. The government of the Republic of South Africa was offering a majority shareholding (75%) in SAT, one of the largest forestry plantation companies in South Africa. In the proposed sale, ownership of the land on which the forestry assets were situated was not proposed to be transferred. Instead, leases and licenses governing use of the land, harvesting of wood and all re-afforestation requirements would be granted to the acquirer. Saurav Ganguly, CEO of Cooling Towers India Ltd. (CTIL) flew into Johannesburg from Kolkata, India, along with his executives and investment bankers, to monitor the due diligence exercise as well as to come up with a final bid value. They also had to find a Black Empowerment Partner (BEP) for the project and meet potential lenders to tie up debt financing for the acquisition, before they returned to India. They had only three weeks to accomplish this. The South African Timber Company Limited (SAT) The assets in the bid package were located in the most productive timber growing region of South Africa with productive soils, favorable topography and a good climate with adequate rainfall. The total area of the forestry assets that would be leased by SAT was 186,954 hectares (about 0.15% of total area of South Africa); of which 129,430 hectares were plantations (close to 10% of the total forestry plantation holding in South Africa). The