The Jordan Phosphate Mines Company (JPMC) said on Thursday, January 18, it is considering plans to privatize the Aqaba Fertilizer Complex to pay back its JD71 ($100) Eurobond, due at the end of 2002.
The JPMC also raised its profit forecasts for this year, expected to reach JD2.6 million—a boost compared to JD80 million in losses incurred through 2000.
Although burdened with JD350 million in accumulated debts, the JPMC admitted the Eurobond is the most pressing concern. “We are considering a partial or full sale of the complex,” said JPMC director general Khalid Sheyyab.
Critics warned against defaulting on the bond arguing it could hinder other Jordanian companies from tapping into international capital markets.
The bond was issued in 1997 to finance Phase II expansion project at the Shadiyeh mine. Instead, the JPMC used a total of $77 million of the bond's proceeds to lower bank debts.
The remaining debts, says Sheyyab, are not troublesome since they are long-term obligations. JPMC foreign debts stand at JD62.4 million owed to a number of creditors including the World Bank, the European Investment Bank and the Islamic Development Bank of Jeddah.
As for the JD40 million allocation for the early retirement scheme and end- of- service payment, Sheyyab explained a large portion is repayable over a15-year period.
On a rosier front, JPMC said the government decision to increase the firm's capital by JD20 million will help relieve the JD48 million debt owed to government.
A JPMC's general assembly is set to convene at the end of the month in order to rubber stamp the transaction. The JPMC has also asked the government for a debt- relief on its dues to the treasury, explains Sheyyab. The Finance Ministry estimates JPMC's debt in mining fees to have reached JD18 million at the end of 2000.
“We are negotiating with the government to fully or partially exempt us from our debt or maybe reschedule it,” Sheyyab told the Jordan Times.
The company is pinning hopes that the government's promise to lower mining fees from $7 to $5 per ton would help it rebound into profitability. JPMC says the profit the company is attempting to make was calculated on the reduced mining fee-breaks formula, adding that the firm plans to resume exports to traditional markets at competitive prices and standards.
Executives complain that the fees, imposed in the late 80s when profits were at record highs, are one of the highest in the world. According to Sheyyab the mining industry is tax-free in some countries and pays less than $1 per ton in others.
Of the JD80 million in losses in 2000, the JPMC stressed operational losses did not exceed JD40 million. — ( Jordan Times )
By Rana Awwad
© 2001 Mena Report (www.menareport.com )