PRIVATIZATION OF STATE-OWNED ENTITIES
FOREIGN CONCESSIONS, LICENSES OR FRANCHISES
Governments in both developing and developed countries have come to the realization that there are many benefits to be obtained by privatizing state owned enterprises such as utilities, transportation facilities and even such government functions as state pension or social security systems.
Privatization projects may entail the selling of existing state-owned facilities and the transfer, in whole or in part of ownership and/or control of the facility. Alternatively it may entail licensing concessions or franchising for a period of years. Still other project are contracted for development and operation to a private enterprise [BOT and its variants] and then returned to state-ownership after a period of years.
We can assist the client in obtaining information, developing strategy and policies, bringing parties together, negotiating agreements, drafting documents in all phases of the pre-privatization procedures and the privatization process as well as providing counsel during the post privatization legal operational issues.
Not all privatization projects are well advertised. often the formal announcement of a tender, auction or other proposed sale of an entity may become known long after the privatization terms and conditions have been determined.
Prospective contractors should obtain advance notice and a continuous stream of news concerning a pending privatization project as well as have the opportunity to participate in discussions which can lead to the setting of the terms and conditions for the privatization process. Our assistance at this early stage can makethe client's participation more successful.
Careful legal analysis of the proposed terms and conditions is required; negotiations with the state owned enterprise and host government must be undertaken . The client should be represented by counsel in the tender or bidding, auction, sale or other process by which the assets or entity are transferred to the private sector and of course, counsel should provide the client with the necessary scrutiny, due diligence, review and drafting of the contractual documentation and the careful analysis of the underling legal framework which should be undertaken in collaboration with qualified local counsel which as noted, we can provide through our network of associated local counsel.
A team is usually formed of prospective partners, investment bankers, legal counsel, and others. We assist in the negotiations for the selection of the members of the team and the establishment of working arrangements or strategic relationships. Then we work with the team to ensure a smooth operation without which the ultimate objective of winning and acquiring the privatized entity would not be possible.
Essential working arrangements with government counsel and counsel for the state-owned enterprise must first be developed. We then assist in drafting and negotiating the contractual documents with them, assist in creating innovative financing arrangements and as the client's counsel, generally advise so as to ensure that the interests of the client are well protected in the relationships with all the parties to the privatization process.
We assist in the negotiation and review of concession and license agreements and ensuring that the underlying legal framework affords the client the necessary protection required in such operations.
