The State Assets Management Agency of the Republic of Uzbekistan (hereinafter – the UzSAMA/The Customer) announces the selection of a Leading consultant (hereinafter – Consultant) to develop a privatization strategy and roadmap for its implementation (hereinafter – Project) of Navoiyazot JSC (hereinafter – Asset) in accordance with the relevant privatization programs.

All interested applicants are invited to submit their commercial proposals based on this Request for Proposals (RfP) no later than 18:00 PM (Tashkent time) 27 March, 2023.

If a joint proposal is submitted, a key consultant must be named who is also responsible for coordinating the work of the consulting partner involved.

Interested Consultants are asked to deliver a commercial offer to the contact addresses listed below:

Shokhrukh Okhunov, Head of department of the State Assets Management Agency of the Republic of Uzbekistan;

Tel.: +998-71-259-20-23; e-mail: tender@davaktiv.uz;

Shokhabbos Abduazimov, Deputy head of department of the State Assets Management Agency of the Republic of Uzbekistan;

Tel.: +998-71-259-20-91; e-mail: tender@davaktiv.uz.

Under this Project, apart from the Lead Consultant, the International Finance Corporation (IFC) is attracted as a strategic consultant. Moreover, a separate selection process will be announced to attract a Technical Consultant for technical, environmental and social due diligence.

It is expected that the work on the Transaction will be carried out in close cooperation between the representatives of the Leading consultant, IFC, Technical consultant, the Client and the Asset, if necessary, with a visit to the Asset and providing practical assistance to the Asset team in data collection.

Disclaimer

This request does not constitute a commitment to submit an offer, the Customer does not give any obligation to accept any offer or conclude any contract in accordance with this Request. Accordingly, this Request does not imply the conclusion of a contract by virtue of the publication of this Request and/or receipt of applications in connection with it, or through negotiations or discussions with one or more selection participants regarding the Project.

The materials and information contained in this document are intended to serve as a preliminary summary of only the most important aspects of the Project and a general indication of the scope of work that can be expected from the Consultant in developing the privatisation strategy.

Selectors cannot and should not rely on anything other than the sole limited purpose of preparing initial presentations and proposals for the Purchaser in connection with the selection process.

The text of this Request is published in Uzbek, Russian and English languages, in case of discrepancies preference is given to the English version of the text.

Request for Proposals (RfP) for Leading consultant on the development of a privatization strategy and roadmap for its implementation of Navoiyazot JSC

The Resolution of the President of the Republic of Uzbekistan “On approval of the targeted program for strategic development of the chemical and gas chemical industry” dated October 10, 2022 No. PP-388 stipulates inter-alia preparation of state’s and Uzkimyosanoat JSC shares in the authorized capital of Navoiazot JSC for privatization. The privatization of Navoiazot JSC is considered either as privatization of the whole Company or of the possible separate unbundled units and/or production chains of the Company and/or unbundled infrastructure and services operated by an independent seasoned private operator. In order to implement it the following tasks must be conducted:

• Financial and Tax Due Diligence;
• Legal Due Diligence;
• Soft Market Sounding
• Primary Market Sounding for the Company as a whole as well as for the possible separate unbundled plant units and/or production chains and/or infrastructure and services;
• Development of a privatization strategy (to privatize state’s and JSC “Uzkimyosanoat” shares in the authorized capital of Navoiazot JSC) and a roadmap for its implementation.

In connection with this, UzSAMA is searching, through an open-bid competitive process, for a Consultancy firm (hereinafter referred to as the "Consultant") that will support UzSAMA’s team in implementing the aforementioned tasks.

The Consultant will take on the role of the Leading Consultant and will be responsible for the whole Project realization, including overseeing the Technical Consultant and consolidating its deliverables with own reports and documentation as required.

Privatization Strategy of the Company is intended to achieve the following goals:

• further improvement of operational efficiency of the existing assets of Navoiazot JSC and financial condition of the enterprise;
• Establish necessary conditions for further sustainable development and modernization of assets (infrastructure, services and production units), for introduction of modern technologies, financial sustainability and “know-how” expertise;
• Establish prerequisites for a potential increase in the return on assets to ensure payments of principal, interest, and taxes to the state budget;
• Increase volume of private investment in the country for the further development of the chemical sector;
• Increase efficiency of using financial, natural and human resources;
• Reduce impact of the company on the environment and supporting the social and economic development of Navoi region.

Briefly about the asset

Navoiazot JSC is one of the largest enterprises of chemical industry of Uzbekistan, specializing in the processing of natural gas, the production of mineral fertilizers, chemical reagents for gold miners, low-tonnage chemical products.

Navoiazot JSC, producing more than 30% of chemical products of Uzbekistan and considered as one of the base segments of Uzkimyosanoat JSC, covers almost all branches of industry, transport, agriculture, fuel and energy complex, as well as services, science and education.

Navoiazot JSC is actively involved in foreign trade operations and by the end of 2021 the company exported 6.9 billion UZS worth products to European and Central Asian countries. Also by the end of 2021 the company has net income at the amount of 3.1 trillion UZS, net income at the amount of 6.2 billion UZS and charter capital at the amount of 6.0 billion UZS.

The central office of the company is located at A. Temur street, Mirabad district 5, Navoi city.

Scope of procured services:

Scope of the Consultant's services under this Project will be divided into 2 (two) stages of implementation:

Stage 1: Detailed financial, tax and legal assessment and due diligences of Navoiazot JSC, conducted with the purpose to assess the necessity and subsequent possibility/feasibility of unbundling of the current interconnected infrastructure, production processes and facilities, general services (“shared services”) into legally separate production units with their further privatization.

1. Financial and Tax Due Diligences:

1. analysis of the financial position and financial performance of the Company for the past three years; revision of pricing policy and current operating business model with the goal of assessment the necessity and subsequent possibility/feasibility of unbundling of the current interconnected infrastructure and services, production processes and facilities, general services (“shared services”) into legally-separate production units and/or infrastructure and services;
2. analysis of the main factors that influence revenue and costs and their impact on profitability;
3. debt analysis, main covenants especially those restricting reorganization of the Company, repayment terms; pay special attention to the analysis of credit funds secured by a state guarantee;
4. analysis of loans including those which are received under state guarantees, and overview of key terms, and timely and full repayment;
5. studying the possibility of restructuring loans received under state guarantees as part of company’s privatization process of the Company as a whole or for the possible separate unbundled plant units and/or production chains and/or infrastructure and services;
6. analysis of working capital with an assessment of working capital that could be required for separate unbundled plant units and/or production chains and/or infrastructure and services;
7. analysis of the main CAPEX programs and the possibility of their reallocation to separate unbundled plant units and/or production chains and/or infrastructure and services;
8. review of contract terms with major suppliers and consumers and the possibility of their reallocation to separate unbundled plant units and/or production chains and/or infrastructure and services;
9. analysis of forecast indicators and explanation of deviations from actual results; 

1. Tax analysis, covering the following key areas:
   • identification of historical tax risks;
   • identification of potential tax implications arising from the possible changes of business model and the legal structure;
   • overview of tax regimes used by the Company with a focus on a industry;
   • analysis of the appropriateness of the use of material tax concessions and the possibility of their application in the future;
   • analysis of tax audit and court liabilities;

2. Evaluation of the possibility of dividing financial and tax accounting into separate unbundled plant units and / or production chains and/or infrastructure and services.

2. Legal Due Diligence:

1. analysis of current organizational structure with an assessment of the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
2. analysis of the rights to carry out activities with an assessment of the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
3. analysis of property rights, contractual relations – including commercial arrangements for feedstock and utilities supply, with an assessment of the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
4. analysis of labor issues and its effect on the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
5. analysis of litigation and its effect on the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
6. analysis of prohibitions, encumbrances and other obligations on companies in general, as well as on equipment and individual plant units and its effect on the possibility of restructuring of the Company’s business into separate unbundled plant units and/or production chains and/or unbundling infrastructure and services;
7. evaluation of the possibility of dividing legal documents into separate unbundled plant units and / or production chains and/or unbundling infrastructure and services.

3. Market sounding:

1. assessment of interest and terms and conditions demand from regional and international strategic investors for the acquisition of the Company as a whole and/or as unbundled plant units and/or production chains and/or infrastructure and services; including commenting on requirements from investors such as commercial terms for feedstock and utility supply, short-term fiscal arrangements and/or ESG thresholds. The Consultant need to agree the approach on market sounding with the UzSAMA, including the list of potential investors; Q&A and etc.
2. analysis of the indicative value of the sale, depending on the responses received from the interested investors.
3. comment on the most important remedial actions needed to increase the population of viable investors and actions required to improve the valuation.

Conclusions of the financial and legal due diligences will be resulted in a report that should contain the following items:

• recommendations on the Company’s development strategy
• recommendations on the Company development strategy as a whole or potential unbundling of assets and on the possible grouping of plant units and production chains and/or infrastructure and services;
• recommendations for improving investment attractiveness of each group of plant units and/or production chains and/or infrastructure and services, taking into account the results of market sounding;
• recommendations on existing loan facilities (including government guaranteed loans), including consideration of the possibility of further restructuring.

This report should further incorporate the key findings and conclusions of the Technical Due Diligence report conducted by the Technical Consultant.

Stage 2: Development of privatization strategy and roadmap for its implementation of Navoiazot JSC:

1. Based on the results of the results of Stage 1, the Consultant proposes a vision for the Company's further development strategy and privatization and “roadmap”, reflecting the following issues:

• Development of proposals for the Company’s development
• Identify main stages, their sequence and approximate time frame terms;
• Recommendations on Navoiazot JSC privatization and/or concession methods: share of the sale/ company as a whole and / or individual groups of plant units / production chains and separately infrastructure and services. For each method, provide the feasibility, rationale for the feasibility of the chosen method, as well as provide a calculation of the range / indicative cost of the sale;
• Determination of the asset and infrastructure management structure from the beginning to the end of the process (who and how will manage before the transfer to the investor);
• Development of proposals for administering or closure of unprofitable production lines (and, possibly, production lines that cannot be privatized);
• Recommendations on possible changes in the legal framework that would allow the privatization of assets (if necessary);
• Recommendations on addressing key environmental and social concerns identified during the Stage 1;
• If a sale by IPO is recommended by the Consultant, the Consultant's opinion shall include:

1. clear and unambiguous recommendations on the size of the holding of shares of each company for sale within the framework of the IPO and the stock exchange (floor) for the IPO;
2. Recommendations on identifying the size of a potential premium/discount on the sale price when bringing a company into a competitive environment, taking into account a comparative analysis of the company's value and the value of comparable public companies;
3. Overview of the potential market demand for an IPO by looking at recent peer listings.

If the proposed privatization strategy for Navoiazot JSC consists of certain groups of plant units/production chains, the proposal should also determine:

• Action plan for unbundling of Navoiazot JSC into simpler and more understandable groups of plant units/production chains/production units for investors;
• Recommendations on the allocation of assets related to general infrastructure and services, and further interaction with groups of plant units and/or production chains;
• Recommendations for administering and/or transfer of social facilities;

The analysis should determine the range of asset values depending on the chosen privatization strategy (either by a group of plant units/production chains, or by the company as a whole);

The Consultant's recommendations to the respective privatization strategies should include potential risks and measures to reduce the risks on environmental and social outcomes (e.g. questions related to the number of employees, collective agreements and etc.)

2. If a decision is made that the assets are not ready for privatization, the Consultant must draw up a roadmap reflecting the following main points:

1. justification of the conclusion that the assets are not ready for sale, including an analysis of the financial condition, the presence of tax, legal, commercial, operational and/or environmental risks;
2. recommendations regarding non-core assets, including social facilities that can be sold separately from the main asset;
3. recommendations for improving the financial condition of assets;
4. recommendations on possible changes in the legal framework that would allow the privatization of assets (if necessary);
5. the Consultant should provide a calculation of the economic effect of keeping the asset in state ownership based on the costs and budgets associated with owning the asset, as well as an analysis of the reasons that indicate the impossibility of selling company in the medium/long term.

Interim reporting and communication

The Lead Advisor is expected to maintain regular communications with the Project Committee members involved in the Project during the performance of its duties and its interactions with other relevant stakeholders. All interim and final outputs must be delivered within the deadlines set by each Stage and must meet the standards deemed acceptable to the Project Committee. The Lead Advisor will always coordinate its interview visits with the appropriate Project Committee members. In the process of monitoring the work in progress, the Project Committee has the right to request, and the Lead Advisor is to immediately provide any and all information related to the Project, including information about the progress of the Project, etc. The Lead Advisor is to promptly replace any member of the Lead Advisor’s team whom Project Committee considers unfit or otherwise unsatisfactory for the job(s) assigned to him/her. In this case, the need for staff replacement does not give the Lead Advisor the right to extend the deadline for the deliverables.  

Expected output:

Single report, that will as well contain key findings and conclusions of the Technical Due Diligence report prepared by the Technical Consultant, on the results of the analysis of the abovementioned assets in Russian and English is provided - editable and in PDF format. All financial models must be provided in Microsoft Excel format (without using macros) in Russian and English.

All deliverables are subject to approval by the Project Committee and are deemed to be final/completed based upon Project Committee’s approval. The UzSAMA reserves 10 working days for providing written comments in either English or Russian language on the deliverables.

The Lead Advisor should observe the following guidelines for all deliverables: 

• They should be technically correct and free of programming, grammar and calculation errors;
• The presentation materials developed by the Lead Advisor should convey their messages clearly and concisely with one message per slide (where applicable);
• Any data and/or calculations must be provided in Microsoft Excel format (without using macros) in Russian and English;
• If some parts of the files or software should be locked to avoid unintended modifications or to protect key parameters/calculations, the passwords/permits should be provided to UzSAMA and Project Committee members;
• All deliverables in the form of written materials and tools are to be submitted to electronically. The electronic versions must be editable and readable without restrictions.

Consultant’s qualification requirements:

1. For the provision of services, the Consultant must provide a list of work (services) performed and specialists involved.

2. The Consultant must be considered as one of the leading international companies in the field of advisory for mergers and acquisitions (M&A) transactions, preferably with at least 5 years of experience in this area – having experience in Central Asia and Uzbekistan is desirable;

3. To render services, the Consultant, members of his team or consortium, must have relevant experience in the market of purchased services and in the industry:

1. experience in participating in transactions on the seller side (M&A, IPO, SPO) as the Lead Advisor with successful closure within the last 5 years. Having experience in the CIS region, including experience in privatization projects in the Republic of Uzbekistan is desirable.
2. experience in participating in the projects that required privatization methods identification within the last 5 years. Having experience in the CIS region, including experience in privatization projects in the Republic of Uzbekistan is desirable.
3. international transaction advisory experience in the chemicals sector of at least 10 years. Having experience in the CIS region, including experience in transaction advisory in the Republic of Uzbekistan is desirable.
4. the Consultant's team must include at least 3 specialists with higher legal and / or financial education and relevant work experience, as well as at least 3 specialists with experience in financial consulting on mergers and acquisitions and / or privatization transactions in the territory of the Republic of Uzbekistan or the CIS countries.
5. the Consultant's team must include at least 2 professionals with a Chartered Financial Analyst (CFA) certificate, at least 2 professionals with an Association of Chartered Certified Accountants (ACCA) certificate, as well as 2 qualified professionals with experience in the field of banking loan restructuring and transformation of large industrial enterprises, including in the energy or chemical industry.
6. the Consultant's team must have experience in providing advisory services for the privatization of assets (M&A, IPO, SPO), in the CIS countries or internationally, having experience in the Republic of Uzbekistan is desirable, on at least 5 projects; including experience in business valuation (holdings of shares / stocks) or fixed assets for energy or chemical enterprises in the Republic Uzbekistan or in CIS with successful completion of at least 5 evaluation projects within the last 5 years.

4. The work experience of the Consultant is confirmed by a brief description of the services performed and signed by the Chief Supervisor of the Consultant. For member companies of the international network, it is allowed to indicate the experience of several legal entities affiliated with the Consultant on the principle of membership in a single international network.

5. To render services, the Consultant may create a working group (hereinafter referred to as the "Group"), whose tasks will include the provision of services specified in this Terms of Reference.

6. Working group must include at least 1 executive officer who has the following credentials:

• possess significant work experience (at least 5 (five) years) in providing consulting services to support transactions in the CIS countries or in the Republic of Uzbekistan, including privatization transactions.

7. Professional qualification of the project team is confirmed by the following documents: resumes of specialists, copies of diplomas and / or certificates and / or certificates, or copies of extracts from Internet resources (if needed).

8. The Consultant has the right to engage a subcontractor and / or form a consortium to implement the terms of reference, however, the responsibility for the performance of all tasks lies with the Consultant. The list of the personnel and resumes of the involved subcontractors shall be included in the Consultant's proposal and may not be changed after the conclusion of the contract.

Deadline for task completion:

6-8 months from the date of signing the contract.

Specific inputs to be provided by UzSAMA:

UzSAMA is to make all reasonable efforts to provide the following to the Lead Advisor during this assignment:

• Guidance – the UzSAMA team is to do its best to provide the guidance needed throughout the assignment and it expects to work closely with the Lead Advisor and Technical Consultant towards ensuring that the deliverables are aligned with its expectations, as well as with UzSAMA’s instruments and processes. Regular updates and progress review calls are to be expected;
• Documentation on previous engagements on fertilizer projects – the UzSAMA team will provide copies of all relevant (and non-confidential) documentation in its possession.
• Primary data and information may be provided in either of the three languages Uzbek, Russian and English as available

Special terms and conditions/confidentiality statement

The Project requires a local presence in the country to collect field data, conduct interviews, present interim findings to the Project Committee team, and to write final recommendations to various teams and counterparts. The Technical Consultant should demonstrate their ability to mobilize the needed in-country expertise to carry out the assignment.

Ownership of all data, reports, and other deliverables will be retained fully and solely by UzSAMA and shall become the property of UZSAMA, IFC and the World Bank Group (WBG). All data and information received from UZSAMA, IFC and the WBG and other relevant stakeholders for this assignment are to be treated confidentially and are only to be used in the framework of this Request for Proposal (RfP).