Press Release

The Zambia Privatisation Agency is pleased to announce that the Minister of Finance Honourable R D S Penza has signed the sale agreement with TATA Zambia Limited for the sale of 70% shares in Pamodzi Hotel Plc.

The Pamodzi Hotel is a 201 roomed five star hotel located in the center of the Lusaka city. The Pamodzi Hotel is owned by the National Hotels Development Corporation Limited (NHDC) which, in turn is owned by the Zambia Industrial and Mining Corporation Limited (ZIMCO) (in liquidation).

The Pamodzi Hotel became operational in August 1979. For the first ten years the hotel was managed under a management contract by a British company, the Caledonian Hotels Management Establishment.

In August 1989, a new ten year management contract was signed with the International Hotel Management Services Limited of India, which is now the Taj International Hotels (a member of the TATA group of companies). Taj Hotels is a major international hotel group and has a chain of five star luxury hotels in India and overseas such as the Lexington Hotel in New York and the St James Hotel in London.

The Pamodzi Hotel was advertised for sale throughout the world. Despite heavy marketing by ZPA, the only bid received was from Tata Zambia. Most would be bidders felt that Taj had done a good job managing the hotel and could not therefore attempt to compete against them.

The acquisition of Pamodzi Hotel by the Tata group comes at a critical time for the hotel industry which has been experiencing declining room occupancy rates whilst competition has been increasing. Continued ownership of Pamodzi Hotel by the Government would have exposed the Government to the risks of the hotel industry.

Taj Hotels has purchased 70% of the shares in Pamodzi Hotel Plc for a total consideration of US$6,043,000. This consideration comprises:

The cash proceeds from the 70% sale of shares will flow in two stages as follows; 10% on signing the sale agreement and the balance on completion, which should be the next two months.

The remaining 30% shares in the company will be offered to the Zambian public through a ZPA controlled public floatation at a later date when market conditions in the hotel sector allow. This will mark the conclusion of the privatization of the Pamodzi Hotel.

The transaction was negotiated by independent team composed of Mr Mark Ndilla as the team Chairman and Mrs Lanette Chiti as the team Lawyer, both individuals of high integrity appointed by the ZPA Board. The negotiators extensively used the valuation prepared by Deloitte & Touche and achieved an optimum price subject to the valuation.

As the majority shareholder Tata Zambia Limited has undertaken that there will be no redundancies as a direct result of this privatization and that they will implement a manpower policy that will ensure that Zambianisation and employee development programmes are put in place as stated in the business plan.

The Tata group believes that the programme of economic reform in Zambia will attract increased high-yielded international traffic from the commercial, institutional and business sectors into Lusaka.

Based on the detailed evaluation of the anticipated needs of the guests at the Pamodzi Hotel, a capital expenditure plan attracting a capital investment of US$1,500,000 has been put in place in order to provide hotel facilities of the high standard found in the Taj Luxury Hotels which are international hotels of five star deluxe standards.

The acquisition by the Tata group of the majority shares in Pamodzi Hotel Plc and the eventual offer of the remaining shares to the Zambian general public marks yet another significant achievement in the Zambian privatization programme.

TATA has pledged continued commitment to Zambia's economic development efforts and is looking for opportunities to participate in Zambia's model privatization programme.

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