CYTA’s alternative proposal to privatization revealed

According to Sigmalive the following proposal was presented as an alternative to privatization to the previous board of directors of CYTA. The proposal is a variant of “sale and leaseback” which according to the source is frequently method of financing companies of high capital growth.

The proposal comes as an alternative to selling the whole organisation or parts of it at a time of crisis when the price that can be obtained will not reflect the true value of the company or its assets.

The idea is that a new subsidiary of CYTA is created and all the buildings and part of the non-vital telecommunications infrastructure is transferred to it. The subsidiary then will then offer its assets for rental for a fixed number of years. In the meantime CYTA remains a semi-government organisation and keeps all commercial activities. Eventually the subsidiary will be sold in the future when the market is a at a better condition. In the meantime CYTA will have the opportunity to restructure itself in order to become more efficient and increase its value. According to the article, the company has already made serious preparations for this and is about to begin restructuring.

What do you think? Worth a try or just postponing the inevitable?