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Al-Ahram Weekly 8 - 14 June 2000 Issue No. 485 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 8 - 14 June 2000 Issue No. 485
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Disgruntled duty free shop investors
By Mona El Fiqi
Last week, the Egypt for Duty Free Shops Company announced that it has accepted the government's offer to help reorganise the struggling firm. However, many investors remain very unhappy. Privatised in 1997, the official rules of the game were abruptly changed two years later with a government decision to place the duty free market under greater regulation. At the time, the state was concerned by the external flow of foreign currency. The American dollar-based duty free market was an obvious hole in need of a plug. A government decree was issued reducing the window of opportunity for purchasing duty free goods from one month to a mere 24 hours. Then, a second decree banned the duty free sale of all durable goods outside of outlets located within customs points. Instantly, these measures debilitated the sector. Private investors could only gnash their teeth as share prices plummeted from LE40 to LE9.
Since the crash, shareholders have been threatening to take legal action. Two weeks ago, Mokhtar Khattab, Minister of Public Enterprise, sent a formal statement to the Duty Free Shops Company promising to settle their long-standing grievance. According to Khattab, on 18 April, the cabinet approved a 10-year term loan of LE100 million. These funds will be extended to the Employee Shareholder Association enabling it to purchase shares from any dissatisfied shareholders who invested prior to the government's regulatory decrees. The purchase price for the shares has been set at LE31.5. An additional LE3 will be added as compensation for shareholder losses.
Abdel-Salam El-Zeidi, chairman of the company, told Al-Ahram Weekly, "This price is unfair since we bought the shares at LE40 per share. Still, we have no option but to accept the government's offer." The shareholders are particularly bitter that the government offer contains only a modest effort to compensate for lost profits. El-Zeidi warns that the "the government has lost credibility in the eyes of foreigners who constitute 25 per cent of the company's shareholders." Shareholders who wish to sell their shares are waiting now for word from the Employee Shareholders' Association. It is expected that approximately 82 per cent of the eligible shares will be bought back. All the rules of the capital market will apply to the sale, but shareholders will have no right to file a suit against the government.
