13 - 19 September 2001
Issue No.551
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Al-Ahram Weekly Online 13 - 19 September 2001 Issue No.551 |
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Cementing the deal
All eyes were on the cement sector this week as one of its giants gets the green light for a privatisation deal
The higher ministerial privatisation committee agreed early this week to the offer presented by ASEC Cement Company, one of the subsidiaries of the Arab Swiss Engineering Company (ASEC), to buy 47.8 per cent of the Helwan Cement Holding Company, writes Niveen Wahish. The deal allows other stockholders to sell their shares to the company at the same price paid by ASEC.
ASEC had submitted an offer last week to buy at least 75 per cent of Helwan Cement in a deal worth up to LE1.3 billion. Helwan currently has about 13 per cent of the Egyptian market. ASEC Cement Company, which already owns 3.5 per cent of Helwan, offered to pay LE51.10 per share and said it wanted to buy the entire company.
According to Reuters, ASEC Cement Company is 45 per cent owned by parent company ASEC, 45 per cent by another ASEC subsidiary and 10 per cent by its Chairman Omar Guemei. The parent company is an Egyptian consultancy firm specialising in cement, which is 51 per cent owned by five partially state- owned cement firms while the remaining 49 per cent is owned, according to Reuters, by an unnamed foreign shareholder.
According to the advertisement announcing ASEC's tender offer, ASEC has been working in the cement sector in Egypt since 1975 and has acted as a consultant in the execution of 18 cement production lines to date. It is also currently assisting and technically managing 12 production lines in Egypt, which account for 50 per cent of Egypt's total production.
The government initiated an open offer bidding process in May for its stake in Helwan.
Portugal's Secil was reported to have planned a $323 million- bid for the company. Secil's Chief Financial Officer Jose Honorio told Reuters that Secil, a cement company, had told Egyptian authorities it planned to offer LE55 a share for Helwan. However, Minister of Public Business Mukhtar Khattab said, after announcing the sale to ASEC Cement company, that the offers, other than that of ASEC were not official bids, but letters of intent with conditions. The first offer was from the Irish building materials company CRH which made its offer conditional on its board being given time to review the company's performance and assets. The other letter of intent, that by Secil, was faxed after the legal deadline, and it was not submitted through the Capital Market Authority, as bidding procedures required.
With Helwan Cement at the centre of attention, its shares rose by LE8.05 to close LE45.44 for the week ending 6 September. However, only 63 transactions in Helwan's shares were carried out. Analysts attributed this to the fact that Helwan shareholders preferred to hold onto their stock in the hopes that the share value would rise further before taking profits.
The Helwan deal had a positive spill over effect for the sector in general. Suez Cement, which is preparing to sell a 25 per cent stake, gained LE1.67 to close at LE38.29. Ameriya Cement gained LE3.1 to close at LE29.22.
But despite the rally led by the cement sector throughout the week, market gains were eclipsed by investors selling to take profits on recent stock price increases. The benchmark Hermes financial index was down 0.67 per cent to close at 6,427.37, while the all share Capital Market Authority index closed up by 17.05 points at 623.77. In all, 103 companies saw their shares traded.
In the telecom sector, regional mobile phone operator Orascom Telecom (OT) climbed from LE18.44 to LE20.98 over the week. The rise in its share value came despite pessimism over the price of a recently-announced share swap for a 20 per cent stake in Pakistani Mobile Communication Ltd. According to Reuters, traders had said investors had expected a lower price for the swap, which they said was LE26 per share.
But speculation that OT will soon sell its 80 per cent stake in its sub-Saharan African subsidiary Telecel may help to offset investor disappointment. The company had announced last week that it was studying three expressions of interest for its stake.
The shares of the Egyptian Company for Mobile Services (MobiNil) rose LE1.66, to last trade at LE59.52.
Among the week's declining shares was the Egyptian American Bank (EAB) which lost LE3.96 to close at LE56.87 as a result of the lack of news on the prospective sale of the Bank of Alexandria's and American Express's stakes in the bank.
While there was no concrete news about privatisation deals in the making, additional ambiguous announcements were made by the government about the programme. Information Minister Safwat El-Sherif told reporters after a cabinet meeting that the government would offer 15 per cent in the state-owned Telecom Egypt, 15 per cent in electricity distribution companies and 40 per cent in oil distribution companies. Since other figures were announced previously by government officials on various occasions but the offerings did not come to fruition, observers are circumspect about El-Sherif's announcements.
Nonetheless, were these promises to be carried out they would represent a frantic attempt by the government to revitalise its privatisation programme. Only last month the government had announced that it would divest its entire remaining stakes in previously privatised companies.
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