CAIRO: Egyptian property developer Talaat Moustafa (TMG) said on Monday the government’s solution to a legal row that threatened its flagship project would preserve the terms of the original land sale contract.
Egypt’s cabinet said on Sunday it would scrap the original contract for TMG’s estimated $3 billion Madinaty project after a court ruled the deal was illegal, but would reallocate the same land to the firm in a new contract.
TMG said in a statement to Egypt’s stock exchange that the original contract stipulated it would compensate the government by giving it 7 percent of the project’s completed housing units, and that it expected these terms would not change.
The cabinet’s statement on Sunday did not specify whether the rate or original payment methods would stay the same, but said any new contract must not value the land at less than LE 9.98 billion ($1.75 billion).
TMG added on Monday it was committed to the government’s decision and that it saw its shareholder’s rights protected under the new contract.
The government sold land to TMG for Madinaty in 2005, but a court ruled in June that the deal was illegal because the land was not publicly auctioned.
The news hammered TMG shares, and the government came under pressure to resolve the row swiftly to reassure investors in the country’s real estate sector. TMG shares were trading down 3 percent at 1117 GMT.
