By Reuters
CAIRO: Egypt’s largest steel maker Ezz Steel will likely be allowed to retain the operating licenses for two of its plants after paying a fee, said HC Securities, which upgraded the stock to “overweight” from “neutral.”
Earlier this year, media reports indicated the government was restoring operating licenses for some Ezz plants that it withdrew in October under a court ruling.
“Ezz Steel will retain its direct reduced iron license, which is a massive boost given the significant cost advantage,” analyst Ahmed Hafez wrote in a note to clients.
In October, Trade and Industry Minister Mahmoud Eisa said the government wants to ensure the company pays fines imposed by the September court ruling — in which it was ordered to pay LE 660 million — but wants it to keep the licenses because that scenario would best serve the companies, the state and the workers involved.
An official settlement contract is yet to be signed, but under the agreement, 15 percent of the fee is to be paid up front and the balance over five years, said Hafez.
“We see this as quite positive, given the strategic importance of the investment and as we believe the payment schedule bodes well with the fact that the first direct reduced iron module is at an advanced stage of construction,” he added.
Shares of the company had closed at LE 7.76 on Wednesday.
