CAIRO: Orascom Construction Industries (OCI) said it is planning a demerger of its construction business from its fertilizer venture, according to a statement.
Each of the businesses will be listed on the Egyptian stock exchange and will have a separate board of directors.
OCI will file with the Egyptian and British authorities to proceed with the demerger, in an effort to “enhance” the quality and capabilities of the businesses. It expects the process to be complete in the first quarter of 2012.
“Each of the businesses will have a greater strategic clarity enabling their respective management teams to make decisions and allocate capital to enhance their growth,” said Nassef Sawiris, OCI chairman and CEO, in the statement.
“The compensation and reward system for management and employees will be clearly aligned to the performance of their respective businesses," he added.
The company’s board of directors approved the decision and that it will file an application with the Egyptian Financial Supervisory Authority (EFSA) to start the process.
As a result of the split, the demerged company holding the construction business will be listed on the Egyptian Stock Exchange and dealings will also be initiated with the UK Listing Authority (UKLA).
“Upon the demerger becoming effective, OCI will continue to be listed on the Egyptian Stock Exchange and expects that its Global Depository Receipts (GDRs) will continue to be listed and traded on the London Stock Exchange (LSE),” the statement said.
The company will convene with its shareholders after approval is received from the EFSA.
“The effect of the demerger for existing shareholders, GDR holders and American Depository Receipt (ADR) holders of OCI would be that each would receive free of charge one share (or GDR or ADR) in the demerged company holding the construction business for every share (or GDR or ADR) held in OCI immediately prior to the demerger,” the company announced.
After the demerger, this would allow shareholder base of both companies to be identical to the shareholder base of OCI as it was before the demerger.
OCI is one of Egypt’s largest corporations employing more than 84,000 people in 35 different countries.
The company announced earlier this week that it would be selling $300 million in the local Egyptian market to repay LE 1.65 billion bond. The repayment of the local bond is required as part of a debt refinancing for OCI’s wholly owned fertilizer subsidiaries announced in October.
The fertilizer group owns and operates plants in Egypt, Algeria, the Netherlands, and the United States, while the construction group provides international engineering and construction services to Europe and the Middle East and North Africa region (MENA), primarily on industrial and “high-end” commercial projects as well as infrastructure.
