CAIRO: Trade Holding Company (THC) Chairman Hadi Fahmy announced yesterday his company is preparing to file a claim to the General Prosecutor s office against businessman Saeed El Hanash after he failed to provide a $40 million (LE 230 million) letter of guarantee for his LE 2 billion offer to purchase Omar Effendi.
Fahmy, along with two senior Ministry of Investment (MOI) advisors, had waited from 9 a.m. to 6 p.m. on Saturday for the arrival of El Hanash or the letter of guarantee at the company s headquarters in Zamalek, but received neither. A few minutes after the expiration of the much anticipated and publicized 3 p.m. deadline, Fahmy received a fax from El Hanash s financial advisor Adel Abdel Fattah stating Fortis Banque, of Belgium, declares El Hanash good for more than $100 million (LE 575 million).
Fahmy says the fax does not qualify as a letter of guarantee because it was addressed from the bank to El Hanash, not to THC and does not mention Omar Effendi. Still Fahmy stopped short of declaring Anwal Group, of Saudi Arabia, the official winner with its LE 655 million offer. Anwal is a Riyadh-based women s and children s clothes retailer, operating more than 140 stores with a workforce of about 600 employees.
This proved to them the goal of El Hanash was to disturb a successful deal, says Anwal Financial Advisor Magdi Tolba. It proves he was never serious about buying Omar Effendi in the first place. He s been given more than his fair chance, despite the fact that our offer was already approved by THC s board of directors.
The Omar Effendi saga has been ongoing for more than a year, after Anwal offered nearly double the highest bid ever received for the 82-branch retailer in 10-years of privatization attempts. THC s approval of the offer was met with fierce public condemnation, especially after a valuation committee made up of THC subsidiary presidents declared the chain worth more than LE 1 billion.
Fahmy says the committee s valuation was made up of the aggregate value of each separate branch, and did not take into consideration the company s liabilities such as its 6,000 employees, LE 50 million in back taxes and estimated LE 200 to LE 300 million needed for renovation and upgrading.
As the Anwal offer was nearing finality, El Hanash stepped in with a massive media campaign to save the iconic chain. Abdel Fatah maintains his client is still serious about his offer but declines to justify his inability to provide the requested guarantees from THC. El Hanash had missed an earlier Aug. 17 deadline to meet with Fahmy or provide guarantees.
I think the document we presented shows (El Hanash) is financially able to purchase Omar Effendi and THC can withdraw the money at anytime, says Abdel Fatah, without clarifying how the letter gives THC the ability to withdraw the money.
Meanwhile, Tolba says Anwal is still awaiting the THC s invitation to finalize its offer.
I understand THC was holding out for the good of the country, says Tolba. [El Hanash s] offer would have put a lot more money into the general budget. But now I think it s clear who s serious about purchasing Omar Effendi and developing the company and who s not.
The 150-year-old department recorded profits for the first time in five years in 2005, with just LE 2 million. Fahmy estimates the new owner will have to pay more than LE 50 million in early retirement packages for willing employees in addition to additional costs for retraining. Among the factors that made Anwal s offer attractive, he adds, is the company s agreement to keep at least 75 percent of the current workforce.
Tolba says he understands the public s concern for the workforce. Despite the controversy, he says his company is still ready to take on Omar Effendi. The controversy, he says, has been a very positive debate for the privatization program as a whole and has proved the transparency of the deal.
