UPDATE 2-OCI share deal faces delays as Egypt queries plan

Wed Feb 20, 2013 10:02am EST

Related Topics

* Firm says Egyptian delisting question remains unsettled

* OCI denies it is turning its back on Egypt

* Needs international capital to fund expansion

* Regulator only 'protecting' shareholders (Adds quotes from OCI, financial authority chief, analyst)

By Tom Perry and Asma Alsharif

CAIRO, Feb 20 (Reuters) - A deal that would see Bill Gates and other U.S. investors inject $1 billion in fertilizer and construction firm OCI NV has been hampered by Egyptian regulators' request for clarification of the deal.

The Egyptian Financial Supervisory Authority (EFSA) wanted more information on an offer by Dutch-listed OCI NV to acquire ordinary shares of its Egyptian-listed subsidiary Orascom Construction Industries, OCI NV said.

This move will delay completion of a deal under which U.S. investors will pay shareholders who choose to sell their ordinary, Egypt-listed shares, said Mohsen Adel, vice chairman and managing director of Pioneer Funds, a financial institution.

"The new disclosures will not affect the course of the deal but will extend the time," he said.

The transaction may see one of Egypt's biggest firms disappearing from the local stock exchange.

Dutch-listed OCI NV announced the deal in January, under which holders of OCI's global depository receipts were offered shares in OCI NV, while holders of the firm's Egypt-listed ordinary shares got the option of cash or OCI NV shares.

Omar Darwazah, head of investor relations for the Egyptian company said the question of a delisting had yet to be settled. "It is not yet clear," he told Reuters, noting that shareholders also had the option to reject both the cash offer and the share swap. Under Egyptian law, companies must have a free float of at least five percent of their capital on the stock market.

Darwazah denied OCI was turning its back on the country. "This does not mean that OCI is exiting Egypt. The stock exchange doesn't change the fact that we have billions of dollars invested in Egypt," he said.

OCI wanted to improve its ability to fund global expansion with international capital, he said, noting that obtaining financing in Egypt has become very difficult.

The country is beset by economic and political uncertainty and Moody's agency cut the credit ratings of five Egyptian banks last week.

GUARANTEEING STABILITY

OCI said on Feb. 13 that shareholders had approved the offer at meetings in Cairo. However, OCI NV said the Egyptian-listed OCI SAE would need another extraordinary general meeting due to the regulator's request.

OCI SAE would comply with the request for "additional documentation, disclosures and clarification" on the tender offer for the Egyptian-listed shares, the Dutch parent said in a statement.

The extraordinary general meeting would discuss additional disclosures related to the transaction "and to subsequently obtain approval on the (meeting's) ... resolutions from minority shareholder", the statement said.

Once minority shareholders had approved these resolutions, the result of the meeting would be ratified and an updated mandatory tender offer application would be formally filed with the Egyptian authorities, it said.

EFSA head Ashraf El Sharkawy told Reuters the clarifications had been requested "to guarantee the stability of the non-banking financial markets". He added that the aim was not to obstruct or delay the deal but to protect shareholders.

In a statement, the authority added that it had sought the extra clarifications because of "the omission of many of the statements needed to be disclosed" and cited what it described as "proof of incomplete and incorrect incidents" at the last ordinary and extraordinary meetings.

OCI NV said in January it had obtained commitments in excess of $2 billion from participating investors to pay shareholders who choose to sell their OCI ordinary shares for cash.

This included $1 billion from U.S. investors, comprising Cascade Investment LCC - which is wholly owned by Microsoft chief Bill Gates - as well as Southeastern Asset Management and Davis Selected Advisers.

OCI Chief Executive Nassef Sawiris said on Jan. 25 he expected Gates and the other U.S. investors to own up to 12 percent of the company. (Reporting by Ehab Farouk, Asma Alsharif and Tom Perry; Writing by Tom Perry; Editing by David Stamp)

FILED UNDER: