CAIRO: A Central Accounting and Auditing Agency report released Monday shows the recently privatized Omar Effendi chain is owed more than LE 300 million by retail clients, public companies and government institutions.
The report broke down the figure into LE 165 million owed to the company by retail clients, LE 49 million by public companies and LE 92 million due from a variety of government entities.
As a former public company itself, Omar Effendi has long been used to supply other government companies with essentials such as office supplies, televisions and heating and cooling equipment. Public sector employees have also enjoyed the privilege of buying from the chain at discounted prices and with long-term financing options.
Magdi Tolba, financial and legal representative of Anwal Group, the chain’s new owner, says the figures are correct but do not increase the value of Omar Effendi because they are balanced with an equally long list of liabilities.
Those liabilities, he says, include LE 155 million in unpaid government tax claims in addition to claims from other public companies and government entities.
“We have to look at the whole picture, Tolba told The Daily Star Egypt. “Just as we are owed money, we also owe a lot of many to different people. When you buy an entity as big and as conflict-ridden as Omar Effendi, that is to be expected.
Tolba added Anwal does not plan to pursue immediate payment of the money Omar Effendi is due until the company’s books are put in order.
“You cannot come in as a buyer and demand everyone pays up immediately, Tolba said. “These are issues that take time to resolve and might involve negotiation and even court action. It is not something that can be accomplished overnight.
Tolba declined to comment on the company’s development plans for the 150-year-old, 82-branch chain, saying Anwal is planning for a press conference in the near future to reveal its plans.
Anwal is a Riyadh-based women s and children s clothes retailer, operating more than 140 stores with a workforce of about 600 employees.
In November, the Omar Effendi sale was finally concluded in favor of the Saudi company after more than a year of strong public criticism of the deal. The deal was last stalled because of a 16,000 sq m plot of land in Nasr City Anwal claimed belonged to Omar Effendi, but the government claimed it was only leased by the company.
In September, Egyptian businessman Said El Hanash caused a two-month delay in the deal by offering LE 2 billion for the chain, but never substantiated his offer with actual funds. Ownership of a 90 percent stake in Omar Effendi was transferred to Anwal last month for LE 589 million, with a contract stipulation the company will invest an additional LE 200 million over the next six years to develop the chain.
Omar Effendi recorded profits of LE 2 million for the first time in 2005 after five consecutive years of losses.
According to a report released by the government’s Trade Holding Company committee in charge of finalizing the sale, Amwal agreed to keep 4,800 of the retailer’s 6,000 workers and pay LE 50 million in early retirements to the rest.
The company also committed to keeping at least 58 of the chain’s 82 branches, but Tolba says no decisions have been made yet to close down any stores.
“No one is going to be more motivated to reform and develop Omar Effendi than us, says Tolba. “As owners, we will assume sole responsibility for everything. If this deal fails, who is going to pay for it? Will the banks forgive our loans? Will the employees concede their rights? I do not think so.