CAIRO: Omar Effendi’s owner company, Saudi-based Anwal, may face opposition from the Egyptian government it if attempts to sell the iconic retail chain.
Rumors circulated last week about a possible bid by the Qatar Holding Company to buy Omar Effendi. Reports claimed that Saudi businessman Gameel El-Qanbeet, owner of Anwal, is in serious negotiations with the Qatari company over a possible sale.
However, officials from the Trade Industries Holding Company, which represents Egypt’s interest in Omar Effendi’s board of directors, retorted that under the original contract terms, Anwal is not entitled to sell, reported news portal Egynews.net.
Repeated attempts to contact Omar Effendi officials for comment were unanswered.
According to Egynews, the holding company recently filed a lawsuit against the Saudi investor to recover debts estimated at LE 59 million, and another lawsuit calling for the termination of the contract for the sale Omar Effendi and its “recovery” by the state.
A member of the holding company’s board of directors is due to announce the results of arbitration in the case later this month.
The latest news is the second controversial deal to be announced from the Saudi investor, preceded by an announcement that Carrefour, the international supermarket chain, had intentions to rent the branches of Omar Effendi as outlets for their stores.
Magdy Tolba, CEO of Biet il Khibra Financial Consultancy Agency and former financial advisor to Anwal, served as the official consultant to the company at the time of the Omar Effendi purchase. He told Daily News Egypt that these recent events have revealed the Saudi firm’s true intentions, adding that investment in and development of the historic retail brand is apparently not their main priority.
“The recent talks with Carrefour and now these negotiations with the Qatari company are indications that Anwal had no real intention of [sticking] to the terms of the contract with the Egyptian government, which clearly stated that the buyers should maintain and develop the assets and workforce of the company,” Tolba said.
“The sale was meant to enable [Omar Effendi] to eventually regain its place as one of Egypt’s leading retailers,” Tolba added.
Anwal’s purchase of Omar Effendi for LE 584 million in cash in 2007 was heralded by a storm of controversy, with media and opposition MPs accusing the government of selling the firm at a price that was considered too low, namely given the prime real estate on which the store’s branches stand.
The agreement with the Egyptian government stipulated that Anwal is not completely free to sell Omar Effendi’s lands or buildings, giving the holding company the first priority of purchase in case of a sale of any fixed assets. The Saudi firm was also supposed to invest LE 180-200 million into upgrading the chain.
In the year it was sold, the 150-year-old department store underwent renovations that reportedly cost Anwal $40 million.
Daily News Egypt visited Omar Effendi’s head office off Adly Street in Downtown Cairo, where it was evident that these renovations were merely a superficial facelift of an old worn out retail chain. In an attempt to speak to an official authorized to comment on the matter, Daily News Egypt met a few employees who were all unable to pinpoint the appropriate person to contact.
“It appears that Anwal’s intentions have shifted from a committed investment firm to that of a broker whose only interest is a making a quick pound,” said Tolba.
“The company has been falling greatly in debt and is performing poorly realizing significant losses over the years,” he added. Tolba concluded that he agreed with the holding company’s decision to file a lawsuit to reclaim Omar Effendi on grounds that the terms in the original contract were not met.
The Qatar Holding Company recently bought Harrods, previously owned by Egyptian billionaire Mohamed Al-Fayed.