CEO of Saudi Egyptian Construction Company (SECON) Darwish Hassanein ruled out offering part of the company’s shares in the Egyptian Exchange (EGX) to obtain liquidity to fund its projects in the next period.
Hassanein explained that the company is owned equally by the Egyptian and the Saudi governments, adding that the ownership must remain as it is without any other contributions.
Hassanein’s statements came last Wednesday during the occasion that marked the signing of the funding contract with both Banque Misr and National Bank of Egypt (NBE). The agreement secured EGP 600m to fund the SECON Nile Towers project.
“The company had enough liquidity to completely fund this project without borrowing from banks, especially after the decision to increase its capital. However, it preferred to use this liquidity to fund other new projects that help to enable more housing units and to create job opportunities, besides increasing the company’s profits. That is in addition to providing financial resources to the state’s treasury through the taxes,” said Hassanein.
The loan provides evidence of SECON’s strong financial state and credit standing, rather than as a sign of the company’s inability to fund the project independently, according to Hassanein.
Hassanein revealed that the company was involved in negotiations with Banque Misr, NBE, and the Commercial International Bank (CIB), until the decision was taken to contract with Banque Misr and NBE to secure EGP 300m from each of them.
Despite the a general lack of confidence from other companies in the Egyptian market in the months after the 25 January Revolution, SECON put forward proposals to construction companies that could implement the Nile Tower project in December 2011, according to Hassanein.
SECON Nile Towers is located on the Nile Corniche in the Maadi district. The project’s two towers consist of one that will house a five-star-hotel with a capacity of 256 rooms and suites; Hilton Hotels’ international operation will manage the hotel. The second tower has a capacity of 190 housing units. Each of the two towers is 23 floors high.
By including residential and hospitality accommodations, SECON intends to diversify its real estate portfolio to guarantee profits in the event that demand in either sector declines.
In order to provide housing accommodation to the influx of companies that the government hopes to attract to New Damietta through its establishment of a logistical zone, SECON intends to establish a four-star hotel in the port city on the land it recently obtained from the government, according Hassanein.
SECON will not seek to obtain further loans for the projects it intends to implement in 2016, according to Hassanein. However, he indicated that the company remains open to the possibility of future funding agreements in the event that it decides to accelerate the implement of a project.
In June 2014, the Saudi government invested $121.5m in SECON representing the most recent capital increase in the company, while the Egyptian government paid its share in kind by granting three pieces of land in New Damietta, New Asyut, and New Cairo.
SECON was established in 1975 as a joint-partnership between the Saudi and Egyptian government for the purpose of a real estate and tourism investment in Egypt.