x Abu Dhabi, UAESunday 23 July 2017

Ezz Steel plunges after licence loss

Egypt's biggest steel maker is reviewing projects worth hundreds of millions of dollars after a court withdrew licenses for two key expansion projects.

Ezz Steel is reviewing all investments to determine which projects should be suspended given the prevailing economic conditions. Dana Smillie for The National
Ezz Steel is reviewing all investments to determine which projects should be suspended given the prevailing economic conditions. Dana Smillie for The National

Egypt's biggest steel maker is reviewing projects worth hundreds of millions of dollars after a court withdrew licences for two key expansion projects.

Ezz Steel is one of four steel manufacturers to lose their licences after the court determined they were not awarded legally, following the uprising that toppled the former president, Hosni Mubarak.

The court decision "does not impact its current operating facilities, but is expected to have a direct and indirect impact on the future growth plans of the company and its subsidiary," Ezz said in a filing.

Shares of Ezz Steel listed on the Egypt Stock Exchange fell as much as 10 per cent yesterday, before closing 3.7 per cent lower after a company official said Ezz was in talks with the government over the ruling.

Kamel Galal, the company's head of investor relations said talks were ongoing.

The stock lost 10 per cent on Sunday and 9 per cent on Thursday before trading was suspended.

Ahmed Ezz, the owner of Ezz Steel who held a leading role in parliament and was a member of the former ruling party, was sentenced to 10 years in prison for corruption last week. He plans to appeal.

The former trade minister, Rachid Mohamed Rachid, received a 15-year sentence at the same time. Mr Ezz stepped down from the company's board in May but still holds a stake in the business.

Ezz is currently reviewing all investments not yet under construction to determine which projects should be suspended given the prevailing economic conditions.

Analysts have already started reviewing their valuations of Ezz Steel.

CI Capital Research cut its valuation for the company to 8.80 Egyptian pounds a share, from 12 pounds, after the ruling, saying the firm's expansion would be hit. Beltone Financial also said it was reviewing its valuation.

halsayegh@thenational.ae