13 December 2014       Download

The sale of two metallurgy companies is expected to close in January 2015 as part of Qalaa Holdings’ drive to liquidate a small group of companies classified as ‘discontinued’ in Qalaa’s financial statements by the end of 1Q15

United Foundries Company SAE, a non-core asset of Qalaa Holdings, signed today sale and purchase agreements for 100% of two metallurgy companies for a total deferred consideration of c. EGP 260 million at the current rate of exchange.

Under the terms of the transactions, a group of investors led by Mr. Ahmed Sid Ahmed — one of the original founders and shareholders of the two companies — will acquire 100% of the shares of Alexandria Automotive Casting SAE (AAC) for a deferred consideration of EUR 27 million and 100% of the shares of Amreya Metal Company SAE (AMC) for a deferred consideration of EGP 20 million. Both companies produce cast parts and components for the local and global automotive assembly industry.

The sale amounts are payable over a six-year period ending June 2021, and the buyers may receive discounts in the event that payments are made on an accelerated schedule.

Both companies are classified as “discontinued operations” in Qalaa’s financial statements alongside a group of companies including turnkey contractor ESACO; and agrifoods brands Enjoy, Misriyeen, El-Aguizy and Mom’s Foods. Together, discontinued operations contributed losses of EGP 143.9 million to Qalaa Holdings’ income statement in the nine months ending 30 September 2014. Fully EGP 64 million of those losses were contributed by AAC and AMC.

“We have made a clear commitment to our shareholders and our board to finalize the disposal of our discontinued companies by the end of 1Q15 to avoid the consolidation of needless losses on our P&L,” said Hisham El-Khazindar, Co-Founder and Managing Director of Qalaa Holdings (CCAP.CA on the Egyptian Exchange, formerly Citadel Capital), an African leader in infrastructure and industry.

“This transaction is fundamentally about the reduction of risk as we look to focus on our proven winners going forward and thus refrain from sinking funds into turnarounds that may or may not succeed,” added El-Khazindar.

Execution of the transactions will result in neither a capital gain nor a loss to Qalaa Holdings at the consolidated level at this time.

The transactions are expected to close in January 2015 and are subject to conditions precedent; both SPAs include further provisions to protect the interests of UCF until such a time as the sale amount is paid in full.

United Foundries and its plant, which specialize in the production of consumables for the cement industry, are not subject to sale under these agreements and remain non-core assets of Qalaa Holdings.