Ezz Steel says ruling may hit investments
Cairo, September 18, 2011
Ezz Steel, whose shares have been battered since a court jailed its former chairman and ordered two of the Egyptian firm's licences be withdrawn, said on Sunday the decision would not affect current operations but would hit future investments.
The firm's shares fell 9 percent on Thursday before trading was suspended and another 10 percent after trading resumed on Sunday. They were trading at 7.03 pounds, their lowest level since March 2009.
It said in a statement that former chairman Ahmed Ezz, who had held a top post in ousted President Hosni Mubarak's party, would appeal his sentence after he was jailed for 10 years.
CI Capital Research cut its valuation for Ezz Steel to 8.80 Egyptians pounds ($1.48) 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.
Ezz said withdrawing the licences 'is not related to the existing activity of the (Ezz) companies or current production, but it is expected to affect directly and indirectly on Ezz and its companies regarding future investments'.
The company said it would particularly affect a reduced iron project and expansion of its furnaces in Ain Sokhna area, which is on the Red Sea east of Cairo, adding it would 'study legal options available and take necessary measures to confront the harm resulting from the ruling'.
Ezz said it would 'review future investments, the execution of which has not yet started, to determine the extent of the temporary freeze necessary and reconsider these investments in light of the prevailing economic conditions'.
The firm said it was seeking to guarantee the continuation of a reduced iron project now being implemented by one of its units, with a total investment of more than 2.6 billion pounds. It has spent 1.7 billion pounds so far. - Reuters