Orascom for Construction Industries (OCI) announced yesterday that the General Authority of Investment and Free Zones (GAIF) approved OCI’s proposed valuation split methodology for the demerger of its construction group from its fertilisers group.
GAIF approved on Saturday to split OCI’s standalone assets and liabilities on book value basis as at 31 December 2011, an OCI’s press release reports.
The next step for OCI to finalise its demerger process, is to file all the necessary documentation with the Egyptian Financial Supervisory Authority (EFSA) for the reissuance of shares of OCI fertilisers and the issuance of OCI construction group shares.
According to the OCI’s press release, the remaining regulatory procedures, which are expected to be finalised by the end of this year, include; the authentication and legalisation of the demerger contract, the creation of demerged Orascom Engineering and Construction (OEC), registration and listing procedures for both the fertilisers group and the construction group on the relevant exchanges, and the transfer of assets to OEC.
Despite a net income drop during the first half 2012 which OCI reported last Thursday, demonstrating a 42.6 percent decline in net profits to amount to EGP1.3 billion, compared to EGP2.2 billion during the same period 2011, the company expects to gain profit on the back of OCI’s expansion in the North American and the Algerian markets.
The fertiliser group initiated its expansion plans in the US market, capitalising on the shell gas boom to start natural gas-based fertiliser production in southeast Iowa, where the Iowa Economic Development Authority (IEDA) approved a comprehensive state financial incentive package that provides tax relief of up to $ 100 million for the project.
In the same respect, the OCI construction group announced Wednesday that the company will acquire Weitz, a construction contractor in Iowa, a move that the company expects to afford a strategic leverage that allows the OCI construction group to diversify its operations in the US market including; Greenfield Industrial Projects.