Three new bidders have shown interest in the debt-laden Omar Effendi department stores, Sherine Abdel-Razek reports Al-Arabiya Lil-Istithmar Company (AC) had originally set the end of January as the deadline to conclude its planned LE320 million deal to buy out the 154-year-old debt-laden Omar Effendi department stores, but it has had a sudden change of heart. "We agreed to buy Omar Effendi based on certain disclosures from the seller [the Saudi Anwal group] which turned out not to be true," AC's Investor Relations Director Amr Sadek told Bloomberg news service last Thursday. "So we decided not to move forward." Anwal group had acquired the stores from the Egyptian government in 2007. A statement sent by the listed AC to the stock exchange cited "unacceptable findings" in its study of the department store's accounts as the reason for not concluding the deal. The decision came a few hours after the Tax Authority's seizure of Omar Effendi's bank accounts, due to the latter's failure to pay back taxes of LE98 million owed since 2007, when the store was privatised. "We knew the company was troubled, but not to that extent," was AC Chairman Mohamed Metwalli's comment on the tax authority's move just before AC's decision to call it quits. The trouble does not end there. Company workers have many reasons to be worried. "We have not been paid our November salaries to this day and only God knows if we will be paid December's," according to a 42-year-old salesman who works at one of Omar Effendi's Heliopolis stores, but who asked that his name be withheld. While there were plenty of goods on display at the store where the salesman works, he said his colleagues in other stores had told him they were running out of stock and were failing to meet most customers' demands. "When we were in public hands, one of our problems was the abundance of stock. I don't understand how we reached this point under private sector management," the salesman told Al-Ahram Weekly. The Saudi Anwal group bought Omar Effendi out after a heated public debate that featured accusations against the then minister of investment Mahmoud Mohieldin of squandering state money for approving to sell 90 per cent of the 82- chained store at LE580 million. This was almost half the valuation that a state committee had recommended. AC's original offer was to buy the 85 per cent stake that Anwal currently owns, as the Saudi firm sold five per cent of Omar Effendi in 2008, for LE320 million. Omar Effendi's trade union met earlier this week to discuss the problem of delay in the payment of salaries and stated later that they asked the management to pay the salaries and to inject at least LE200 million in cash to buy the necessary inventory for the store to operate. Despite all these problems, press reports on Sunday and Monday quoted sources close to Omar Effendi as saying the store is still attracting investors' interest. "We received three offers, two from Egyptian investors, one of which is a listed company, while the third is from an Iraqi-Lebanese company," Al-Shorouk newspaper quoted Tareq Abdel-Aziz as saying. Abdel-Aziz is the lawyer of Anwal group owner and Chairman Gameel Al-Qanbeet. But the financial problems are not the company's only woe, as it faces hundreds of lawsuits on top of those filed by its former parent company and the current owner of 10 per cent of its shares, the Holding Company for Construction and Urbanisation (HCCU). Prior to the company's sale, Omar Effendi's last chairman and member of the committee at HCCU was Ezzat Mahmoud Effendi. He told the Weekly that Anwal's contract should be cancelled due to many violations by the Saudi owner. According to Mahmoud, Anwal failed to pay workers leaving the company under the early retirement plan of their agreed-upon financial compensation. Moreover, instead of injecting new investments to renovate the stores, Al-Qanbeet resorted to loans from local banks which he took in return for giving the bank 11 stores as collaterals. The prime estimation of the store's debt to banks is LE350 million, which is only half the overall money owed to its suppliers. Moreover, according to Mahmoud, the company's well- known logo was changed. "The list of violations is long and each merits the cancellation of the contract," he said.
