THE SAGA of Egypt's largest and oldest department store is still on. Privatised in 2007 amid heated debate over its sale value, the company is struggling through debt while its current shareholder Saudi Anwal group is trying to spin it off. Just three years after it became privatised, the company is facing real financial problems. The management failed to pay its workers' November salaries. In addition, the stores are suffering a deficit in their inventory, an unprecedented situation in the store's 144-year history. In November, the listed Al-Arabiya Lil- Istithmar, a local holding company with many arms in real estate and power, and a major shareholder in Peugeot's exclusive dealer in Egypt, announced it is buying out Anwal's 85 per cent stake in the store for LE320 million -- about LE200 million less than the value the government sold the store for. The announcement ignited a heated debate on the validity of any sale, while the result of an arbitration case between the holding construction company, Omar Effendi's former parent company, the current owner of 10 per cent of the store and Anwal group has not been published yet. The holding company says that Anwal violated the original contract by changing the company's logo, failing to inject the new investments it promised to inject into the company, and pawning 17 of Omar Effendi's stores as a collateral to acquire bank loans. The due diligence process ended in "unacceptable findings" in the department store's accounts, as a statement by Al-Arabiya Lil-Istithmar to the Stock Exchange pointed out, while the former decided to call it quits. However, press reports asserted last week that there are at least two new offers to buy the store whose bank loans are said to be LE350. By the time Al-Ahram Weekly went to press, the identity of the companies interested in buying the store had not been announced.
