Tuesday, Apr 30, 2013
CAIRO (Zawya Dow Jones)--Orascom Construction Industries (OCIC.CI) on Tuesday said it has agreed to settle a tax dispute with the Egyptian authorities, ending months of uncertainty that will allow its Netherlands-based parent company to focus on growth plans for the fertilizer and construction conglomerate.
The company, a subsidiary of OCI N.V. (OCI.AE), will pay the Egyptian Tax Authority 7.1 billion Egyptian pounds ($1.02 billion) to settle tax claims for 2007 to 2010, a period in which it divested its cement business, OCI, which is listed on the Egyptian Exchange, said in a statement.
The settlement amount was reached following months of challenging negotiations, OCI said in the statement, noting that the Egyptian tax authority has exonerated the company and its management of any wrongdoing related to the transaction.
The payment is to be made in ten instalments between 2013 and 2017 after adjusting for existing tax credits of about $26 million. OCI N.V. will loan its Egyptian subsidiary the necessary funds required for the tax settlement with the first instalment of EGP2.5 billion scheduled for payment in the second quarter of 2013.
"As we end the prolonged period of uncertainty, the Company will now regain its focus on growth initiatives," Nassef Sawiris, OCI N.V.'s chief executive officer, said in the statement.
OCI N.V., which listed in January on the NYSE Euronext stock exchange in Amsterdam, took a 75.7% stake in the Cairo-listed entity by exchanging its global depositary receipts for shares in the Netherlands-based firm. As part of the transaction, it also filed for Egyptian regulatory approval to acquire all of OCI's Cairo-listed shares in exchange for OCI N.V. shares or a cash amount.
"With the settlement of the tax claim, OCI N.V. expects to proceed with its filing for the tender offer for the ordinary shares of OCI S.A.E.," the company said.
Orascom has previously said it remains committed to maintaining its headquarters and employees in Egypt and its move to Netherlands was to give the company "deeper access" to the European market's cheaper capital amid continued economic and political uncertainty at home after the revolution that overthrew former President Hosni Mubarak in 2011.
In a separate statement, OCI said it made a fourth-quarter 2012 net loss of $81.2 million compared with a net profit of $124.4 million in the year before period. Its three-month earnings were impacted by extraordinary charges of $181.2 million, which included a one-off $82 million in additional interest expenses related to the tax settlement.
Write to Reem Abdellatif at reem.abdellatif@dowjones.com
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(END) Dow Jones Newswires
30-04-13 1225GMT
