By Salim Hassan
The Holding Company for Metallurgical Industries (HCMI) is set to inject EGP 1bn in investments into subsidiary companies throughout FY 2015/2016.
Chairman of the Holding Company for Metallurgical Industries Zaki Bassiouni said that the company plans to self-finance new investments by utilising the revenues from each subsidiary company, and will not borrow from banks.
He told Al-Borsa that the company invested EGP 464m in its subsidiaries during FY 2014/2015 and that it aims to increase this figure by 54% to resolve the crises experienced by stalled companies.
The subsidiaries urgently and immediately require approximately EGP 7bn to implement the restructuring plan laid out for the upcoming period, according to Bassiouni.
The company plans to finance the restructuring plan internally after banks refused to lend unless they obtained a guarantee from the holding company for the second time.
“I approached the banks again, as commissioned by the Minister of Investment in order to borrow the investments the subsidiary companies need in order to restructure, but the banks asked for a guarantee from the holding company, and this was rejected by the Board of Directors,” he said.
He added that the holding company does not possess enough financial liquidity to protect itself if any subsidiary companies default in payment due to accumulating debts.
The company’s debts amounted to approximately EGP 3.7bn by the end of FY 2014/2015, of which EGP 1.2bn represented debts for Egyptian Iron and Steel alone.
He said that the company is exerting all its efforts to restructure and develop subsidiary companies through new investments, which will increase economic returns.
Bassiouni refused to discuss restructuring Egyptian Iron and Steel, saying “there’s too much talk about Egyptian Iron and Steel… a restructuring is not going to happen”.
Egyptian Iron and Steel recorded its highest losses to date during FY 2014/2015, at approximately EGP 600m, and the company needs to develop a number of furnaces in order to avoid losses.
The company received offers from Russian and Chinese companies to restructure the company in exchange for $400m. A memorandum of understanding was recently signed to that effect.
“I don’t know anything about those offers… ask the Minister of Investment,” Bassioni said, indicating that the new investments would be far-removed from Iron and Steel.
He explained that El-Nasr Company for Coke & Chemicals is currently considering two offers from Chinese companies and an Egyptian alliance led by the Arab African Bank.
He revealed that the Chinese company is the closest to winning the El-Nasr bid, as it submitted a lower financial offer, although Bassiouni refused to disclose the amount until a final decision is made.
The holding company’s revenues amounted to approximately EGP 8.6bn during FY 2014/2015.
The company aims to increase subsidiaries’ exports throughout FY 2015/2016 to approximately EGP 5.6bn, compared to the EGP 4.4bn expected for FY 2014/2015, marking an increase of 23%.
Bassiouni confirmed that the company is continuously developing its factories to improve the company’s financial status and render it profitable, noting that they are keen to fund subsidiaries for a variety of purposes. This includes restructuring the companies, funding working capital, designating the ideal use of assets and resources, and developing labour.
The total revenue activity targeted for subsidiary companies for FY 2015/2016 is approximately EGP 13.7bn, a 29% increase compared to the EGP 10.6bn expected for FY 2014/15.