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We have news of Egypt reaching a staff level agreement with the IMF on the third review of the USD 8 billion loan program, updates on the docking plans of the regasification unit Egypt will lease from Norway’s Höegh LNG, news of Talaat Moustafa Group’s Saudi success story, and more.
But first… we heard whispers that up to 18 heads of Egypt’s 32 ministries could be replaced in a cabinet reshuffle when the new government is sworn in tomorrow.
The IMF will extend another USD 820 million tranche to Egypt in coming weeks
The Clap
Subject to International Monetary Fund (IMF) board approval, Egypt is set to unlock another USD 820 million of its USD 8 billion loan with the IMF.
What
The news came after the IMF reviewed Egypt’s reform progress last month.
Some Context
Expanded from an original USD 3 billion loan agreed on in December 2022 — a new package of up to USD 8 billion was approved after the CBE’s 600 bps interest rate hike and another devaluation of the EGP three months ago.
So What
“While geopolitical tensions and their impact on Egypt remain challenging, the authorities have stayed the course to preserve macroeconomic stability through fiscal discipline, tight monetary policy, and a shift to a flexible exchange rate regime. These efforts are beginning to deliver an improved outlook, improved FX availability, inflation starting to slow down, and signs of recovery in private sector sentiment,” IMF Mission Head Vladkova Hollar said.
Now What
Negotiations are also in progress to grant Egypt access to an extra USD 1.2 billion in low-cost, long-term climate funding under the IMF’s Resilience and Sustainability Facility
A new regasification unit coming to Sokhna next week
The Clap
The floating LNG regasification unit the government will lease from Norwegian maritime energy infrastructure developer Höegh LNG until February 2026 is set to anchor in Ain El Sokhna next week, Asharq Business quotes a state source as saying. The unit will kick off operations after an initial seven-day trial period.
So what:
Cabinet will shell out USD 90 million annually to lease the vessel. Egypt is in coming days planning to issue an international tender to import about 15 shipments of LNG through October. The import strategy — expected to average around USD 120 million a month for three shipments — follows implementation of daily power cuts in a bid to save as much USD 300 million per month.
Coming at an opportune time:
This comes as the country wrestles with its domestic energy supply after becoming a net importer of LNG in recent months following a fall in domestic gas production. The decrease in national gas supplies led several companies including Abu Qir Fertilizer, Sidi Kerir Petrochemicals, and Kima to shutter their factories temporarily last week.
Progress on the supply gap’s resolution:
On Thursday, the Oil and Electricity Ministries gradually expanded LNG supplies to a number of fertilizer firms, and yesterday the Egypt Kuwait Holding-owned Alexandria Fertilizer Company said it had begun to resume operations after stabilization of gas pressure.
The clap:
Talaat Moustafa Group’s first overseas project, Benan in Saudi Arabia, now constitutes 30% of its total contractual sales, despite its soft launch in May. The company has raked in a record EGP 37.1 billion in sales from the project alone in the first five months of the year, compared to total revenues of EGP 45 recorded during the same period in 2023.
The breakdown:
The group, which noted in May it saw its contractual sales and reservations in the year-to-date climb 153% YoY to EGP 86 billion partly on the back of Benan, has so far secured some 2500 unit sales from the project, Asharq Business reports.
More to come:
The Benan project — developed in partnership with the National Housing Company — spans 10 million square meters, and is expected to provide 28,000 housing units over its eight-year development cycle to generate revenues of SAR 40 billion (USD 12 billion) from estimated investments of some SAR 31 billion riyals.
The Clap:
Emaar Misr’s board of directors has approved the feasibility study for a capital increase of 3.19 billion shares to complete the acquisition of Albro North Coast for Developments and Sky Tower for Real Estate Development, according to an EGX statement.
First up, Albro:
Through a share swap, Emaar Misr wants to purchase up to an extra 75% stake of Albro from shareholders, giving it complete control over the business. Emaar will now hire an independent financial advisor to determine the swap ratio.
Claps class:
A share swap is a way to fund a company acquisition, where the acquiring company pays using its own shares for the equity in the other company, rather than using cash.
Secondly, Sky Tower:
Emaar Misr hopes to buy a quarter of Sky Tower in an all cash transaction, with the possibility of acquiring the remaining 75 % through a share swap after the planned share issuance.
The Clap:
Local steel maker Ezz Steel’s board of directors (BoD) has approved a decrease of the company’s capital by writing 910,481 treasury shares with an EGP 4.55 million face value.
And approved issuance of joint guarantees for its subsidiaries:
The Ezz Steel BoD will issue joint guarantees of up to USD 500 million for Al Ezz Dekheila Steel Alexandria, Al Ezz Flat Steel, and Al Ezz Rolling Mills in favor of both local and international banks to obtain medium and long term financing facilities.
Market reaction:
Ezz Steel’s share value fell 0.69% yesterday on the EGX.
What else is clapping?
Qalaa Holdings completed the first phase of its debt for equity swap subscription, seeing EGP 875.357 million in orders from brokerage firms– equivalent to USD 17.49 million — out of a total value of USD 21.57 million, with an 81.11% coverage rate.
Egyptian Chemical Industries Company saw the second phase of its capital increase fully covered, with the remaining 3.381 million shares seeing an almost 23x coverage and an allocation ratio of EGP 0.0434 per share.
Electro Cable Egypt recorded a 164.7 YoY surge in net income in Q1 2024 to EGP 535.3 million.
El Kahera Housing turned profitable in Q1 2024, raking in EGP 1.1 billion in net profits from losses in the same period last year of EGP 7.8 million.
Suez Canal revenues dropped 64.3% YoY in May to USD 337.8 million, registering just over little over 1100 vessel crossings for the month.
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