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CAIRO, Oct 3 (Reuters) - Egyptian billionaire Naguib Sawiris’ OTMT said on Monday failure to resolve a dispute with the financial regulator had hit business and stymied growth, and the holding company would call a board meeting to discuss how to proceed.
The dispute emerged six months ago and centres on breaches the Egyptian Financial Supervisory Authority (EFSA) says were involved in the 2011 demerger of Orascom Telecom Holding, which resulted in OTMT’s current shareholding structure.
OTMT said the dispute had scuppered efforts by its subsidiary Beltone Financial to acquire local investment bank CI Capital - a deal that was central to its growth strategy.
“The major shareholder will ask the company’s board of directors to convene at the earliest possibility to discuss how the company will continue its business given its current inability to expand and perform its core business normally,” OTMT said in a statement on the stock exchange website.
OTMT said the dispute would have a “very bad effect” on the company, its shareholders and subsidiaries as the company had “stopped performing its core business in a normal manner”.
There was no immediate comment from EFSA.
Egypt’s Commercial International Bank (CIB) said in June it had dropped plans to sell its CI Capital subsidiary to Beltone after failing to win regulatory approval.
CIB had signed a deal in February, agreeing to sell the unit to Beltone for 924 million Egyptian pounds ($104 million).
Sawiris said at the time he planned to merge CI Capital with Beltone, which OTMT bought last year for 650 million pounds, to create one of Egypt’s largest investment firms.
Once combined, Sawiris had hoped CI Capital and Beltone would offer an alternative to competitor EFG-Hermes.
But the deal hit a series of delays.
The acquisition faced an early challenge in February when a unit of state-owned National Bank of Egypt made a counter-offer. It withdrew after failing to reach an agreement with CIB.
Sawiris said in March the deal was still awaiting security clearance and that the hold-up was the latest move by authorities to prevent him from controlling a large financial institution.
Sawiris had previously tried to acquire EFG-Hermes, one of the region’s largest investment banks, through his New Egypt Investment Fund, but the bid was unsuccessful.
OTMT has holdings in media, technology and cable businesses but had sought to move further into the financial services.
It reported a first-half net loss of 3.635 million pounds. (Reporting by Ola Noureldin, writing by Lin Noueihed; Editing by Mark Trevelyan)