Adhoc News
DGAP-Adhoc: Orascom files appeal against judgment of Cairo Court alleging breaches of Egyptian Capital Markets Laws leading to the suspension of the judgment and initiates discussions for settlement
Orascom Development Holding AG / Key word(s): Legal Matter
29.08.2011 06:41
Release of an ad hoc announcement pursuant to Art. 72 KR
Press Release
Orascom files appeal against judgment of Cairo Court alleging breaches of
Egyptian Capital Markets Laws leading to the suspension of the judgment and
initiates discussions for settlement
A Cairo Court of first instance has sanctioned the main Egyptian subsidiary
of Orascom Development Holding and Samih O. Sawiris for alleged breaches of
Egyptian Capital Markets Laws. The allegations mainly relate to the
correctness of disclosures of the shareholding of Orascom Development
Holding AG ('ODH' or the 'Company') in its main Egyptian subsidiary and the
compliance with free float requirements for the shares of the Subsidiary.
The Company and Samih Sawiris believe that the allegations are unfounded.
An appeal has immediately been lodged leading to the suspension of
sanctions and settlement negotiations have been initiated. The proceedings
are not expected to have any impact on Orascom's operations in Egypt.
Altdorf/Cairo, 29 August 2011 - On Thursday 25 August 2011, the Cairo
Economic Misdemeanours Court of First Instance tendered a judgment against
Orascom Hotels & Development ('OHD' or the 'Subsidiary'), the Egyptian
subsidiary of Orascom Development Holdings AG, and Mr. Samih Sawiris, in
his capacity as the legal representative of OHD, for alleged breaches of
the Egyptian Capital Markets Law and its Executive Regulations. The
judgment was communicated to the Subsidiary on Saturday, 27 August and
sentenced Mr. Sawiris, in his capacity as Chairman of OHD, and not in his
personal capacity, for two years imprisonment, a fine of CHF 6,780, and the
payment of CHF 2,720 as a bail.
Immediately, on Saturday the bail has been paid, appeal has been launched
leading to the suspension of the judgment and discussions regarding a
settlement of all charges have been initiated. This is in accordance with
Egyptian Capital Markets Law which allows for settlement at any point in
time.
The principal allegation in this case is that the Subsidiary misrepresented
the percentage of the Company's ownership in it. The financial statements
of the Company showed a 98.16% beneficial ownership while the shareholders
register of the Subsidiary held with the Egyptian Depository showed a
record legal ownership of 96.14%. The alleged misrepresentation of this
approximately 2% difference resulted from the non- recognition by the
Egyptian Financial Services Authority ('EFSA') of ownership transfer
through the acquisition of an economic interest which took place in
December 2008.
It is important to note that this 2% economic interest in OHD has been
recognized, audited, and approved by the Company's auditors and is in full
compliance with the International Financial Reporting Standards ('IFRS').
Moreover, in order to rectify such minor discrepancy, EFSA has instructed
ODH in November 2010 to launch a mandatory tender offer for the remaining
3.86% percent which included the 2% in dispute. The Company has complied
with such direction; and completed the transaction on January 18, 2011. As
of January 19, 2011, the Company holds 99.66% of OHD's shares and is in
full compliance with Egyptian regulatory requirements.
Another allegation invoked by EFSA was that ODH breached an obligation
towards OHD's shareholders which required ODH to keep the Subsidiary listed
on the Egyptian Stock Exchange for 3 years from the date of the 2008
mandatory tender offer. The Company ascertains that this is, by no means,
due to its wrongdoing. EGX has changed its listing rules in January 2010
and has required that all listed companies maintain a free float of 5% of
its shares at all times. Given that the initial tender of May 2008 has
resulted into ODH owning 96%, this caused automatically a non-compliance
with the revised listing rules and led to the suspension of trading in
OHD's shares as of January 1, 2010. This also meant that the Company could
no longer adhere to its undertaking to keep OHD listed for 3 years.
Nevertheless, ODH has actively pursued rectifying this situation with EFSA;
and it was finally resolved by EFSA's approval to move forward with the
December 2010 mandatory tender offer.
It is noteworthy to mention that the case was transferred to the Court
without an investigation by the Public Prosecutor as mandated by law and
without giving OHD an opportunity to defend and clarify its position. The
Court has issued its sentence after only two procedural hearings and
without allowing OHD the right to plead its case in full.
The Company and Samih Sawiris are convinced that they have acted in
accordance with applicable laws and regulations and that the allegations
included in the judgment are unfounded. The proceedings are not expected to
have an impact on Orascom's operations in Egypt.
Information and Explaination of the Issuer to this News:
About the Group
Orascom Development Holding AG (Orascom Development) is a leading developer
of fully integrated towns that include hotels, private villas and
apartments, leisure facilities such as golf courses, marinas and supporting
infrastructure. Orascom Development's diversified portfolio of projects is
spread over nine jurisdictions, with primary focus on touristic towns and
recently affordable housing.
Orascom Touristic Establishments (OTE) was established in 1989 setting the
first step in building the Group's track record in the development of
integrated towns. After some name changes and reorganization, the main
business was held under Orascom Hotels & Development (OHD). Since the
settlement of the public exchange offer by Orascom Development for OHD,
Orascom Development became the new parent of OHD. Orascom Development has a
dual listing, with a primary listing on the main board of the SIX Swiss
Exchange (ISIN: CH0038285679) and a secondary listing on the EGX Egyptian
Exchange (ISIN: EGG676K1D011). In December 2009, the Group modified its
secondary listing on the EGX. While the Group's shares had previously been
trading on both the SIX and the EGX in Swiss Francs, Orascom Development at
that time procured the issuance and listing of Egyptian Depositary Receipts
(EDRs; each EDR representing 1/20 of the Group's share) which are currently
trading on the EGX in Egyptian pounds. The objective of this modification
is to improve trading and liquidity on the EGX.
Today, Orascom Development operates in nine jurisdictions (Egypt, Jordan,
UAE, Oman, Switzerland, Morocco, United Kingdom, Montenegro and Romania)
and is continuously seeking development opportunities in untapped yet
attractive locations all over the world. The Group has four existing
projects: El Gouna, the flagship project, a fully-fledged town on the Red
Sea coast (Egypt). Taba Heights, on the Sinai Peninsula (Egypt), is the
Group's second tourism destination following El Gouna's business model. The
Cove (Ras Al Khaimah, UAE) is the Group's first development experience
outside Egypt. Haram City, an integrated town dedicated to affordable
housing in Egypt, catering for the mass population.
For further information, please contact:
Orascom Development Holding AG
Mamdouh Abdel Wahab
Director Investor Relations
Tel: +41 79 846 55 60
+20 12 315 32 00
Email: ir@orascomdh.com
Adrian Dudle
Company Secretary & Corporate Counsel
Tel: +41 79 685 66 60
Email: adrian.dudle@orascomdh.com
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29.08.2011 News transmitted by EquityStory AG.
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Language: English
Company: Orascom Development Holding AG
Gotthardstraße 12
6460 Altdorf
Switzerland
Phone: +41 41 874 17 11
Fax: +41 41 874 17 12
E-mail: ir@orascomdh.com
Internet: www.orascomdh.com
ISIN: CH0038285679
Swiss Security Number: A0NJ37
Listed: SIX
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