Orascom Construction Industries (OCI), Cairo, has announced that its board of directors has decided to file with the relevant authorities to start the process to effect a demerger of the company’s construction business from its fertilizer business. OCI will file an application with the Egyptian Financial Supervisory Authority (EFSA) in order to formally commence the demerger procedures. The contemplated demerger will result in OCI as the continuing company holding the fertilizer business, and the demerged company holding the construction business.
Upon the demerger becoming effective, OCI will continue to be listed on the Egyptian Stock Exchange (EGX) and expects that its Global Depository Receipts (GDRs) will continue to be listed and traded on the London Stock Exchange (LSE). The demerged company holding the construction business will also be listed on the EGX, and procedures will be initiated with the UK Listing Authority (UKLA) to list GDRs of the demerged company holding the construction business on the LSE. OCI will call for an extraordinary meeting of shareholders to authorize the demerger when permitted by EFSA. The demerger is expected to be completed during the first quarter of 2012.
The effect of the demerger for existing shareholders, GDR holders, and American Depository Receipt (ADR) holders of OCI would be that each would receive, free of charge, one share (or GDR or ADR) in the demerged company holding the construction business for every share (or GDR or ADR) held in OCI immediately prior to the demerger. In this way, the shareholder base of both companies immediately following the demerger would be identical to the shareholder base of OCI immediately before the demerger.
OCI Chairman and CEO Nassef Sawiris commented that "the demerger of our construction business from our fertilizer business will enhance the long-term value creation capabilities of both businesses. Each of the businesses will have a greater strategic clarity, enabling their respective management teams to make decisions and allocate capital to enhance their growth. The compensation and reward systems for management and employees will be clearly aligned to the performance of their respective businesses. Our focus is to deliver superior shareholder value, and this is the key driver behind our decision.”
Upon the successful completion of the contemplated demerger, each of the resulting companies will have an independent and separate board of directors compliant with prevailing corporate governance requirements. Sawiris is expected to serve as chairman and CEO of OCI as the continuing company holding the fertilizer business, and as chairman of the demerged holding company for the construction business.