Arabtec’s Egypt housing deal still under discussion, says chairman

The Arabtec chairman said yesterday that long-delayed plans to build low-cost housing in Egypt were still on the cards.

The stock ended in positive territory for the first time in five sessions.

The chairman Mohamed Al Rumaithi said that Arabtec was still in talks with the Egyptian government to build a first phase of 13,000 homes – just a tiny fraction of the company’s original plans to develop a million low-cost units across the country.

“We are in discussion with the Egyptian government and hopefully we will reach an agreement,” said Mr Al Rumaithi at the Arab Businessmen nd Investors conference in the capital. “The project has been segmented into phases, first phase is 13,000 units, then we move to 100,000, and then to 200,000, and so on.”

Arabtec’s stock jumped by as much as 9.3 per cent during trading yesterday before retreating to close at Dh1.16 – an 8.4 per cent increase on the previous day.

The stock was the most heavily traded on the Dubai bourse yesterday and volumes stood at their highest level in nearly five months.

The saga of Arabtec’s planned US$40 billion low-cost housing project which was announced in March 2014 and was due to start on site in the fourth quarter of 2014 has dragged on as the company attempts to finalise a deal with the Egyptian government.

A deal for the high-profile project across 13 sites was originally struck by Egypt’s president, Abdel Fattah El Sisi, as part of a raft of support offered by the UAE to Egypt aimed at maintaining stability after the Arab Spring.

But so far little tangible progress has been made.

Arabtec, in which the Abu Dhabi government fund Aabar is the largest single shareholder, last week announced a Dh944.7 million third-quarter loss that forced it to write off Dh379m of previously declared profit.

The results sent the stock tumbling 9.92 per cent on Thursday and another 9.32 per cent on Sunday.

The company has been embroiled in a cost-cutting and restructuring programme following the departure of the former chief executive Hasan Ismaik, who was closely involved in brokering the Egyptian deal as part of ambitious plans for the company to expand Arabtec to become one of the world’s 10 biggest builders.

“We are not pricing the Egypt project into our calculations when we look at Arabtec’s share price,” said Allen Sandeep, the director of research at Cairo-based Naeem Brokerage. “Perhaps we could have done so before Hasan Ismaik left, but we are certainly not pricing it in now.

“We have been actively covering this story for years and there has been no change in Arabtec’s stance. But from official and unofficial channels on the ground here we have not heard of any deal being struck.”

He added: “To us it looks like this jump in the share price is more of a reversal after the stock fell so much in the last sessions. The company is still backed by Aabar and, sooner or later once the company has detoxified its balance sheet, we [will] see some sort of rebound in operations.”

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