Daily News Egypt

ETF to demand banks initiate purchase of bankrupt companies: Official - Daily News Egypt

Advertising Area

Advertising Area

ETF to demand banks initiate purchase of bankrupt companies: Official

Big banks that would be asked to execute plan are NBE, Banque Misr, Housing and Development Bank, CIB, and Barclays

The Egyptian Tourism Federation (ETF) is looking into asking some banks to establish a holding company in which to reintegrate purchased tourism companies that have gone out of business, according to an ETF official.

The official said the new company’s job will be to revive the loss-making companies and bring them back into business, in addition to creating a strong merger between these companies.

“There are more than 100 tourism companies that have exited the market during the last four years,” the official said, adding that the low tourism flow to Egypt is the reason behind their stopping operations.

The banks that the ETF is likely to ask to engage in the plan are the National Bank of Egypt (NBE), Banque Misr, Housing and Development Bank, Commercial International Bank (CIB), and Barclays, according to the official.

Egypt’s tourism income has decreased over the last four years, taking into consideration the 2010 of that reached $12.5bn, the lowest point occurring in 2013, when the income reached $5.9bn.

The income improved somewhat in 2014, recording $7.3bn. However, it never achieved the 2010 figure in the last four years, the official said.

The investments of the majority of the collapsed tourism sector companies are the in areas of Ras Sedr, Taba/Nuweiba, and the Red Sea, the official said. He added that the banks already have large debts in some of the tourist areas, especially in Ras Sedr and Nuweiba/Taba.

The official does not believe the plan would contradict the tourism fund that the ETF suggested to support the loss-making companies, in cooperation with Cairo Financial Holding (CFH).

“The fund will be responsible for participating in acquiring shares in return to its debts in the companies, and then it will exit in a specific period with the improvement of the situation,” the official said. “However, it will be different to establish a company to purchase the falling companies, where this company will finally have the ownership, in addition to integrating it with other companies.”

The official added that initiating the company would create new tourism allies that do not currently exist in the market. This will give the business the ability to compete with foreign companies in attracting customers to the types of Egyptian tourism in the next period.

ETF Chairman Elhamy El-Zayat said the federation is already seeking to integrate the companies that went out of business during the last period. He added that the federation is negotiating with some companies, but refused to announce their names until an agreement has been reached.

“We are still studying the form of the demand and for what extent the collapsed companies would accept to be sold to one of these bodies,” El-Zayat.

The purchasing would not be limited to tourism investment companies, but will also include different types of companies like those involved in tourism transportation, religious tourism, diving, marine activities, or floating hotels, according to the official.

One of the tourism types most affected by the crisis in the last four years is the floating boats, the official added, and owners are willing to sell. The one-, two- and three-stars hotels have also been affected in the last period.

The company would work on developing the assets that it would acquire through coordinating with Ministry of Tourism and ETF.

Breaking News

No current breaking news

Receive our daily newsletter