Lenders are backing out of FiT contracts over arbitration dispute.

The House Manpower Committee is looking to break a deadlock over raises for civil servants. The committee is set to meet with representatives of the ministries of finance and planning today and tomorrow to reach a compromise on annual raises for civil servants under the proposed Civil Service Act, a clause that is threatening to derail the legislation a second time. The committee will complete its report on the act next week, with the House of Representatives due to vote on the law after the Eid break, Youm7 reports. Committee members have declared that they will not budge on their position that the nation’s bureaucrats deserve raises in excess of 5% per annum.

When do we eat? Iftar will be at 7:00pm CLT today, while the cut-off for sohour will be at 3:09am CLT, according to Islamic Finder.

Ongoing this week:

• Obour Land will file a request to offer 25% of its shares on the Egyptian Exchange, Chairman Mohamed Hamed told Al Borsa. The company is set to complete required documentation before the end of June and expects to begin trading in 3Q2016. The company has said it will issue 200 mn shares at a par value of EGP 1.00 per share, sources added.
• The next session in the trial of former Central Auditing Organization chief Hisham Genena is due to take place on Tuesday.
• Budget debate: The House of Representatives is set to discuss the state budget in four consecutive sessions starting Sunday, 26 June, Al Mal reported. Finance Minister Amr El Garhy presented an overview of the FY2016-17 budget to the House in May.

Oh, and this coming Thursday, 23 June is Brexit Day as voters in the U.K. head to the polls to decide whether or not to remain in the European Union.

One of the “crown jewels” of the Middle East: Mohamed Alabbar-led Adeptio reached an agreement to acquire a majority stake in Kuwait Food Company (Americana), ending a two-year process, Bloomberg reported. Adeptio will pay Al Khair National for Stocks and Real Estate KWD 2.65 (USD 8.80) per share for its 67% stake in Americana, a 26% premium over the closing price on Wednesday. “Adeptio will launch a mandatory takeover offer for the remaining shares of Americana at the same price,” Bloomberg writes. “We are delighted to have acquired one of the crown jewels of the Middle East … With its long and successful history as the leading food and restaurants business in MENA, Americana is uniquely positioned in the region,” Alabbar said.

Just last month, Americana had announced that the sale of the majority stake to Adeptio had been called off. In April, Citigroup withdrew from the group of banks providing a bridge loan to finance the transaction, with unnamed sources telling Reuters that “Americana’s business dealings in Iran had raised compliance concerns and was one of the reasons for the bank’s withdrawal,” Reuters reported at the time.

The Financial Times (paywall) also has coverage, saying the move provides a much-needed shakeup for a stagnant M&A climate in the region in light of oil prices. A “transaction of this size and complexity provides a timely shot in the arm for the high-end M&A market in the region,” said Mohammed Al-Shukairy, an M&A partner with Clifford Chance.

Goldman Sachs advised Adeptio, while Allen & Overy was legal counsel. Cairo-based law firm Sharkawy & Sarhan was advisor to Adeptio on matters of Egyptian law, including due diligence on Americana’s subsidiaries in Egypt and advising on the implementation of the agreement. “Rothschild advised Al Khair, which sought legal counsel from Clifford Chance. Standard Chartered Bank assisted in structuring the acquisition financing and joined Credit Suisse, Ahli United Bank, Emirates NBD, First Gulf Bank and National Bank of Abu Dhabi as mandated lead arrangers for the transaction.”

Is the Central Bank of Egypt’s imposition of term limits on bank chiefs standing on shaky legal ground? The CBE has been adamant that the decision impose nine-year term limits on bank managing directors is set in stone, with Deputy Governor Gamal Negm denying in mid-May reports that the bank’s legal counsel was saying the move was merely a recommendation, not a requirement. That message hasn’t trickled down to legal counsel yet, it seems, with the central bank’s lawyers arguing in court on Sunday that term limits are merely recommendations. The CBE was in court to defend against a suit asking the measure to be declared illegal. Al Borsa has more on the story.

The Industry and Trade Ministry denied that trade partners had filed complaints with the World Trade Organization about import restrictions designed to stem the flow of foreign exchange, according to the ministry’s head of trade agreements, Saeed Abdullah, Al Masry Al Youm reports. Egypt had presented its restrictions to the WTO’s Technical Barriers to Trade Committee at a meeting last week, and no country has voiced concerns, said Abdullah, who refuted reports to the contrary which we noted yesterday.

We have an official price tag for the 4G license, at least for Orange Egypt: Orange Egypt disclosed to the EGX on Sunday that a licence to provide 4G services will cost a total of EGP 3.54 bn, with 50% of the license fees being payable in USD. NTRA also offered Orange Egypt the chance to provide landline services for EGP 100 mn and a license to offer international gateway services for a further EGP 1.80 bn. Orange Egypt said it is assessing the proposal and will update the EGX accordingly before first week of August deadline. The news confirms reports we picked up last week; there has still been no official reaction from the other operators or from Telecom Egypt. Reuters has coverage in English.

Half of the 4G license fees will have to be paid in USD because of the equipment the government needs to import, CIT Minister Yasser El Kady told Al Mal, adding that 4G services have been delayed a number of years because the Egyptian Radio and Television Union had not agreed to release unused frequency. (Earlier reports had suggested the frequency was actually under military control.) A source from Telecom Egypt said mobile operators have the foreign currency liquidity to pay the licence fees from a number of sources, including fee income from using subsea cables. Mobile operators aside, Telecom Egypt’s CEO said his company is also prepared to pay the full licence fees, including the USD portion, according to Al Shorouk.

As for the international gateway licenses, Vodafone and Orange are reportedly not happy with the pricing, which has not changed since the defunct unified operator license, sources tell Al Borsa. Orange Egypt is particularly peeved as prices have risen by EGP 300 mn. Both companies plan to petition the NTRA to reconsider the prices, and Orange Egypt will ask to pay for the license in installments. A government source tells Youm7 that companies will not receive international gateway licenses until they first receive a 4G license.

The European Bank for Reconstruction and Development (EBRD) and OPEC Fund for International Development (OFID) have notified Orascom Construction they are officially backing out of financing a USD 80-90 mn solar power plant after failing to reach an agreement on arbitration with the Electricity Ministry, Al Mal reports. Meanwhile, OFID and AFD subsidiary Proparcohave notified BPE Partners they are forfeiting a financing agreement worth 70% of a solar power plant’s cost, Chairman Hazem Barakat said. As we had reported yesterday, the IFC and EBRD are threatening to withdraw pledges of USD 3 bn for renewable energy projects in Benban.

Half-Ramadan advertising revenue report: The top 10 TV networks netted EGP 1.5 bn in ad revenue in the first week of Ramadan, Al Borsa reported. MBC Masr led the way with a total revenue of EGP 260 mn, Al Nahar in second place with EGP 243 mn, and CBC in third with EGP 205 mn. In total, the top 10 networks aim to generate EGP 2.2 bn during the whole month, Al Borsa adds.

Meanwhile, the Transport Ministry has made arbitration through Egyptian courts or the Cairo Regional Centre for International Commercial Arbitration a condition for the USD 750 mn agreement to develop the multipurpose platform at the Alexandria Port with China Harbour. Negotiations for the project are expected to be completed in two months’ time, with the Chinese government expected to offer the company a five-year USD 700 mn loan at 2.5% interest for the project, a source tells Al Mal.

Gold exploration company Alexander Nubia International announced it changed its name Aton Resources Inc., with the name change effective 26 June, 2016. “The new name — Aton Resources Inc. — emphasizes our commitment to Egypt and our business objective of executing high impact gold exploration in Egypt, with the goal of developing a mine at our flagship project at Hamama, within our Abu Marawat concession and ultimately becoming a mining house,” CEO Mark Campbell said.

Analysis of data on the two “badly damaged” black boxes of EgyptAir flight MS804, sources on Egypt’s Aircraft Accident Investigation Committee told Reuters on Sunday, adding that it would take “lots of time and effort.” The committee is being assisted by representatives from France and the US. The memory units from both the voice and data recorders “were extracted from the devices and dried in a military facility for eight hours, the committee said in a statement. Investigators are now conducting electrical tests on the memory units, the final step before trying to extract data.” Bloomberg also has coverage.

National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) confirmed (pdf) they are indeed in talks for a potential merger. Together, both banks would create the Middle East’s largest lender by assets, WSJ says, noting that NBAD and FGB “are the seventh and 15th largest banks by assets in the Middle East and Africa, respectively, according to Standard & Poor’s.” Senior managers from both banks formed a working group “to review the commercial potential of a merger or combination” but warned that “there is no certainty discussions will ultimately be fruitful.” Shares in NBAD rose to a three-month high after the merger reports, The National reported.

CORRECTIONS- In yesterday’s issue, a typo in the TL;DR read ‘CIB about to hit GDP cap’ when it should have instead read ‘CIB about to hit GDR cap.’ Also, the date for the USD-EGP parallel rate should have also read ‘Tuesday, 14 June’ as opposed to ‘18 June.’ H/t Omnia S. and Osama E.

The New York Times has picked up on the two leaked exams and answers from this year and the backlash the Education Ministry has received as a result. The situation “highlighted disgruntlement with the declining quality of public education in Egypt,” the article says. Education Minister El Helaly El Sherbiny blamed the leaks on the use of electronic devices “such as credit cards that can function as telephones, surgically inserted headphones and high-tech reading glasses” — and even suggested cutting internet across Egypt for an hour before exams at a hearing at the House of Representatives.

“Where we once had relatively benign missions conducting peace support operations, such as the MFO mission, [it is] now turning more hostile … Toxic environments where, in the case of the Sinai, [ISIS] in the Sinai is now grown in strength and impedes the conduct of the mission,” Chief of the Defence Staff of the Canadian Armed Forces Jonathan Vance told CBC News. A peacekeeping expert says the mandate of the MFO mission in Sinai “has not kept up with the changing circumstances on the ground and the threats.” CBC news notes that the MFO has had to deal with an increase in violence from Wilayat Sinai, which has launched rocket and mortar attacks against at least one of the MFO’s two bases in the Sinai.

Trump travel ban could include Egypt: In comments about Donald Trump’s controversial immigration ban, Alabama Republican Sen. Jeff Sessions told CNN‘s Dana Bash on Sunday that Egypt may be one of the countries slapped with a ban. “The public data that we have indicate there are quite a number of countries in that region that have sent a large number of people that have become terrorists … Pakistan has a number, Egypt, Syria, Iraq, Afghanistan, Yemen,” he said.

In somewhat related news, on Sunday, Trump said the US needs to consider more racial profiling in law enforcement, especially of Muslims, as his controversial immigration ban continued to gain traction in the media. “You look at Israel and you look at others, and they do it and they do it successfully. And you know, I hate the concept of profiling, but we have to start using common sense,” he added.

Peter Hessler’s profile of an American journalist covering the yakuza, the New Yorker, January 2012: Don’t ask us the hows or whys of how the internet works. This week, aside from a 10-year old piece in the Atlantic on just how bad management theory really is, another older article has suddenly once again found new life: Peter Hessler’s 2012 story on the yakuza told through the lens of Tokyo-based American reporter Jake Adelstein. “Nowadays, yakuza run hedge funds. They speculate in real estate… At least one Japanese Prime Minister has been documented socializing with yakuza, and politicians have the kind of contact with criminal groups that would destroy a career elsewhere… [A former export minister] admitted that he had accepted substantial donations from a yakuza front company… This did so little damage to his reputation that he eventually became minister of the agency that regulates Japan’s finance industry.” (Read All due respect: An American reporter takes on the yakuza)

Teacher-student ratio—Pack ‘em deep, and teach ‘em cheap: The following image purports to show an unnamed teacher holding a final exam review in a stadium, with students allegedly forced to shell out EGP 60 per class. (View image via Daily News Egypt)

Fallen behind on all the various Ramadan series? Sarrahsworld will get you up to speed. (Watch in Arabic, running time: 7:12)

Brexit is on everyone’s mind this morning as the 23 June referendum approaches. Bloomberg’s Jeff Black writes that while central banks are already priming themselves for the short term, it’s the long term they’re most worried about. “My concern is about the negative feedback loop into the real economy,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management in Luxembourg. “I’m pretty convinced that there would be a lower growth potential in that case, both for the euro area and the U.K. The probability is that the ECB, for example, would be asked to do more.” EU policy makers are similarly prepared, with German Finance Minister Wolfgang Schaeuble saying they have safeguards in place to avoid “chaotic developments” should the UK exit the bloc.

Meanwhile, the UK’s share of global M&A activity has sunk to a record low due to the uncertainty, according to the FT (paywall). The volume of deals involving UK targets has sunk almost 70% this year compared to last, with the USD 57.6 bn spent on transactions making up a mere 4% of global M&A. “In a Leave scenario, I think M&A in Europe is going to turn very negative,” said head of Europe, Middle East and Africa M&A at ­Citigroup Wilhelm Schulz. Remaining in the EU, however, could “unleash” a series of agreements, say bankers who spoke to the FT.

Egypt and Canada have signed a USD 30 mn aid agreement under which Canada will fund education and vocational training programs and school meals in Aswan, said Egypt’s ambassador to Canada Moataz Zahran. The agreement was signed during International Cooperation Minister Sahar Nasr’s trip to Canada last week for the 22nd session of the Conference of Montreal, where she discussed a CAD 50 mn (USD 38.9 mn) grant to help train women Youm7 reports.

…At a meeting with President Abdel Fattah El Sisi and Prime Minister Sherif Ismail on Sunday, Nasr was instructed by the President not to sign any agreement without making sure that Egypt can pay back the loan, as Egypt’s foreign debt remains in a relatively stable position, Al Mal reports.

Egypt is looking to import around 110-120 shipments of LNG in 2017, an EGAS official told Reuters. Three trade sources said EGAS had purchased 10 cargoes of LNG from Trafigura and one from PetroChina earlier this month.

Twenty-three companies are reportedly bidding on a tender to supply the Power Ministry with 250k smart electricity meters, Al Borsa reported on Sunday. The Egyptian Electricity Holding Company (EEHC) had approved the companies out of 68 firms that had previously tendered for the meters. The EEHC will put together another short list by the end of the month, with the winning bidder set to supply the metres during the third quarter of this year. The Electricity Ministry had previously cancelled a tender to provide 50,000 smart meters, with companies interested at the time including El Sewedy, Siemens, and Huawei.

The Irrigation Ministry’s mechanical and electrical department will put forth a tender for four irrigation pump stations next August, a EGP 220 mn project of which 42% is funded by the Islamic Development Bank, according to department head Mostafa Abo Zeid, Al Borsa reports. The rest will be funded by the ministry.

Supply Minister Khaled Hanafy downplayed the ministry’s probe into corruption in the wheat harvest collection, stating in an interview with AMAY that the nationwide audit of silos was unrelated to instance of corruption identified in Qalyubia. The Supply Ministry has reportedly paid farmers EGP 14 bn for the domestic wheat harvest season, Hanafy told President Abdel Fattah El Sisi during a meeting on Sunday, Al Mal reported. Wheat supplied collected totalled 5 mn tonnes, surpassing the government’s target by 25%.

The Supply Ministry has contracted the Egyptian Poultry Association (EPA) to import 4,000 tonnes of poultry as of next month and sell them at subsidized prices, Al Borsa reported on Saturday. Cairo Poultry Company, Misr Arab Poultry and Alwatania Poultry Egypt are among the firms importing, EPA member Tharwat El Zeiny said. Prices of chicken have been surging over the past month, growing as much as 50% to around EGP 28 per kilo.

Oriental Weavers has signed an agreement with its subsidiaries for the necessary raw materials it needs for manufacturing, Al Shorouk reported. The agreement comes as part of a larger strategy to mitigate losses caused by the USD shortage, including increasing domestic components, decreasing imports, and transferring USD-based financial obligations to EGP, sources said. Oriental Weavers imports 55% of its supplies in USD, while exports represent 55% of the company’s revenues.

Wadi Degla Real Estate Development, Saudi Arabia’s Al Futtaim Group, and the UAE’s Emaar are among the firms negotiating with the Holding Company for Tourism and Hotels to develop an 800k sqm, EGP 3 bn project in Ras Ghamila in Sharm El Sheikh, Chairman Mervat Hataba said, Al Mal reported on Sunday. The offering process will commence once there is substantial interest from the private sector, Hataba added.

Al Ahly for Real Estate Development company has applied for official permits for the Green Square Sabbour II and L’Avenir projects at Future City in New Cairo, Chairman Hussein Sabbour told Amwal Al Ghad. Al Ahly will choose a project contractor for Green Square II within the coming period and will begin construction by the end of the year, he added. The project falls within the first phase of Future City and has an estimated cost of EGP 186 mn.

!​_StoryHed_​! Wadi Degla Real Estate signs EGP 1.6 bn contract to develop Magawish

Wadi Degla Real Estate Development Company signed an EGP 1.6 bn contract with the Egyptian General Company for Tourism & Hotels (EGOTH) to develop Magawish in Hurghada, Al Borsa reported. Wadi Degla Real Estate Development Chairman Maged Helmy says the revenues from the project are expected to be around EGP 2.3 bn, of which EGOTH will receive EGP 670 mn. He added that the project will be developed over eight phases, but did not specify when operations will begin.

ERA Commercial Egypt has commenced construction on residential compound Astoria Park, which spans over 12.5 feddans in Sixth of October, Al Mal reported on Sunday. The EGP 300 mn Astoria Park is comprised of 340 homes.

The Civil Aviation Ministry has issued at least three licenses to budget carriers and has asked that flights begin before the Eid holidays, Al Masry Al Youm reported. Nile Air will start service between Cairo and Sharm El Sheikh on 30 June, while flights between Cairo and Hurghada will commence on 1 July. Tickets will start at around EGP 400 for both destinations, Nile Air CEO Ahmed Ali said. Two other companies were awarded domestic flight licenses, including Smart Aviation and Almasria Universal Airlines.

Tourism Minister Yehia Rashed held talks with German Air Berlin and Condor Flugdienst to increase traffic into Egypt, he said, Al Borsa reported on Sunday. He’s also set to visit Germany to meet with tourism firms, MPs, and Finance Ministry officials to discuss reducing departure fees from Germany to Egypt, which stand at EUR 24 compared to EUR 7.5 for other countries. In related news, airlines are reportedly asking for the Tourism Ministry to help them with marketing costs as well as proposing a decrease in the USD 25 per person departure fee from Egyptian airports and the costs of ground services, he said.

Construction on a new terminal at the Borg Al Arab Airport is set to begin in July, Chairman of the EgyptAir Holding Company Ismail Abou El Ezz told Amwal Al Ghad. The terminal has a capacity of 4 mn passengers annually and will be financed through a USD 150 mn loan from the Japan Bank for International Cooperation, he added. The terminal will bring the airport’s total capacity up to 5.6 mn passengers annually, he said.

Amwal Al Khaleej is looking to increase its investments in Egypt and will participate in the Egyptian Propylene & Polypropylene Company (EPPC)’s capital increase, head of the Cairo office Karim Saada told Al Mal. EPPC is looking to increase its capital by USD 200-250 mn to around USD 500 mn, he added. The company is looking to double its output to 600k tonnes annually by adding another production line, he said.

Egypt is seeking help from India’s financial institutions to learn more about SME financing, The Economic Times reported. The Egyptian Banking Institute organised a visit to India “in collaboration with the India Institute of Banking and Finance to garner expertise of the India’s progress in developing and financing SMEs.” The visit reportedly included discussions with institutions including the Indian central bank and the Small Industrial Development Bank of India, amongst other.

NBE is arranging an EGP 1.2 bn syndicated loan with the Emirates NBD Egypt and Union National Bank Egypt for the Food Industries Holding Company (FIHC), Deputy Chairman Yehia Aboul Fotouh told Al Borsa. NBE is looking to provide around EGP 300-600 mn of the loan, with the remainder divided equally, and the possibility of a fourth bank joining, he added. The financing will be presented to FIHC over three tranches, said Aboul Fotouh.

The Environment Ministry was notified that the waste recycling plant to produce alternative fuel in Ain Al Sokhna has to be scrapped for its proximity to the administrative capital, sources told Al Borsa. The plant is one of five recycling projects that were allocated space, the source added, and the other four projects in Belbeis, Kuraymat, Al Saf and Kom Osheim will commence as normal. Environment Minister Khaled Fahmy has asked for a new land plot for the fifth project.

Governorates are not facing water shortages, Water Resources and Irrigation Minister Mohamed Abdel Aati said after following up with all related bodies and receiving daily reports, Al Shorouk reported on Sunday. His statement follows recent reports that some villages in the governorates of Beheira and Ismailia have been suffering from severe drinking water shortages, with Ismailia locals in particular saying they hadn’t received water for an entire month.

The House Committee on Housing is leaning toward approving articles of the Unified Construction Act that legitimize informal ownership and unlicensed development of land, Al Borsa reports. The law, which will set fines and compensation for the state for the practice, is currently being discussed by the committee. Failure to pass the law could result in EGP 2 tn in losses to the state and the economy, said committee member Fawzy El Sherbasy.

Egyptian flying camera drone startup Drofie secured a USD 26,000 investment and a spell in the Kickstart Accelerator in Zurich, Wamda’s Rachel Williamson reported. “Imagine pulling a camera out of your pocket, throwing it into the air and having it follow you around, capturing everything you do. Well, that’s exactly what Drofie does,” founder Mohamed Ghaith explained. If you’re thinking how a drone startup managed to escape the ever-watchful eye of customs officers who are always on the lookout for “spy equipment”: Ghaith and his team are based in Latvia.

By the end of this year, the Tutankhamun collection is set to be moved from Tahrir’s Egyptian Museum to its new permanent home at the Grand Egyptian Museum (GEM) overlooking the Giza Plateau, said Antiquities Minister Khaled El Enany, according to Ahram Online. The collection had been housed in Tahrir for over 84 years. Supervisor-general of the GEM Tarek Tawfik told Ahram Online that the collection “will be transported after the carrying out of preliminary restoration of some artefacts.” Let’s just hope none of them meet the same, unfortunate fate as Tut’s mask.