Cleopatra offering priced at EGP 9 / share. Also: It’s BBQ season.

• The second Africa and Middle East conference on software engineering (AMECSE) is happening at Intercontinental Citystars in Cairo on 28-29 May.
• N Gage’s Investment Regulation Forum in cooperation with Pepsico hits the ground running on 29 May (Sunday) at the Four Seasons Nile Plaza, Cairo. Register here.
• The two-day Middle East Regional Forum Egypt kicks off on Monday 30 May at The Movenpick Hotel & Casino Cairo-Media City in Cairo.
• On 1-2 June (Wednesday and Thursday) the Cisco Connect Egypt 2016 is taking place at Cairo’s Royal Maxim Palace Kempinski. You can go ahead and tap here to register.
• Right after, the first annual EBRD Research Symposium on the Economics of the Middle East and North Africa takes place on 2-3 June (Thursday-Friday) at the EBRD headquarters in London.
• And, finally, don’t expect an agreement on production output cuts when OPEC meets on Thursday, 2 June.

European Bank for Reconstruction and Development President Sir Suma Chakrabarti will arrive in Cairo on 31 May, not yesterday as we had reported previously, according to a source in government. The same source tells us that Sir Suma will not be signing loan agreements with the government during the visit.

Egypt is set to receive the USD 2 bn UAE deposit at the central bank before the end of May, a source at the central bank told Al Masry Al Youm. He noted that the CBE’s priorities are to increase foreign currency source, fulfill importers’ requests, and repay the Paris Club debt as well as a maturing Qatari deposit.

EgyptAir Flight 804’s emergency location transmitter (ELT) has been located by Airbus within a circle of 5 km radius, head of Egypt’s investigative committee Ayman El Moqaddem told Ahram Gate on Wednesday. The ELT is a distress signal transmitter and is distinct from the black boxes (as the cockpit voice and flight data recorders are known). The discovery of the ELT should help searchers in their efforts efforts to locate the black boxes.

It is unclear to us whether Egyptian authorities have contracted two international companies to help search for the black boxes of flight MS804. Reuters had quoted EgyptAir chairman Safwat Mosallam as saying that an agreement had been reached with a French and an Italian company to conduct deep sea searching in the Mediterranean, 3,000 metres deep. Al Ahram’s breaking news portal is running a denial by Mosallam that EgyptAir had anything to do with the agreement. Mossallam stated that only the Egyptian investigation committee is authorized to make such an agreement, but gave no concrete statement whether an agreement had taken place. Two French diplomatic sources told Reuters that Egyptian authorities and France’s BEA air accident investigation agency were finalising a contract with two French companies, Mauritius-based Deep Ocean Search and Alseamar.

“It might be terrorism, it might be technical or any third possibility,” said Foreign Minister Sameh Shoukry about the crash in an interview with NBC News on Tuesday. He warned terrorists might make a claim of responsibility even when they can’t back it up with hard proof — or stay silent to “create a high sense of confusion.” Shoukry said the hunt is still in its early stages, but “we can always get lucky” in finding all of the wreckage.

And as the search continues, with days running out to find the black boxes before their batteries run out and they cease broadcasting location signals, Bloomberg writes that some accident investigators are saying “it’s time to employ technology to make crash data available immediately.” Investigators are pushing for instant access to critical clues about crashes either through streaming in real time via satellite or by devices designed to jettison from the plane. “The industry has to look at itself and say, is it time?…the public is demanding it,” said Tony Fazio, aviation consultant and former accident investigation chief for the US Federal Aviation Administration.

Also worth reading this morning on the topic: Tamer El Ghobashy and Robert Wall’s “Crash Is a Test of EgyptAir’s Mettle” for the Business section of the Wall Street Journal, which does a good job at getting international readers up to speed with EgyptAir.

Abraaj’s Cleopatra Hospital prices offering at EGP 9.00 per share, first day of trading one week from today: Cleopatra has set the price for its offer of 40 mn existing ordinary shares (or about 25% of the company’s outstanding share capital) at EGP 9.00 per share, according to the company’s price announcement. The offering includes 34 mn shares to institutional investors in an international offering, which was was 6.73x oversubscribed, having generated EGP 2.1 bn (c. USD 231.9 mn) in demand. Another 6 mn shares will be put up in an Egyptian retail offering, the price announcement for which appears in the domestic press this morning. The company had previously given an indicative price range for the offering of EGP 8.75-11.88 per share. Selling shareholders will reinject the proceeds of the transaction into Cleopatra to drive new growth, including the development of extensions of Al Shorouk Hospital and Cleopatra Hospital and the potential acquisition of a site in New Cairo to develop into a new hospital, said Cleopatra Hospital Company’s chairman and CEO Dr. Ahmed Ezzeldin. Trading in the shares on the EGX is expected to commence on Thursday, 2 June under the ticker CLHO.CA. EFG Hermes is the sole global coordinator and bookrunner for the offering. Freshfields Bruckhaus Deringer LLP is international counsel to Cleopatra Hospital Company, while Zulficar & Partners are local counsel. Shearman & Sterling (London) LLP is international counsel to the sole global coordinator and bookrunner, while Matouk Bassiouny is local counsel.

CBC and Al-Nahar merge one holding company that will control five companies in total — the television networks and their respective advertising arms. CBC owner Mohamed El Amin said the holding company will manage the whole group on both the editorial and business fronts. Al-Nahar CEO Alaa El Kahky said planning for the merger began six months ago. El Kahky spoke to Al Mal about economies of scale and cost reductions, saying they were the main driver of merger, not the recent developments in the market, including Ahmed Abou Hashima’s acquisition of ONTV from Naguib Sawiris. The merger will be reflected in coordinated content on both channels, El Kahky told Al Borsa, noting that both channels will keep their separate brand names. He added that the new holding company will be looking to create a new channel targeting audiences in the GCC.

Government hits local wheat purchase target: Egypt has reached its target for wheat purchases from local farmers for the year, Bloomberg reported. Egypt bought 4.076 mn tonnes of local wheat during the current harvest, slightly above the 4.0 mn tonne-target. The government is committed to buying all the wheat supplied from farmers, and the local procurement season will not end before then, Agriculture Ministry Spokesperson Eid Hawwash asserted on Al-Ghad satellite TV on Wednesday (runtime: 3:01). Local purchases of wheat are expected to hit 5 tons or a little less by the end of the season, Hawwash said. Also, the ministry has paid farmers in full for the harvest through the Principal Bank for Development and Agricultural Land, he said, after they had complained of being underpaid. Meanwhile, the EBRD suggests buying wheat is not the only important step as Egypt loses 10-20% of its overall wheat supply due to inadequate infrastructure along the the supply chain, according to Daily News Egypt. Blumberg Grain chief Philip Blumberg has met with President Abdel Fattah El Sisi in recent weeks to discuss the next phase of a national network of wheat storage and handling infrastructure that Blumberg is building to address exactly that problem.

The EGX announced it would “delay approving Beltone Financial’s capital increase request until the company submits reasons for the move.” According to a bourse statement, Beltone’s auditor Deloitte has requested more time to finalise its assessment of the proposed capital increase and, accordingly, the EGX has postponed its approval until the reasons for the capital increase are submitted. Beltone Financial had requested to increase its paid-in capital by EGP 1 bn.

Meanwhile, Beltone Financial has put in its fifth request for a two-week extension on its acquisition of CI Capital, Al Mal reports. Beltone had agreed to pay Commercial International Bank (CIB) some EGP 50 mn to guarantee the acquisition when it requested the fourth extension, which expires today. Sources tell Al Borsa that CIB is likely to accept considering reports that OTMT and the Egyptian Financial Supervisory Authority are closing in on an settlement over irregularities concerning its demerger, which are holding up the transaction. OTMT has submitted the documents needed to waive the requirement for a mandatory tender offer to EFSA, according to sources. EFSA is expected to only require that OTMT pay a fine. This is not the first time we’ve heard a settlement was at hand.

Qalaa Holdings is confident that Egyptian Refining Company (ERC) will cut Egypt’s dependence on oil imports, chairman Ahmed Heikal told Reuters. ERC (Qalaa’s USD 3.7 bn megaproject that is on track to begin production in 1Q2017) will have the capacity to produce 4.2 mn tonnes of refined products per year, which it will sell to Egyptian General Petroleum Corporation (EGPC) at international prices under a 25-year agreement. While ERC will be exposed to EGPC’s USD shortages, Heikal said there were contract provisions allowing for a rolling letter of credit for oil products that cover the three months going forward. “You have to remember what is the alternative for the government? The alternative is to import. So they will have to pay cash for the products,” he said. And while Heikal is “cautiously optimistic” on the medium-term outlook for Egypt, especially in light of recent gas discoveries, he believes the government will have “no other choice” but to lift energy subsidies.

Speaking of which: Is business accepting higher energy prices for more export subsidies? Government officials are holding closed door talks with business leaders that may see industry accept higher prices for energy in exchange for an increase to export subsidies, a senior government source tells Al Shorouk. As it stands both sides seem amenable to such an arrangement, the source added. The movement appears to be in line with the planned 43% slash in energy subsidies in the FY2016-17 fiscal year. As of yet it is unclear whether this increase to export subsidies will be an additional top up to the EGP 6 bn promised by Industry and Trade Minister Tarek Kabil earlier this month.

The proposed value added tax (VAT) bill will be presented to the House of Representatives without a proposed tax rate, Ashraf El Araby, a member of the economic subcommittee, told Al Mal. Instead, the legislation could leave the setting of the rate to the discretion of the Finance Ministry. El Araby said parliament will ask to know the exact rate will be charged, or at least it will require the government to disclose studies assessing the inflationary impact of the applying the VAT. El Araby also noted that he and his colleagues will not accept studies drafted before the most recent EGP devaluation. Al Mal had reported that the proposed VAT rate was increased to 14% from 10%.

Egypt needs to do more to improve airport and aircraft security flights from Russia can resume, said Russian Deputy Foreign Minister Mikhail Bogdanov told Sputnik. “We are working on it, there are constant intensive contacts between the Russian and the Egyptian sides, there is mutual understanding, we exchange visits regarding air travel issues, airport security, the safety of passengers and aircraft. This requires more contacts and efforts,” Bogdanov said. The Russian side wants to resume air travel “as soon as possible,” he added. TASS, however, is reporting that Russia’s Transport Minister Maxim Sokolov said his ministry has not yet received a response to Russia’s complaints about security at Egyptian airports, which include “introducing requirements on ensuring aviation security at flights that go through the Russian Federation, as well as providing service to passengers, planes, cargoes and mail sent to the Russian Federation,” said Deputy Transportation Minister Valery Okulov.

In what may be the last trailing earnings releases for the season, EIPICO’s 1Q2016 consolidated net profit grew 38% y-o-y to EGP 123 mn, according to audited financial statements on the EGX. Mansoura Poultry also released 1Q2016 results, posting a net profit of EGP 8.5 mn, up from EGP 3.4 mn last year. Sinai Cement reported a 1Q2016 net loss of EGP 38.0 mn, widening from a loss of EGP 10.9 mn last year.

** Enterprise is powered this morning by thoughts of sirloin steak for breakfast / lunch / whateveritis as soon as we hit “send” on this morning’s issue. (See Worth Reading and Worth Watching, below.)

The Euromoney Institutional Investor FX rankings showed Citigroup retaining the number one spot as the world’s largest currency trader by market share. Meanwhile, Deutsche Bank AG’s market share sunk to 7.9% from 14.5% last year, dropping them to fourth place overall. XTX Markets Ltd., a computerized trading firm, “has come from nowhere” to claim the fourth place in spot currency traders — “the first time an electronic specialist has displaced a bank in the annual survey,” according to Bloomberg.

Egypt should drop the profit sharing agreements model for exploring mineral resources for tax, royalties, and rent models, veteran finance writer Patrick Werr suggests. Mining costs are, unlike oil and gas, back loaded. Miners also seek longer-term contracts. “If more mining companies were to enter Egypt, the government would not only collect more profit and royalty revenue, but would also be able to tax the wide range of service companies and other businesses that would inevitably spring up around them,” Werr says. He believes the government would be able to increase its revenues if it limits “its role to that of regulator, promoter and overseer, with proper royalty and tax systems that are competitive with concessions in other countries.” Earlier this week, Werr suggested Egypt’s mineral resources could eclipse oil and gas as a source of wealth.

Israeli Prime Minister Benjamin Netanyahu’s inking of an agreement to bring the party of ultranationalist Avigdor Lieberman into the ruling coalition on Wednesday stokes “fears of a lurch to the right and a possible hardening of Israeli policies toward the Palestinians,” the FT (paywall) reports. “If [Lieberman’s] historical record is worth anything at all, it’s a cause of concern,” said Mark Heller, a research fellow in regional politics at the Institute for National Security Studies at Tel Aviv University, according to Bloomberg. Lieberman once suggested bombing the Aswan dam, talk that is unlikely to “grease the wheels” and see Egypt mediate between Israelis and Palestinians.

Egyptian authorities denied entry to Remy Pigaglio, a French journalist who worked for several publications, including Catholic daily La Croix and RTL radio, and who had reportedly been accredited by Egyptian authorities. According to the Associated Press, Pigaglio “has a residency work permit and press card, and was detained for 30 hours at the airport before being sent back to Paris early Wednesday.” Egyptian Foreign Minister Sameh Shoukry told his French counterpart that Pigaglio was denied entry for unspecified security reasons, a French official was quoted by the Wall Street Journal as saying. Mada Masr has comment from Pigaglio. The French Embassy in Cairo responded by issuing a statement in French and Arabic saying it regretted the decision. The New York Times also has coverage.

The foreign press is particularly interested this morning in the call by for the EU stick to an EU-wide suspension on arms transfers to Egypt, which we noted earlier this week. Bloomberg, Deutsche Welle, and Sputnik are carrying the story this morning. Foreign Affairs Minister Sameh Shoukry denounced the report on Wednesday, despite not having read it, he said. During a press conference with his Canadian counterpart, Shoukry said the organisation’s reports are “always exaggerated and based on false information.” The arms are used to fight terrorism and stabilise the state, he added, according to DNE.

BBQ season is now upon us. Do you feel left out when the rest of the guys put on their man-aprons, then head into the fray with a beer in one hand, tongs in the other? The New York Times has got your back with the epic, very practical and beautifully designed How to Grill. Even those talented at the art of cooking with fire will find a nugget (or a recipe) worth digesting.

Don’t have a balcony or backyard on which to BBQ? If your tastes run to sirloin (or ribeye, for that matter), celebrity chef Gordon Ramsay has got your back in How to Cook a Steak (run time: 2:35). Easy steps and (once your meat hits room temperature) very fast. All it requires is a heavy-bottomed pan and the willingness to forget what your parents taught you about cooking meat.

Abu Dhabi’s Crown Prince Mohammed bin Zayed Al Nahyan arrived in Cairo yesterday, where he met with President Abdel Fattah El Sisi and discussed bilateral cooperation and regional developments in Syria, Libya, and Yemen, without specifying details, Al Ahram reports.

Former Serbian Foreign Minister and UN General Assembly President Vuk Jeremic arrived in Cairo yesterday on a three-day visit to lobby for Egypt’s support for his run as Secretary General of the UN. Al Ahram said Jeremic, who is looking to succeed Ban Ki-moon, will meet with Foreign Minister Sameh Shoukry and a number of Egyptian officials.

EGAS is issuing a tender next week to import 20 shipments of LNG to meet domestic demand, sources told Al Borsa. The shipments, each containing around 3 bcf, are set to arrive starting mid-2016 and through to the end of the year.

The cigarette market has gone through a wave of price changes throughout the last two weeks driven by an almost 50% cut in Philip Morris production, Al Borsa reported. The production cut was caused by the shortage in raw materials, which was in turn caused by a shortage in USD, Eastern Company Chairman Mohamed Haroun said. Traders and sellers used the opportunity to spike their prices between 20-30%, despite not being charged extra by the company, he added. Production has since reportedly returned to normal levels.

Lafarge Egypt said it’s unlikely to bid for a new cement license, sources told Al Borsa, saying the market is already oversupplied. Lafarge has five cement production lines, he added, noting that the government should focus these projects where they’re needed: Alamein, Sinai, and Upper Egypt. The country’s demand for cement rests between 52-54 mn tonnes annually, said head of sales Mohamed Farouk, while the total production of cement in Egypt is between 70-75 mn tonnes annually, indicating an almost 15 mn tonne surplus. Between a saturated market and an estimated cost of EGP 1.5 bn to build a new production line, a new cement license seems unnecessary.

Agriculture Minister Essam Fayed will submit a report from the House Agriculture Committee report to the cabinet economic group calling for a EGP 100 increase in the price the state pays to farmers for sugar. The rise to EGP 500 per ton, sources in tell Al Borsa, is meant to encourage farmers to keep growing the strategic crop. Meanwhile, the Finance Ministry fears the move could cost the government EGP 1.1 bn, the sources added. On a related note, Egypt now has a six-month reserve of the sweet stuff, cabinet said on Wednesday, Al Masry Al Youm reported. The statement comes after the cabinet imposed a EGP 900 export fee on every ton of sugar last week and exempted sugar imports from custom duties a few days ago in a bid to keep prices stable ahead of Ramadan.

Chandra Kant Dhanuka-owned Dhunseri Petrochem is looking to bring in a strategic partner for its loss-making Egyptian Indian Polyester Company (EIPC), India’s The Telegraph reported. EIPC has appointed a merchant banker to look for an equity partner on the advice of its lenders. "Bankers feel that further equity should be pumped into the business. Accordingly [CI Capital], a subsidiary of CIB, has been appointed to look for a partner," Dhanuka, executive chairman of Dhunseri Petrochem, said. EIPC has borrowed funds from the IFC, CIB, and Ahli United Bank. The plant, in which Dhunseri Petrochem has a majority stake of 70%, has not been in production for over a year because of lack of working capital.

Italian stove manufacturer Bertazzoni are looking to invest EUR 55 mn in Egypt to build a new stove factory, Trade and Industry Minister Tarek Kabil told Amwal Al Ghad. The new factory will begin production in August 2017, with 50% of its output earmarked for regional exports, especially to countries with which Egypt has free trade agreements. The company is particularly interested in using Egypt as a conduit to export to African nations, said Bertazzoni’s chairman Paolo Bertazzoni. The plant will source 60% of its production inputs in Egypt. As we noted back in March, the facility was expected to cost USD 100 mn, according to El Araby’s deputy chairman Ibrahim El Araby.

Air Leisure will sign agreements establishing daily flights between Saudi Arabia, Kuwait, Bahrain, and Oman and Sharm El Sheikh and Hurghada with local travel agents today. Daily flights will commence from the first week of July and will carry 1,000 passengers a day, said Reda Daood, managing director at Lucky Tours, Air Leisure’s agency. Online booking for the flights, the first of which takes place in three months’ time, will begin in Ramadan, he added. The move coincides with a Tourism Development Authority campaign targeting GCC nations which will take place during Ramadan. Last month, the Tourism Ministry commissioned Air Leisure to fly three trips a day from Saudi destinations to Sharm El Sheikh and Hurghada.

Dubai Group is in the process of selling its 48.4% stake in Shuaa Capital and is being obliged to divest its 11.8% stake EFG Hermes and 12.8% stake Bank Muscat this year, said Fadel al-Ali, the chief executive of Dubai Group’s parent firm on Tuesday, according to Reuters. EFG Hermes and Bank Muscat assets would be sold as part of a restructuring, he said, but declined to comment further. Bloomberg reported on 12 May that Natixis was holding discussions to find buyers for Dubai Group’s assets that back a USD 1.1 bn loan to the company. Al-Mal has the story domestically.

Banque Misr has begun negotiating to borrow USD 100 mn from a UAE-based bank, according to Chairman Mohamed El Etreby. The loan will be used to support the bank’s liquidity, finance investment spending, and support clients’ strategic needs. El Etreby told Al Masry Al Youm the details of the loan will be finalised next week. He also noted that Banque Misr has plans to expand into GCC countries, including Bahrain and Yemen.

Bahrain’s Bank ABC is planning an expansion in Egypt through its local subsidiary, either through the acquisition of existing banks or the opening of new branches, said Bank ABC Egypt CEO Akram Tinawi. At a press conference announcing nearly 23% growth in net profits in FY15, Tinawi stated that the bank will keep its revenues in Egypt to build up local liquidity, probably in anticipation of the expansion. Tinawi added that the bank has yet to draw on a USD 80 mn line of credit extended by the parent company, according to AMAY.

McDonald’s Egypt will invest EGP 400 mn in opening 80 new stores, bringing its total number of restaurants in Egypt to 170, marketing head Hisham Abdel-Wahab said on Wednesday, according to Al Mal. The Mansour-owned company is looking to grow revenues 7% to EGP 1.1 bn by year’s end, he added.

The House Media Committee plans to recommend amendments to the draft media bill that would ease restrictions on ownership and financing for media outlets, said committee member Osama Sharshar. The restrictions include limiting ownership and investment in media outlets to Egyptian nationals, capping ownership stakes for minority shareholders, and restricting the majority ownership by an individual investor or his immediate family to one weekly outlet, monthly outlet or website. Sharshar told Al Borsa that he favors keeping the minimum capital requirement for establishing a website at EGP 500k. He added that the full body of the House will discuss on the bill in June.

A “change” crisis? The CBE has reissued the EGP 1 banknotes and governor Tarek Amer told Al Ahram there will be EGP 500 mn worth of them in circulation by the beginning of Ramadan. EGP 1 banknotes were discontinued and removed from circulation in 2007 and were replaced with coins. For our young readers and those who haven’t been in Egypt long enough to come across it, this is what an EGP 1 note looked like. Al Mal says a number of freshly-printed banknotes dated 2002-2003 were available in a number of stores. One retailer said the stock of change he received from the CBE was entirely made up of EGP 1 banknotes, with sources telling him higher minting costs are driving the switch to banknotes. This is a bit dubious as the EGP 1 coin, according to Wikipedia, has a bimetallic structure, with the outer ring made of 94% steel, 2% copper, and 4% nickel plating, whereas its centre is 94% steel, 2% copper, and 4% copper plating. Most recent CBE data does not indicate a reduction in issuing EGP 1 coins and all three metals used in minting it have experienced significant price drops in the past year, which, if anything, should result in higher seigniorage profits to the central bank — unless the central bank is just looking to expand its seigniorage profits. Amer had reportedly announced that the CBE was exploring the move back in February, according to Al Mal.

The CBE has also approved reissuing the EGP 0.25 and EGP 0.50 notes, Al Mal reports. There is no word as to the fate of the EGP 0.10 note, popularly referred to as Monopoly Money.

Switzerland is set to put into effect a law on 1 July to help seize and repatriate illicit gains parked in its banks by “foreign dictators,” the government said on Wednesday, according to Reuters. “Three ordinances cover assets previously seized as a precaution from former Presidents Zine El Abidine Ben Ali of Tunisia, Hosni Mubarak of Egypt and Viktor Yanukovych of Ukraine and their inner circles, although all three expire early next year.”