Tarek Amer and Investor Associations reach partial settlement deal for pre-float LCs
A settlement agreement for pre-float LCs of less than USD 5 mn? Not quite yet. Companies with pre-float letters of credit worth less than USD 5 mn could be given up to seven years to repay their bankers, Al Borsa says, if a settlement mechanism for which an industry association is pushing goes through. Others with debts north of that figure will have to wait until a later stage of talks between Central Bank Governor Tarek Amer and members of the Union of Investor Associations. Rhetoric or reality? UIA member Mohamed Khamis Shaaban is quoted as saying that companies that have “suffered too much damage” as a result of the float will enjoy debt forgiveness, a notion we find unimaginable. Amer is set to meet with members of the association next Sunday to discuss the guidelines for the settlement and is said to have tasked a committee with working to resolve disputes that may arise between the banks and companies. Why are we skeptical? This story should be seen as part of a lobbying effort by the association. While we do not doubt that Amer is giving the association face time, but that’s a far cry from the CBE directing banks (formally or verbally) to reschedule payments. We’ll be speaking with friends in banking today and will report back if there’s anything to say.