Egyptian billionaire Nassef Sawiris's Orascom clears $1.3 billion share issue for OCI merger

Orascom Construction Plc, the contractor controlled by Egyptian billionaire Nassef Sawiris, has approved the issue of 97.2 million new shares to OCI N.V., a block worth about EGP77.9 billion ($1.41 billion) at the stock's latest closing price in Cairo.

The board signed off on the issue by written resolution on Nov. 5. It is the last scheduled approval on Orascom's side of the deal that folds OCI, the Dutch-listed company Sawiris also controls, into Orascom Construction. The issue lifts Orascom's issued capital from $110.2 million to $207.4 million, made up of shares with a nominal value of $1 each, and nearly doubles the number of shares in issue. The new shares carry a premium of $12.79 each over nominal value, which puts the issue at about $1.34 billion.

Orascom Construction closed at EGP801 on the Egyptian Exchange on Nov. 8. The new shares are due to list on the Egyptian Exchange and the Abu Dhabi Securities Exchange on Nov. 24.

How the deal works

OCI will move nearly all its assets and liabilities into a subsidiary and transfer that unit to Orascom Construction in return for the new shares. OCI shareholders will receive 0.4634 Orascom Construction share for every OCI share they own. OCI investors will end up with about 47% of the enlarged company, which will be renamed Orascom and run three divisions covering infrastructure, construction and investments.

OCI shareholders approved the combination on Oct. 30, with 99.85% of votes cast in favor. Orascom Construction shareholders backed the share swap in January.

OCI's last day of trading on Euronext Amsterdam is expected to be Nov. 26, and the stock will be delisted the next day. Shareholders should receive their Orascom shares on or around Dec. 8, after which OCI will be liquidated. The companies aim to complete the deal in December, ahead of a Dec. 30 long-stop date.

Investors who do not want Orascom stock can sell to NNS Holding, the Sawiris family investment company, which is offering €4.10 ($4.59) per OCI share in cash. That offer closes on Nov. 17 unless it is extended. The combination goes ahead only after NNS declares its offer unconditional and settles it.

A petition by shareholder Value8 asking the Dutch Enterprise Chamber to investigate OCI is still pending. It did not stop the Oct. 30 vote.

Sawiris's stake

Sawiris and entities linked to him held 47.83 million Orascom Construction shares, or 43.39%, after his family office NNS City bought about 1.13 million shares in April. At the Nov. 8 close, that block is worth about EGP38.3 billion ($692 million).

The new issue will cut that block to about 23% of the enlarged share capital. Sawiris will make up much of the difference through NNS, which owns more than half of OCI and will receive Orascom shares in proportion to its OCI holding when the shares are distributed.

He is set to become non-executive chairman of the combined company, which plans to put more than $1 billion of equity into new infrastructure and recurring-income investments by the end of 2026.

Sawiris, 65, is the youngest son of Onsi Sawiris, who founded the Orascom business in 1950. He took charge of the construction business in 1995 and later built OCI into one of the world's largest nitrogen fertilizer producers before selling most of its plants. He chairs German sportswear maker Adidas AG, where he owns close to 6%, and co-owns English Premier League club Aston Villa with Wes Edens.

Forbes estimates his net worth at $9.6 billion, which makes him Egypt's richest person.

Figures were converted at EGP55.34 to the dollar and €1 to $1.12.