Hearing of The Invalidity of Tanta Flax Contract, 11/6/2011

Investment circuit holds the first hearing for the case #34 248 / 65jy which The Egyptian Center for Economic and Social Rights and   Wael Hamdi Alsaid  law house   filed on behalf of workers of Tanta Flax and Hamdi elFakharany  claiming  the invalidity of the selling contract of Tanta flax Company to the Saudi investor Abdulilah alKahky.

This is the second case to retrieve privatized public companies, the first was Omar Effendi’s  . The complaint stated that the company’s shares were  5,910,000 , the holding company for chemical industries owned 3,352,870 shares , the National Investment Bank, represented by the minister of finance as chairman of the board owns 2,557,130 shares.

All shares were sold  in full with the amount of EGP 83 million , under the following terms:

Advance payment : EGP 33,200,0000 representing 40% of the total. This amount has been paid by four checks (copies attached). The selling contract is only valid after checked have been cashed.

The remaining EGP 498 million plus the deferral revenue are payable in 3 installments.

The selling price has been decided by the financial position of the company on 30/6/2004. The price was calculated according to the book value reduced by annual depreciation rates. The pricing did not abide with the rules set forth in the law of auctions and tenders and the law of the public business sector.

The appeal said that the company has ten plants (thick wood – thin wood – linen – thin string –  thick string – oil products – home furniture  – urea – conter wood- milamin). All plants were operating in full capacity at selling time having  2000 workers. Today more than 1500 workers were laid off and only 2 plants are running  : thin wood high  and linen).