The acquisition deal of the Omar Effendi department stores is at stake. The Arab Investment Development company (AID), which would buy an 85 per cent stake in the stores told Ahram online that it will cancel the deal if the previous owner, Anwal does not pay its back taxes.
On Wednesday the Tax Authority seized control of the department store’s bank accounts in order to collect some LE98 million ($17.5 million) in unpaid taxes, owed since 2007 when the store was privatised.
"There is no way that we can finalise the deal if Omar Effendi does not settle its debt crisis with the Tax Authority, AID chairman, Mohamed Metwalli said.
The deal by which Arabiyya was to buy an 85 per cent stake in the troubled company was due to be finalised on 31 December, with a plan to update the chain which operates about 80 stores throughout Egypt.
The remaining 10 per cent of the shares was to be owned by the Egyptian state-owned firm, while the remaining 5 per cent would be owned by the World Bank.
"We knew the company was troubled, but not to that extent," Metwalli told Ahram online, describing the crisis as ‘having severe negative consequences on the development of the deal".
Omar Effendi was a public 'underdog' chain until 2006, when it was sold to the Saudi group, Anwal. The company has only released losses since then and is still heavily in debt.