Citadel Capital to Call for an EGM to Approve US$ 175 mn Rights Issue

The Extraordinary General Assembly of the leading private equity firm in the Middle East and Africa will meet to approve a US$ 175 million rights issue to support current platform and portfolio companies as well as future investments

The announcement follows the Egyptian Financial Supervisory Authority (EFSA)’s decision to approve the call for an EGM meeting specifically to approve the rights issue.

Citadel Capital’s management is confident that this rights issue will be fully subscribed. Citadel Capital Partners Ltd (CCP), the largest shareholder in Citadel Capital (owning 33.12% of the Firm’s shares) and the vehicle through which the Firm’s Executive Committee holds its equity, will participate pro-rata in the rights issue.

All shares to which Citadel Capital Partners Ltd. subscribes will be subject to a one-year lock-up period.

“Citadel Capital is firmly on the right side of macroeconomic trends,” noted Citadel Capital Chairman and Founder Ahmed Heikal. “The majority of our platform companies — which have dollar and dollar-linked revenues, local costs and local currency debt — will benefit from the devaluation of the Egyptian pound. Moreover, the anticipated widening of the budget deficit will accelerate the medium-term removal of fuel subsidies and liberalization of the energy sector, both of which are key Citadel Capital investment themes.

“With exits delayed 12-18 months amid the present volatility in public markets, we have a duty to ensure the Firm and our investments have the liquidity they need to grow — and to be prepared for a wave of attractive investment opportunities in the medium term. Our emphasis in the coming period will thus be on nurturing existing platforms while gearing up for the next wave of exits and new investments.”

The Firm is raising a total financing package amounting to US$ 244.1 million (EGP 1.5 billion) which will be funded via proceeds of the rights issue as well as other sources including revenues from Citadel Capital portfolio companies in the current year.

Proceeds will be used as follows:

Balance of Citadel Capital’s contribution to Egyptian Refining Company’s Equity US$ 52.0 mn
Investments in Upstream Oil and Gas (National Petroleum Company and NOPC / Rally Energy) US$ 46.5 mn
Repayment of Loan and Interest US$ 28.1 mn
Investments in Wafra (Agribusiness) US$ 24.0 mn
Working Capital Needs US$ 15.0 mn
Investments in Gozour (Agribusiness / Consumer Foods) US$ 14.0 mn
Investments in Tanweer (Media / Publishing) US$ 12.0 mn
Capitalization of Loans from Citadel Capital Partners US$ 52.5 mn
Total Proceeds US$ 244.1 mn

In the EGM meeting, shareholders will vote on increasing the Firm’s capital to EGP 4,358,125,000 (4.358 billion) from EGP 3,308,125,000 (an increase of EGP 1,050,000,000) through the issuance of a total of 210 million shares. This includes 157.5 million regular shares and 52.5 million preferred shares. Any shares left un-covered after the one-month first call for subscription would be made available to all shareholders on an open (not pro-rata) basis in subsequent rounds. The rights issue will be complete within two months from the date of approval.

Added Heikal, “Assumptions underpinning the rights issue are extremely conservative and include no exits of any platform company, no additional debt at the Citadel Capital level and no additional third-party debt or equity at the portfolio-company level. The Firm’s working capital needs of US$ 15 million for 2011 are covered entirely by cash available and revenues from advisory fees. Furthermore, we have cut 2011 operating expenditures by 52% through a combination of salary and bonus deferrals, cuts to travel costs, reduced spending on communications, marketing and events, and a significant reduction in other running costs.”

Execution risk continues to fall across Citadel Capital’s platform investments on the back of the Firm’s solidly apolitical strategy and careful attention to operational developments that saw seven greenfield investments begin operations in 2010. The Egyptian Refining Company (ERC), which is building a US$ 3.7 billion greenfield refinery that will prevent the release of up to 183,000 tons of sulfur dioxide annually, has received strong backing from the current government, while mining platform ASCOM’s concession in Ethiopia has reported very positive early test results.

Citadel Capital shares were listed on the Egyptian Exchange in December 2009 and carry a par value of EGP 5.00 each.

—Ends—

Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading private equity firm in the Middle East and Africa. Citadel Capital focuses on building regional platforms in select industries through acquisitions, turnarounds, and greenfields executed via Opportunity-Specific Funds. The Firm’s 19 OSFs now control Platform Companies with investments worth more than US$ 8.6 billion in 14 countries spanning 15 industries, including mining, cement, transportation, food and energy. Since 2004, Citadel Capital has generated more than US$ 2.2 billion in cash returns to its co-investors and shareholders (on investments of US$ 650 million), more than any other private equity firm in the region. Citadel Capital is the largest private equity firm in Africa by PE assets under management (2006-2011, as ranked by Private Equity International). For more information, please visit www.citadelcapital.com.

For more information, please contact:
Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.)

g...@qalaaholdings.com (click to reveal this email)

Tel: +20 2 2791-4439 • Fax: +20 22 791-4448
Mobile: +20 16 662-0002