Lebanon’s Bank Audi open to sale of Egyptian unit in new strategy

Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks to implement to help weather the crisis. (Reuters)
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Updated 14 January 2020

Lebanon’s Bank Audi open to sale of Egyptian unit in new strategy

  • Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks
  • Bank Audi Egypt has grown from a three-branch operation acquired by Bank Audi in 2005 to 50 branches today

BEIRUT: Lebanon’s Bank Audi is considering selling its Egyptian subsidiary after receiving interest from lenders, its chief financial officer told Reuters, indicating a possible strategy rethink as Lebanon grapples with a financial crisis.
Bank Audi is also proceeding with an equity increase which the central bank has instructed all Lebanese banks to implement to help weather the crisis, the country’s worst in decades.
Finance chief Tamer Ghazaleh said Bank Audi will call a shareholder meeting for the second week of February to vote on the equity raising and he was confident of securing shareholder support.
Bank Audi is “doing the equity increase and independently considering discussing with parties selling Bank Audi Egypt at the right price,” he said in an interview late on Monday.
“For us, we would not have considered thinking of it if the situation was different in Lebanon. We have our own ambition and expansion plan in Egypt,” he said, referring to a potential sale of Bank Audi Egypt.
Since Lebanon’s crisis began, the bank has received several calls from investment bankers “trying to support us if we want to sell foreign assets as a way of increasing the capitalization and liquidity of the Lebanese operation,” Ghazaleh said.
“The appetite of investors was higher for Egypt. We did not reach any agreement with any party to do a transaction but we are considering this — if we get the right offer,” he said.
Bank Audi Egypt has grown from a three-branch operation acquired by Bank Audi in 2005 to 50 branches today with total assets of $4.4 billion at the end of September, Ghazaleh said, calling it “a very profitable operation.”
“For us, we would not have considered thinking of it if the situation was different in Lebanon. We have our own ambition and expansion plan in Egypt,” he said.
If Bank Audi decided to sell, it would still require board and regulatory approval, he said.
Lebanon’s biggest bank by total assets has expanded in the region since 2005 and has operations in 10 countries in the Middle East and North Africa, including its fully owned subsidiary Bank Audi Egypt.
Lebanon’s central bank instructed banks in November to raise their Common Equity Tier 1 capital, a key measure of financial strength, by 10% through cash injections by the end of the year and a further 10% by June 30 this year.
Bank Audi had enough shareholder support to secure approval for the equity increase, Ghazaleh said. “We are comfortable with the level of commitment of the large shareholders for this increase. We have enough support to call for the (shareholder meeting) soon,” he said.
Across Lebanon’s banking sector, a 20% equity increase should raise $4 billion, representing 2% of the banking system.
Lebanon’s central bank governor Riad Salameh said in a televised interview last week that most banks had informed the central bank that they had started steps to implement the increase.
Bank Audi had told the central bank it would need some additional weeks beyond the Dec. 31 deadline to complete the first part of the increase due to its complexity and the short time frame, Ghazaleh said, noting its listing on two stock exchanges and over 1,500 shareholders.
Bank Audi aims to raise $311 million in the first part of the increase.
“The first point is to regain the confidence of the market. The shareholders want to show to the market and customers their willingness to support their organization by any necessary means. It is to show commitment,” he said.
“The second point is that any capitalization will always be beneficial to maintaining the solvency of the banking system.”


Cirque du Soleil walks a tightrope through pandemic

Updated 17 min 40 sec ago

Cirque du Soleil walks a tightrope through pandemic

  • Suitors wage backstage battle to rescue debt-stricken Canadian circus icon
  • Among the potential bidders is former fire eater Guy Laliberte, who fouded the acrobatic troupe in 1984

MONTREAL: Its shows canceled due to the COVID-19 pandemic, an already heavily indebted Cirque du Soleil’s fight for survival has invited an intense backstage battle to try to save the Canadian cultural icon.

High on a list of potential suitors is former fire eater Guy Laliberte, who founded the acrobatic troupe in 1984 but later sold it.

“Its revival will have to be done at the right price. And not at all costs,” said the 60-year-old, determined not to see his creation sold to private interests.

The billionaire clown said after “careful consideration,” he decided “with a great team” to pursue a bid, but offered no details.

Under his leadership, the Cirque had set up big tops in more than 300 cities around the world, delighting audiences with contemporary circus acts set to music but without the usual trappings of lions, elephants and bears.

Then the pandemic hit, forcing the company in March to cancel 44 shows worldwide, from Las Vegas to Tel Aviv, Moscow to Melbourne, and lay off 4,679 acrobats and technicians, or 95 percent of its workforce.

Hurtling toward bankruptcy, the global entertainment giant and pride of Canada commissioned a bank in early May to examine its options, including a possible sale.

Meanwhile, shareholders ponied up $50 million in bridge financing for its “short-term liquidity needs.”

Laliberte, the first clown to rocket to the International Space Station in 2009, ceded control of the Cirque for $1 billion in 2015.

It has since fallen into the hands of American investment firm TPG Capital (55 percent stake) and China’s Fosun (25 percent), which also owns Club Med and Thomas Cook travel. The Caisse de depot et placement du Quebec (CDPQ) retains the last 20 percent.

The institutional investor, which manages public pension plans and insurance programs in Quebec, bought Laliberte’s last remaining 10 percent stake in the business in February, just before the pandemic.

Since 2015, the Cirque has embarked on costly acquisitions and renovations of permanent performance halls, while its creative spirit waned, according to critics in the Quebec press.

Meanwhile, it piled on more than $1 billion in debt.

Fearing that the Cirque would be “sold to foreign interests,” the Quebec government recently offered it a conditional loan of $200 million to help relaunch its shows as restrictions on large gatherings start to be eased worldwide.

But the agreement in principle is conditional on the Cirque headquarters remaining in Montreal and the province being allowed to buy US and Chinese stakes in the company at an unspecified time in the future, “at market value” and with “probably a local partner,” said Quebec Minister of the Economy Pierre Fitzgibbon.

“The state does not want to operate the circus, but the circus is too important to Quebec (to leave it to foreigners),” he said.

In addition to Laliberte, other prospective buyers include Quebecor, the telecoms and media giant of tycoon Pierre Karl Peladeau, whose opening lowball bid was outright rejected.

“It is essentially the value and reputation of the brand” that has piqued interest in the company, says Michel Magnan, corporate governance chair at Concordia University in Montreal.

But “as long as there are restrictions on gatherings of people, the future is not very rosy” for the Cirque, he said.

Several challenges await, according to Magnan.

“There were a lot of people working in all of these shows. Where are they now? What are they doing? How are they doing? In what shape are they, what state of mind?” he said.

“The more time passes, the more this expertise risks evaporating.”

Small consolation: The Cirque resumed its performances on Wednesday in Hangzhou, China, five months after a coronavirus outbreak in the city.