The General Company for Paper Industry 'Rakta' marked a notable success in the auction conducted on April 19, managing to sell a number of idle equipment and scrap for a total value of £24.1 million.
This move comes at a time when the company is facing substantial financial challenges, as the ordinary general assembly approved the liquidation accounts for the period from July to the end of December 2024, revealing losses estimated at £102.6 million.
Auction Details
During the auction, it was decided to utilize the impairment provision amounting to £340.95 thousand concerning the debts owed by the Eastern Company, in addition to approving the use of an impairment provision for the total debts of the Nile Company for Sulfur and the ready-made wooden housing amounting to £686.85 thousand.
The general assembly also ratified the decision to renew Ayman Ramadan Abdo's role as the general liquidator of the company with a monthly salary of £20 thousand, and appointed accountant Ashraf Al-Husseini as the assistant to the liquidator with a salary of £12 thousand.
Background & Context
It is worth noting that the General Company for Paper Industry 'Rakta' has been inactive since September 25, 2019, and is under liquidation as of March 20, 2024, according to the decision of the extraordinary general assembly. The company's losses have significantly increased, multiplying by 8.2 times during the first half of the current financial year, reaching £385.2 million.
Conversely, the company's revenues during the first six months of the current financial year rose to £202 thousand, compared to £150 thousand during the same period of the previous financial year. The company attributed the rise in losses to the early retirement of some employees at a cost of £315.8 million.
Impact & Consequences
The difficult financial circumstances faced by 'Rakta' necessitate serious measures to address the increasing debts, as the Financial Regulatory Authority has demanded that the company disclose all its assets immediately. It also called for a detailed statement of all debts, including loans obtained from the holding company.
The new measures approved by the extraordinary general assembly include the right to sell the company's movable or immovable property, in addition to authorizing contracted lawyers to deal with commercial liquidation. These steps aim to improve the company's financial situation and alleviate the financial burdens it faces.
Regional Significance
The situation of 'Rakta' serves as an example of the challenges many industrial companies face in the Arab region, where numerous companies suffer from similar issues related to debts and losses. The success of the auction may provide some hope for improving the financial situation, yet challenges remain.
In conclusion, the current situation of 'Rakta' requires effective strategies to deal with financial crises, reflecting the urgent need for restructuring distressed companies in the region.