Shares of Lebanon’s construction company Solidaire rose sharply Monday after the cabinet last week removed most obstacles blocking the issuance of construction permits for projects in downtown Beirut, reported the Daily Star newspaper.
The sharp rise in Solidaire A and B shares in Beirut Monday was a clear indication that investors believe projects in Beirut Central District (BCD) will soon move forward, it said.
On the first day of local trading since the cabinet decision, Solidaire A shares rose more than seven percent to $5.625, while the B shares jumped 4.5 percent to $5.75.
The company's global depository receipts (GDRs) did not trade, as markets in London were closed for a public holiday, the paper said.
The cabinet last Thursday voted to resolve key issues such as the exact size of the Solidaire area, thus removing the technical obstacles that the Beirut municipality previously cited when blocking the issuance of permits.
The fortunes of Solidaire, the largest private company in Lebanon, are often seen as a barometer of the country's overall economic and political health, according to the paper.
Ending the permit dispute should improve the image in the eyes of foreign investors of one of the highest-profile Lebanese companies open to them.
"How can we expect foreign investors to come here when they see that the government is fighting the largest company in the country?" asked Fouad al-Khazen, a Solidaire board member and a major contractor.
The cabinet vote was also a triumph for Prime Minister Rafiq Hariri, who founded Solidaire in 1994 and remains a major shareholder.
According to the paper, his supporters claim that much of the permit obstruction was driven by political opposition to Hariri.
Solidaire recently recorded a first-ever net loss of $31.8 million in 2000, a result it attributed to the blockage of construction permits, the withdrawal of pledged investments, and the postponement of outstanding payments to the company.
Net revenues from land and real estate sales fell to $3.4 million in 2000 from $16 million the year before.
The company made net profits of $3.7 million in 1999, $54 million in 1998 and $78 million in 1997, said the paper – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)
