TEL AVIV, Israel, Oct. 9, 2011 (GLOBE NEWSWIRE) -- Ampal-American Israel Corporation (Nasdaq: AMPL) announced today that East Mediterranean Gas S.A.E. ("EMG") - in which it holds a 12.5% interest - has taken legal action against two Egyptian state-owned entities and an Israeli entity. EMG informed Ampal that it submitted a Request for Arbitration with the International Chamber of Commerce ("ICC") to begin arbitration proceedings against the Egyptian General Petroleum Corporation, the Egyptian Natural Gas Holding Company (the "EGPC/EGAS"), and the Israel Electric Corporation Ltd ("IEC"). IEC is Israel’s largest electricity producer and is state-owned.
EMG submitted the request for arbitration as a result of EGPC/EGAS’s prolonged interruption of the gas supply to EMG as well as EGPC/EGAS’s long-standing failure to supply the quantities of gas that they contractually committed to supply to EMG under the parties’ Gas Supply and Purchase Agreement and its amendment (the "Contract"). EGPC/EGAS’s escalating material contractual breaches have, in turn, directly impacted EMG’s ability to provide gas to IEC and other clients. EGPC/EGAS, IEC, and EMG are all parties to a tripartite agreement in which EGPC/EGAS guaranteed a steady flow of gas to IEC through EMG, which necessitated including IEC in the dispute as an additional respondent.
Through the Request, EMG is seeking relief in the form of compensation from EGPC/EGAS for damages resulting from EGPC/EGAS’s contractual breaches, which EMG asserts have been ongoing since the contract was amended to include higher gas prices and continue to this day. EMG has further requested that an ICC tribunal issue an order that EGPC/EGAS perform their obligations under the Contract and a declaration that EGPC/EGAS are not entitled to terminate the Contract. Additionally, EMG has requested that a tribunal declare that EGPC/EGAS - and not EMG - are liable to IEC for any damages resulting from their failure to deliver contracted quantities of gas to EMG.
The Request follows an earlier request for arbitration that EMG filed with the ICC on September 21, 2011 against IEC in a related dispute under a separate contract.
In addition, Ampal and other shareholders of EMG have taken the formal steps required to initiate international arbitration procedures against the Government of Egypt under several bilateral treaties for the protection of investments.
EMG and its international shareholders retained the legal services of Freshfields Bruckhaus Deringer, LLP and M. Firon & Co. to represent them in the various arbitrations, claims, and other legal proceedings involving EMG’s dispute with EGPC/EGAS and the claims against the Government of Egypt.
EMG has also retained the services of Baker Botts LLP, which has provided legal counsel to EMG for a long period of time.
Freshfields is consistently ranked as the world leader in international commercial and treaty arbitration.
M. Firon & Co., one of Israel’s largest law firms, is ranked as an Israeli market leader in Projects & Energy.
Baker Botts’ Oil & Gas practice is consistently ranked as a global leader in this field.
Mr. Yosef A. Maiman, Chairman, President and CEO of Ampal, commented: "As we have said before, Ampal, as well as the other international shareholders, are determined to pursue every available avenue to secure the smooth operation of EMG."
Mr. Maiman added that "Ampal, as well as other international investors, have invested a substantial amount of money in EMG through direct investments and in EMG’s shares. EMG’s clients have also invested a substantial amount of money in power and industrial plants, all of which are based upon the gas sale and purchase agreements between EMG and its downstream clients. Moreover, these agreements are backed by the gas sale and purchase contract between EMG and the Egypt’s state-owned upstream gas supplier as well as by a Memorandum of Understanding between the Government of Egypt and the Israeli Government. As noted previously, we hope that the Government of Egypt and the Egyptian state-controlled gas supplier elect to honor the obligations under the gas sale and purchase contract. However, we will continue to take all necessary actions to protect our investments."
About Ampal:
Ampal and its subsidiaries acquire interests primarily in businesses located in the State of Israel or that are Israel-related. Ampal is seeking opportunistic situations in a variety of industries, with a focus on energy, chemicals and related sectors. Ampal’s goal is to develop or acquire majority interests in businesses that are profitable and generate significant free cash flow that Ampal can control. For more information about Ampal please visit our web site at www.ampal.com.
Safe Harbor Statement
Certain information in this press release includes forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934) and information relating to Ampal that are based on the beliefs of management of Ampal as well as assumptions made by and information currently available to the management of Ampal. When used in this press release, the words "anticipate," "believe," "estimate," "expect," "intend," "plan," and similar expressions as they relate to Ampal or Ampal's management, identify forward-looking statements. Such statements reflect the current views of Ampal with respect to future events or future financial performance of Ampal, the outcome of which is subject to certain risks and other factors which could cause actual results to differ materially from those anticipated by the forward-looking statements, including among others, the economic and political conditions in Israel, the Middle East, including the situation in Iraq and Egypt, and the global business and economic conditions in the different sectors and markets where Ampal's portfolio companies operate. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcome may vary from those described herein as anticipated, believed, estimated, expected, intended or planned. Subsequent written and oral forward-looking statements attributable to Ampal or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Please refer to the Ampal's annual, quarterly and periodic reports on file with the SEC for a more detailed discussion of these and other risks that could cause results to differ materially. Ampal assumes no obligation to update or revise any forward-looking statements.