SINGAPORE - International Cement Group on Monday (March 11)said it has entered into a conditional sale and purchase agreement to acquire a 100 per cent stake in Schwenk Namibia Pty Ltd for an aggregate US104.4 million (S$141.89 million) in cash, comprising US$19.3 million for all its shares and another US$85.1 million for the purchase of its loans.
The company intends to fund the proposed acquisition through third party financing or borrowings, it said.
Schwenk Namibia Pty Ltd owns a 69.83 per cent stake in Ohorongo Cement, and a 100 per cent stake in EFF.
Ohorongo Cement owns and operates an operational cement plant at North Otavi, Namibia with an annual production capacity of about 1 million metric tonnes. The firm is principally engaged in the business of selling and producing cement. Meanwhile, EFF is mainly engaged in the business of sourcing for alternative energy sources and businesses related to that.
The sale shares in Schwenk Namibia Pty Ltd include the purchase of 1.53 million cumulative redeemable preference shares, and 100 ordinary shares of the company. The deal also involves the transfer of outstanding shareholders' loans that have been extended by the vendor, Schwenk Zement International Gmbh & Co Kg to Schwenk Namibia Pty Ltd as at the date of completion of the proposed acquisition.
As at Dec 31, the unaudited net tangible liabilities of Schwenk Namibia Pty Ltd stands at 25.1 million Namibian dollars (S$2.36 million).
International Cement noted that following its "successful diversification" into the cement business in Central Asia in 2017, the group has decided to expand its cement business into Africa. As compared to building a new cement plant, having a commercially operational plant will eliminate project risk during the construction period, the company said.
Thus, the group is of the view that the proposed acquisition presents an "attractive opportunity" for it to seize growing business opportunities in Africa arising from the construction of infrastructure there, and/or generated from China's Belt and Road initiative.
Among other things, the proposed acquisition is subject to shareholders' approval at an extraordinary general meeting to be convened, and the transactions being approved by the relevant government authorities.
In the event that these approvals are not granted by July 31, 2019, the company shall pay the vendor US$10.4 million, or 10 per cent of the combined share purchase price and loan purchase price. The agreement will also lapse if the approvals are not obtained on, or before this date.
Last week, mainboard-listed aluminium dealer Compact Metal Industries noted that the Singapore High Court has granted approval for its restructuring via a scheme of arrangement, which will see Compact Metal transfer its shares and listing to International Cement Group. Accordingly, Compact Metal was delisted with effect from March 8, and became a wholly-owned subsidiary of International Cement.