NAMIBIA – West China Cement, a Chinese cement company, is set to buy Ohorongo Cement from Schwenk Zement, in which Schwenk will sell their entire shareholding for US$110 million (N$1.5 billion), reports The Namibian.
According to the agreement, West China will acquire all the shares of Schwenk Zement, as well as the shareholder loan they extended to Ohorongo Cement.
The share value of Schwenk Cement in Ohorongo Cement is valued at US$19.34million (N$276 million), while the outstanding amount for the shareholder loan extended to Ohorongo Cement is at US$84.09 million (N$1.2 billion), bringing the total consideration to US$110 million (N$1.5 billion).
Schwenk owns 69.83% of Ohorongo Cement, which operates a plant near Otavi in northern Namibia. Other shareholders include Industrial Development Corporation of South Africa (14%), the Development Bank of Namibia (11%) and the Development Bank of Southern Africa (4%).
Schwenk Namibia is wholly owned by Schwenk Zement International, a family-owned German construction company.
West China Cement have indicated that they will pay cash for the purchase and have stipulated that the success of the deal is on condition that Schwenk Zement’s disposal of its stake in Ohorongo Cement is approved by the Namibia Competition Commission (NaCC).
A second stipulation requires Ohorongo Cement to fully repay a loan granted by the First National Bank of Namibia and ensure that such loan is terminated accordingly.
West China Cement will go through with the takeover if the two conditions are satisfied, and they have given Ohorongo Cement and Schwenk Zement till 31 March this year to fulfil both terms.
This second attempt of Schwenk Zement to sell off their ownership in Ohorongo Cement flies in the face of their promise to sell Ohorongo shares to Namibians, as detailed on their website.
West China Cement attributed their interest in Ohorongo Cement to the prospect of increased demand in the Namibian cement industry and the fact that the company only has one competitor, namely Cheetah Cement.
“In view of the existing supply and demand situation of cement in Namibia and the market demand for cement driven by the aforementioned infrastructure constructions to be developed vigorously in the future,” West China said.
It added that the planned investment in, and the acquisition of, the Namibian cement production line will improve the group’s profitability in the cement business and prove to be a strategic step in entering the international cement market.
West China is principally engaged in investment holding and the group is principally engaged in the production and sale of cement in western China. The company has over 25 subsidiaries and wants to add Ohorongo under their belt.
