Minority shareholders in China Resources Cement, whose profit slumped 85 percent last year, have voted overwhelmingly to accept a HK$428 million privatisation offer by the Hong Kong-listed company’s controlling shareholder. CR Cement’s stock was suspended from trading Thursday _ it closed Wednesday at HK$2.40, pending an announcement about the proposed privatisation from the firm’s Beijing- based parent company, China Resources Holdings, which owns a 74.5 percent stake in the subsidiary, while minority shareholders own 25.5 per cent.
CR Cement was established in spring 2003 and its shares listed in Hong Kong on July 29 that year. Once privatised, the company’s stock is expected to be delisted on July 26. More than 99.97 per cent of the minority shareholders voted in favor of the proposed privatisation, while the remaining 0.03 percent voted against.
“We will continue our business strategy after we go private,’’ vice chairman Shi Shanbo said Thursday following a special shareholders’ meeting. Shi said CR Cement hopes to go public in Hong Kong again in the future if such action matches with its business development plans.
Corporate parent China Resources Holdings has said it will pay HK$2.45 in cash per share to minority shareholders, or they can have the option of taking one share in another privately- held subsidiary, Smooth Concept Investments, which will wholly own CR Cement after its privatization.
Minority shareholders have until July 19 to decide whether to accept the cash payout or to take Smooth Concept stock. Investment banking firm Somerley, the independent financial adviser to the deal, is recommending the cash rather than the share option, since minority shareholders would have limited participation in Smooth Concept’s business affairs and future direction.
Operating primarily in Hong Kong, Guangdong and the Guangxi Autonomous Region, CR Cement is mainly involved in the production and distribution of cement, concrete and related products. The company had earmarked HK$1.8 billion for expansion purposes, aimed at raising cement production capacity to 15Mta from 7.7Mta by 2008, while boosting concrete capacity to 10m cu metres a year from 4.4m cu metres. Despite ambitious expansion plans, the company still faces the problem of a glut in the market and slumping prices. (original reporting taken from The Standard).