Orascom invests in Turkey

Orascom invests in Turkey
Published: 26 January 2006

Orascom Construction Industries announced that it has completed the acquisition of an integrated cement plant in Eastern Turkey near the City of Van for a total consideration of US$54m. The plant has an annual cement production capacity of 0.6Mt with large potential for upgrade, which implies an acquisition cost per ton of US$97. The Van cement plant assets were sold to OCI through a public auction conducted by the Turkish Savings & Deposits Fund. OCI Chief Executive Officer, Mr. Nassef Sawiris commented "In addition to the Van plant acquisition, OCI intends to increase its capacity in the Eastern region of Turkey to around 3 million tons through a local partnership that will be subject to regulatory approvals."

In Western Turkey, OCI has also completed the acquisition of a 20 per cent stake in Baticim Cimento, a cement company with a consolidated annual cement capacity of 3Mt and clinker capacity of 2.2Mt for a total sum of US$ 54.7m implying an estimated cement enterprise value (EV) / ton of US$ 82 based on the latest available audited financial statements.  Baticim Cimento is the majority shareholder (75%) of Bati Soke Cimento. Both companies are listed on the Istanbul Stock Exchange.

Mr. Sawiris added "OCI has approximately earmarked a total of US$250m for its investments in both regions of Turkey. We view Turkey as a natural extension to our core geographic markets around the Mediterranean rim. Turkey has solid growth prospects in light of its favorable macroeconomic environment and continues to be one of the largest cement markets in the Mediterranean region experiencing double-digit growth in consumption. Domestic consumption during January-October 2005 grew 14 per cent. It also plays a pivotal role in the cement exports arena being ranked as one of world’s largest cement export sources. Our new investment in the Eastern region of Turkey compliments our expanded presence in northern Iraq where OCI already has a majority stake in a long-term lease on a 2.3Mt cement plant and in a state-of-the-art 3Mta greenfield cement plant that is scheduled for commissioning during 2007."