China Tianrui increases stake in China Shanshui Cement

 China Tianrui increases stake in China Shanshui Cement

China Tianrui Group Cement last month increased its stake in China Shanshui Cement to 28.16 per cent, more than Shanshui founder Zhang Caikui.

Fitch Ratings deemed the move a change of control. It also downgraded Shanshui to BB-, three levels below investment grade, citing weak cement prices.

"The Chinese authorities' approach to the sector is clear - they want consolidation," said Kalai Pillay, a senior director at Fitch Ratings in Singapore.

In the case of Tianrui's part acquisition of Shanshui Cement, "we don't know the intention of Tianrui and we don't know how local lenders will react to the change of control".

Shanshui has also yet to outline any relationship plans with Tianrui. (Source: Bloomberg)