China Shanshui shareholders mull takeover bid

China Shanshui shareholders mull takeover bid
22 July 2015

China Shanshui Cement Group Ltd said two of its largest shareholders are considering a takeover bid, Bloomberg reports.

Asia Cement Corp of Taiwan and China National Building Material Co, which together own about 38 per cent of Shanshui Cement, are considering a general cash offer to acquire the shares they don’t already control, the companies said in a statement to Hong Kong’s exchange Tuesday.

The proposal by Asia Cement and China National Building Material escalates the fight for control of China Shanshui Cement, just one week before a special meeting is due to be held during which shareholders will vote on whether to replace Shanshui Cement board members.

Tianrui International Holdings Co, the largest shareholder with a 28.2 per cent stake, is seeking to remove seven board members, including Chairman Zhang Bin, and appoint its own nominees at a special meeting on 29 July, according to a 8 July Hong Kong exchange filing.

Asia Cement and China National Building, which hold a combined 41.85 per cent of voting rights, will oppose Tianrui, the 8 July filing shows.

Bloomberg highlights that Zhang’s removal could trigger a “change of control” event, allowing holders of Shanshui Cement’s $500m bonds due in 2020 to demand immediate repayment at 101 per cent of face value. China Shanshui Cement has said it won’t have enough funds to repay the debt in time.

No binding agreement on the possible takeover offer has been entered by any of the parties and terms have not been finalised, according to the Tuesday statement.

Tianrui to reject offer
Tianrui (International) Holding Co has since told Bloomberg that it won’t accept any takeover offer  because such a plan wouldn’t resolve shortcomings at the country’s fourth-largest producer. "We don’t think a general offer can solve the problem of Shanshui, it will be useless finally. Tianrui won’t accept any general offer," Tianrui said in an e-mailed response to Bloomberg Wednesday.

Explaining why it has proposed a change to management,  Tianrui said that it was "about shareholders interests," adding that: “The management’s performance is not good enough comparing to other peers.

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