WEST CHINA CEMENT LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
WEST CHINA CEMENT LIMITED
中 國 西 部 水 泥 有 限 公 司
(Incorporated in Jersey with limited liability, with registered number 94796)
(Stock Code: 2233)
DISCLOSEABLE TRANSACTION ACQUISITION OF YAOWANGSHAN CEMENT
SALE AND PURCHASE AGREEMENT
The Board announced that on 1 November 2015, Yaobai Special Cement, an indirect wholly-owned subsidiary of the Company, and China Jiantou Trust entered into the Sale and Purchase Agreement, pursuant to which Yaobai Special Cement agreed to purchase and China Jiantou Trust agreed to sell 100% equity interest of Yaowangshan Cement for a consideration of RMB391,653,798.53 and the Shareholder's Loan in the amount of RMB375,580,928.25.
LISTING RULES IMPLICATIONS
As certain applicable percentage ratios are more than 5% but all of the applicable percentage ratios are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules.
INTRODUCTION
The Board announced that on 1 November 2015, Yaobai Special Cement, an indirect wholly-owned subsidiary of the Company, and China Jiantou Trust entered into the Sale and Purchase Agreement, pursuant to which Yaobai Special Cement agreed to purchase and China Jiantou Trust agreed to sell 100% equity interest of Yaowangshan Cement for a consideration of RMB391,653,798.53 and the Shareholder's Loan in the amount of RMB375,580,928.25.
The consideration for the Acquisition, including the acquisition of the Shareholder's Loan, is equal to an enterprise value (EV) of approximately RMB349 per ton of cement production.
THE SALE AND PURCHASE AGREEMENT
The principal terms of the Sale and Purchase Agreement are summarised as follows: Date: 1 November 2015
Parties: Purchaser: Yaobai Special Cement Vendor: China Jiantou Trust
Subject matter: 100% equity interest in Yaowangshan Cement
Upon completion of the Acquisition, Yaowangshan Cement will become an indirect wholly-owned subsidiary of the Company.
consideration: The consideration for the Acquisition is RMB767,234,726.78, including RMB391,653,798.53 for the acquisition of the 100% equity interest of Yaowangshan Cement and RMB375,580,928.25 for the acquisition of the Shareholder's Loan from China Jiantou Trust, which was determined after arm's length negotiations between Yaobai Special Cement and China Jiantou Trust and was determined after taking into account, amongst others, the financial information of Yaowangshan Cement as at 31 July 2015, the valuation of Yaowangshan Cement as at 31 July 2015 and a price earning ratio of Yaowangshan Cement as agreed between the parties.
Payment: The consideration shall be paid by Yaobai Special Cement to China Jiantou Trust in cash in the following manners:
Before 25 November 2015, Yaobai Special Cement shall pay 74.5% of the consideration amounting to RMB571,407,827.52 to China Jiantou Trust; and
10 days upon the satisfaction of the conditions set out in the Sale and Purchase Agreement, Yaobai Special Cement shall pay the remaining balance of RMB195,826,899.27 to China Jiantou Trust.
Conditions precedent: The Sale and Purchase Agreement is conditional upon, among other things:
Yaobai Special Cement and China Jiantou Trust entering into legally binding agreement;
the shareholder of Yaowangshan Cement passing the necessary resolution approving the Acquisition; and
completion of the relevant business registration procedures regarding the transfer of the Equity Interest.
Completion: Completion of the Sale and Purchase Agreement shall take place on the date of satisfaction of the conditions set out above.
FINANCIAL INFORMATION ON YAOWANGSHAN CEMENT
The book value and appraised value of the total and net assets of Yaowangshan Cement as at 31 July 2015 is RMB855,315,619 and RMB391,653,799, respectively.
For the year ended 31 December 2014, the net loss of Yaowangshan Cement amounted to RMB56,356,700. There is no profit or loss for the year ended 31 December 2013, as Yaowangshan Cement had not yet commenced operation in 2013.
INFORMATION ON CHINA JIANTOU TRUST AND YAOWANGSHAN CEMENT
China Jiantou Trust is a professional trust financial institution incorporated in the PRC with limited liability. It is a wholly-owned subsidiary of China Jianyin Investment Limited* (中 國建銀投資有限責任公司), an investment company established in September 2004 in the
PRC.
Yaowangshan Cement is located in the Yaowangshan region of Tongchuan District, Shaanxi Province. The Yaowangshan Cement Plant that it operates is primarily engaged in the production and sale of cement, with an annual capacity of approximately 2.2 million tons of cement and a strong emphasis on environmentally friendly cement production technology.
To the best of the Directors' knowledge, information and belief having made all reasonable enquiry, China Jiantou Trust, Yaowangshan Cement and their respective ultimate beneficial owners are Independent Third Parties.
INFORMATION ON THE COMPANY AND YAOBAI SPECIAL CEMENT
The Company is a cement producer based primarily in the Shannxi province in the PRC. The cement produced and sold by the Company is primarily used in the construction of infrastructure projects such as highways, bridges, railway and roads, as well as residential buildings.
Yaobai Special Cement is an indirect wholly-owned subsidiary of the Company based in Xi'an that primarily engages in the production and marketing of cement.
REASONS FOR AND BENEFITS OF THE ACQUISITIONS
Yaobai Special Cement has been in charge of the management of the operations of Yaowangshan Cement under a management in trust arrangement with China Jiantou Trust, pursuant to which Yaobai Special Cement has received a management fee, since July 2014, but does not own the Equity Interest prior to the Acquisition. The Acquisition, under which the Group will formally acquire the Equity Interest, will enable consolidation of Yaowangshan Cement's operating results into the accounts of the Company and promotes the continuing consolidation of the cement industry in Shaanxi Province.
The Directors consider that the terms of the Sale and Purchase Agreement are on normal commercial terms and the Acquisition thereunder is fair and reasonable and in the interests of the Shareholders as a whole.
LISTING RULES IMPLICATIONS
As certain applicable percentage ratios are more than 5% but all of the applicable percentage ratios are less than 25%, the Acquisition constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.
DEFINITIONS
In this announcement, the following expressions shall have the following meanings unless the context requires otherwise:
''Acquisition'' the acquisition of Equity Interest by Yaobai Special Cement
the Shareholder's Loan pursuant to the Sale and Purchase Agreement
''Board'' the board of Directors
''China Jiantou Trust'' China Jiantou Trust Co., Ltd.* (中建投信託有限責任公司),
a company established under the laws of the PRC with limited liability
''Company'' West China Cement Limited (中國西部水泥有限公司), a company incorporated in Jersey with limited liability whose Shares are listed on the Main Board of the Stock Exchange
''Director(s)'' the director(s) of the Company
''Equity Interest'' 100% of the equity interest of Yaowangshan Cement
''Independent Third Parties'' third party(ies) independent of the Company and connected
persons (as defined under the Listing Rules) of the Company and are not connected persons (as defined under the Listing Rules) of the Company
''Listing Rules'' the Rules Governing the Listing of Securities on the Stock
Exchange
''PRC'' the People's Republic of China, and for the purpose of this announcement only, excludes the Hong Kong Special Administrative Region, the Macau Special Administrative Region, and Taiwan
''RMB'' Renminbi, the lawful currency of the PRC
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