OCI subsidiary bids for stake in Sinai Cement
Egypt’s Orascom Construction Industries (OCI) has issued a clarification regarding its consolidated subsidiary Egyptian Cement Company’s (ECC) bid for a stake in Sinai Cement. OCI announced that ECC, in association with Palestine Commercial Services Company (PCS), has submitted an offer to the Board of Directors of Sinai Cement proposing a strategic capital increase.
ECC will contribute 55 percent of the investment. The details of the offer are as follows:
Option 1: ECC & PCS will contribute 100 million Egyptian Pounds in a capital increase that would raise Sinai Cements capital from EP250 million to EP350 million in addition to a EP50 million premium. ECC & PCS would end up with a 28.6 percent stake in Sinai Cement under this scenario.
Option 2: ECS & PCS will contribute EP65 million in a capital increase that would raise Sinai Cements capital from LE 250 million to EP315 million in addition to a EP32.5 million premium. Furthermore, ECC & PCS will also tender for 3.5 million shares (of a new total of 31.5 million shares) from the market, which would bring their stake in Sinai Cement to 31.7 percent.
Both options require a guarantee of three seats on Sinai Cements Board of Directors out of the existing eleven. The offers are conditional upon a satisfactory due diligence process that would take place within 30 days following an approval by an Extraordinary Shareholders Meeting (EGM).
Sinai Cement is located in the northern part of the Sinai Peninsula, some 60 kilometers south of Al-Arish city. The company began operations in early 2001 and has a production capacity of 1.4 million tons of cement per year. The main dry-process plant equipment was supplied by F.L.Smidth.
Sinai Cement also owns 20 percent of Sinai White Portland Cement Company, which has a production capacity of 400,000 tons per year and is located adjacent to Sinai Cements factory. During 2002, Sinai Cement recorded sales of EP216.5 million with a gross profit of EP79.1 million (37 percent), EBITDA of EP59.2 million (27 percent) and a net income of EP19.6 million (nine percent).
Net income for the year excluded capitalized interest of EP43 million. Sinai Cement sold 1.424 million tons of cement and 310,000 tons of clinker during the year. Sales volumes included exports of 196,000 tons of cement and 4,000 tons of clinker to Jamaica, Libya, Sudan, Jordan, Palestine and Eritrea.
PCS was formed in 1994 and is entirely owned by the Palestinian Authorities. PCS specializes in the transportation and distribution of cement with an average annual sales volume of 1.5 million tons. PCS is also 49.9 percent owner in Palestine Cement Company which was formed in 2000 in partnership with MENA Cement Holding (OCI 50.1 percent / Holcim 49.9 percent), to build and operate a grinding station in Palestine.
ECC is located in the Suez area and has a production capacity of seven million tons of cement per year. ECC is owned 53.7 percent by OCI and 43.7 percent by Holcim of Switzerland.
OCI Chief Executive Officer, Nassef Sawiris commented there is tremendous value in the synergies that could be formed between ECC and Sinai Cement particularly in regard to local cement distribution and exports. OCI considers cement as a core business segment and shall continue to consider attractive domestic and regional investment opportunities. — (menareport.com)
© 2003 Mena Report (www.menareport.com)