Another Chinese firm eyes Ohorongo

07 January 2020 | Business

West China Cement has made a bid to acquire Schwenk Namibia's 69% stake in Ohorongo Cement for approximately N$1.5 billion in a recent submission to the Hong Kong Stock Exchange.

This follows a similar bid last year by Singaporean firm International Cement, whose bid Ohorongo owners turned down.

The latest bid was submitted to the Hong Kong Stock Exchange last week Friday [3 January].

Should its bid succeed, China will hold a majority stake in all of Namibia's cement factories. Another local cement manufacturer, Whale Rock Cement is already majority owned by a Chinese company.

“The board is pleased to announce that after trading hours on 3 January 2020, West China Cement and Schwenk Zement entered into the sale and purchase agreement, pursuant to which the West China Cement agreed to acquire from Schwenk Zement the target shares and the its loan in respect of Schwenk Namibia for an aggregate consideration of approximately US$104 410 774,” West China Cement said in a statement.

West China Cement highlighted Ohorongo's dominance in the local cement market as a motivation to buy out Schwenk Namibia.

“Currently, Namibia has only two cement production companies, one of which is Schwenk Namibia Group. In view of the existing supply and demand situation of cement in Namibia and the market demand for cement driven by the aforementioned infrastructure constructions to be developed vigorously in the future, the investment in and the acquisition of Namibia cement production line will be able to improve our Group's profitability in the cement business,” West China Cement said.

West China Cement features on its board Zhaoyang Ma as a non-executive director whose firm International Cement made a bid for the stake in Ohorongo.

Ma's International Cement had a bid turned down by the Singapore Stock Exchange to buy out Schwenk Namibia's shareholding in Ohorongo.

“The company does not have sufficient cash resources to fund the purchase consideration. It intends to possibly obtain significant external loans from financial institutions and shareholders. Such loans, when considered with the potential losses of the target business, will result in a material adverse financial impact on the group,” the stock exchange said at the time of the rejection.

The planned transaction was also flagged for possible money laundering at the time.

“The audit committee and the board is to undertake that so long as the group operates in Kazakhstan, Tajikistan, Namibia and/or any other developing jurisdictions, the company is to put in place adequate and effective systems of internal controls and risk management controls relating to the company's sources of financing of acquisitions,” the stock exchange said.

Silence on local front

The Development Bank of Namibia (DBN), which is a 9% shareholder in Ohorongo Cement, said it was evaluating the planned purchase of Ohorongo Cement by West China Cement.

“DBN will at this stage not comment on the reported share transaction between Schwenk and the buyer, West China Cement. We can however confirm that DBN's shareholding in Ohorongo remains as it is,” its CEO Martin Inkumbi said.

DBN did not respond to questions posed to it when asked whether it would consider upping its stake in the cement manufacturer, a move previously considered by another minority shareholder in Ohorongo, the Industrial Development Commission (IDC).

The Namibia Competition Commission did not respond to a query when asked whether a submission on the part of West China Cement had been made regarding the planned acquisition.

Local economist Klaus Schade said given the size of the investment, it would be difficult for a single local investor to buy into Ohorongo Cement.

“It is quite a significant investment and would need a group of investors to come together. I am not sure if there is an individual that would be prepared to take the risk,” Schade said.

UP FOR SALE AGAIN: West China Cement wants shareholding in Ohorongo Cement. Photo: FILE


Similar News


‘Govt is failing manufacturing’

16 hours ago | Business

"Our suspicion that corruption is one of the biggest enemies facing our members is no longer a suspicion," the chairperson of the Namibian Manufacturers Association...

Solar power dims ECB revenue

1 day - 27 February 2020 | Business

The Electricity Control Board (ECB) recorded revenue of N$86.3 million for 2018/19, an increase of 3.6% compared to the previous financial year.The ECB’s main source...

Phase two of MTC's 081Every1 launched

1 day - 27 February 2020 | Business

Phase two of MTC's billion-dollar 081Every1 network project plans to roll-out a total number of 102 sites and is expected to be completed by September...

Company news in brief

1 day - 27 February 2020 | Business

Rio Tinto posts jump in full-year earningsAnglo-Australian miner Rio Tinto yesterday posted an 18% rise in 2019 underlying earnings as a surge in iron ore...

WBSR invests N$93.6 mln in new plant

2 days ago - 26 February 2020 | Business

With an investment of N$93.6 million in a new salt processing plant Walvis Bay Salt Refiners (WBSR) can now target international markets as the company...

Wanted: Business direction

2 days ago - 26 February 2020 | Business

Jo-Maré Duddy – Government policy – or the lack thereof, government regulation, government failure, government’s fiscal position and the recession: Ask the business sector in...

Let's work together and solve important problems

2 days ago - 26 February 2020 | Business

Chantell Husselmann - The PwC Business School has started the year 2020 on a high note with a special occasion that marks the first of...

Deere taps into tech in bid to break ground...

2 days ago - 26 February 2020 | Business

It's ride-hailing, farm style. Deere & Co. is teaming up with the “Uber of tractors” in Africa and betting on a future where farmers summon...

NSX bears brunt of recession

2 days ago - 26 February 2020 | Business

Jo-Maré Duddy – The recession didn’t spare the Namibian Stock Exchange (NSX) last year: Trading volumes dropped and the share prices of most of the...

Managing checks and balances

2 days ago - 26 February 2020 | Business

B7: Explain your job in a nutshell.PA: An integral part of my job is to manage Nedbank Namibia’s liquidity, funding and interest rate risk in...

Latest News

Shimbulu reinstatement declared illegal

2 hours ago | Politics

Oshakati town council legal consultant Jan Greyling has penned a damning opinion on the nomination and swearing-in of Katrina Shimbulu as a councillor, and her...

Has ACC finally awoken from...

2 hours ago | Opinion

The Anti-Corruption Commission (ACC) has for years stomached bashing for its perceived 'small fish' approach to corruption.In fact, there is nothing suggesting that corruption has...

Samherji throws lifeline to Geysir...

2 hours ago | Labour

Workers currently on Samherji's Geysir vessel, which is fishing in Mauritania, will keep their jobs, while the rest of the crew who were left in...

MTC to build 270 houses

2 hours ago | Infrastructure

MTC is planning to construct 270 houses and will partner with the Shack Dwellers Federation of Namibia (SDFN) for the delivery of the homes in...

Neckartal level at 5.2%

2 hours ago | Weather

The multibillion-dollar Neckartal Dam has received inflow of about 45 million cubic metres of water since the beginning of this month. To put this in...

The passion of Cassidy Karon

2 hours ago | Art and Entertainment

We all can pretty much nod at the fact that Cassidy Karon is currently at the frontline of youth, fashion and street culture in Namibia....

The flip-flop drag

2 hours ago | Art and Entertainment

After years of tossing and turning in their grave, the fashion gods and ancestors have finally defeated the powers of death and risen once again....

Online, online, online!

2 hours ago | Art and Entertainment

Since taking over tjil last year, I have been met with praise, yet also criticism. I have been met with pride, yet also concern. It's...

Song Night is back

2 hours ago | Art and Entertainment

Consistently exceeding expectations of nurturing the Namibian sound, Song Night, now sponsored by RMB, pledges to focus even more on mentoring musicmakers and bringing explosive...

Load More