Competition Commission still in the dark over Ohorongo’s Chinese acquisition
WINDHOEK – The Namibian Competition Commission (NaCC) yesterday confirmed it has not yet received any application to approve the billion-dollar acquisition of a 100 percent stake in Schwenk Namibia (Pty) Ltd, which is a majority shareholder of Ohorongo Cement based near Otavi. A Singapore stock exchange-listed company, International Cement Group (ICG), owned and controlled by Chinese nationals, recently expressed interest in acquiring the Schwenk Namibia shareholding for US$104.4 million, which at the current exchange rate is slightly more than N$1.5 billion.
If successful, the acquisition would mean that the Chinese hold majority shareholding in both of Namibia’s cement producers, namely Ohorongo Cement and Cheetah Cement who in 2007 ditched its founding Brazilian shareholders for a Chinese concern, Beijing Vibroflotation Engineering.
“The Commission has not received a notification yet. We believe that the parties will file the necessary documentation with the Commission in due time,” said NaCC spokesperson Dina Gowases.
Through some research, New Era has discovered that ICG is in fact owned by Chinese nationals, including Ma Zhaoyang and Zhang Zengtao. Further investigations by New Era have revealed that ICG is a relatively new company, created literally a few days before the announcement of the Schwenk Namibia acquisition in March this year. In fact, documents show that ICG was created through the takeover of a Singapore-listed company called Compact Metal Industries, which was an aluminium window manufacturer.
Industry insiders are concerned that the Schwenk acquisition, if approved, will pose serious national security risks for Namibia as majority ownership of the country’s cement factories will rest in Chinese hands.
According to recent reports, the Schwenk acquisition offer is comprised of US$19.3 million (about N$280 million) for its shares and another US$85.1 million (just over N$1.2 billion) for the purchase of its loans. However, industry sources emphasised that the share purchase agreement is still subject to shareholder and regulatory approval. The same sources were adamant that Ohorongo’s operations will in no way be affected by the share purchase.
However, according to ICG disclosures to the listing exchange in Singapore: “The company does not have any experience in Namibia…The Group’s Deputy Chief Executive Officer Mr Cao Jianshun, a Chinese national, will be overseeing the operations for the cement plant upon completion of the proposed acquisition”.
Global media reports indicate that ICG intends to fund the proposed acquisition through third party financing or borrowings.
The share sale in Schwenk Namibia reportedly includes the purchase of 1.53 million cumulative redeemable preference shares, and 100 ordinary shares of the company. The deal also involves the transfer of outstanding shareholders’ loans that have been extended by Schwenk Namibia’s parent company, Schwenk Zement International Gmbh to Schwenk Namibia Pty Ltd as at the date of completion of the proposed acquisition.
As at December 31,2018, the unaudited net tangible liabilities of Schwenk Namibia Pty Ltd stood at N$25.1 million.
2019-04-05 10:46:12 | 9 months ago