Displaying items by tag: shareholders

India: UltraTech Cement has agreed an acquisition schedule to buy the cement assets of Century Textiles & Industries. The cement production subsidiary of BK Birla Group comprises three integrated plants in Madhya Pradesh, Chhattisgarh and Maharashtra respectively with a combined production capacity of 11.4Mt/yr and a 1Mt/yr grinding plant in West Bengal.

The takeover has been arranged via a demerger process whereby Century Textiles’ shareholders will be given shares in UltraTech Cement. The deal is subject to approval from shareholders, creditors, competition bodies and others. It is expected to be completed by early 2019.

Zambia: The Ventriglia family has been awarded full ownership of Zambezi Portland Cement by the High Court of Zambia. The resolution follows a 10-year battle between the Ventriglias and businessman Rajan Mahtani, according to the Times of Zambia. Mahtani’s company Finsbury Investments claimed a majority share in the cement producer but the Ventriglia family objected, asserting full ownership of the company.

Ireland: CRH says it has reduced its proposed executive salary increases following votes by a significant minority of its shareholders against a remuneration report. The board said that it would take into account the views of 39.7% of its shareholders by providing a lower salary increase to its finance director, although it had offered other benefits to the director instead. It added that the remuneration committee of the company intends to hold a consultation later in 2018.

South Africa: PPC has revealed details of a US$176m black economic empowerment (BEE) transaction. The transaction, together with the BEE shareholding from the two previous transactions, will result in an effective 30% BEE shareholding in PPC South Africa Holdings, making the company compliant with the Mining Charter, according to the Pretoria Times newspaper. Called PPC Phakama, meaning ‘rise up’ in Zulu, the transaction will result in PPC's equity shareholding in PPC South Africa being reduced from 100% to 74.6%.

Sibonginkosi Nyanga, an analyst at Momentum Securities, said that the cement producer was required by the Mining Charter to implement the transaction. It requires companies to have at least a 26% BEE shareholding. Non-compliance could have had the potential put PPC’s mining rights at risk.

South Africa: Peter Nelson has resigned as the chairman of PPC. He has been replaced by Jabu Moleketi. The changeover follows the demand in late February 2018 by Prudential Investment Managers, a large shareholder of PPC, that Nelson leave the role. Sydney Mhlarhi and Dawn Earp have also resigned as non-executive directors of the cement producer.

Moleketi is the Non-Executive Chairman of Brait as well as the Development Bank of Southern Africa (DBSA), Vodacom and Harith General Partners. He was the Deputy Minister of Finance (South Africa) from 2004 to 2008 and MEC of Financial and Economic Affairs in the Gauteng Provincial Government from 1994 to 2004. During his tenure as the Deputy Minister of Finance, he was the chairperson of the Public Investment Corporation. Moleketi holds a Masters in Financial Economics from the University of London and an Advanced Management Programme from Harvard.

Other personnel changes include the appointment of Noluvuyo Mkhondo and Antony Ball to the board as non-executive directors of PPC.

Mkhondo is an investment banking and corporate finance professional, having spent time at Goldman Sachs International and Anglo American in the UK where she was responsible for mergers and acquisition execution, investment evaluation and strategic long term financial planning. During her time at Goldman Sachs and Anglo American, she executed cross-border transactions in Consumer / Retail, Healthcare, Real Estate and Metals and Mining across the UK, Africa and the Americas. Mkhondo is a Chartered Accountant by profession, having begun her career in the Audit and Advisory Financial Institutions services Team at Deloitte in Johannesburg. In addition, she has an MBA from London Business School where she was a Mo Ibrahim Scholar.

Ball is the co-founder of Value Capital Partners (VCP). Prior to that, his notable business accomplishment was the founding in 1990 and building of Brait, a South African private equity business. Ball is a qualified Chartered Accountant.

Chile: Hurtado Vicuna Group has asked its minor shareholders to support a merger between its subsidiaries Cementos Bicentenario (BSA) and Cementos Polpaico. Hurtado Vicuna holds a 57.1% share in Cementos Polpaico, according to the Diario Financiero newspaper. However, two of the company’s major shareholders, Volcan and Megeve, may oppose the merger. If successful the merger would create Chile’s largest cement producer. As part of its acquisition of Cementos Polpaico, Hurtado Vicuna agreed to sell some of BSA’s assets. This potentially could involve the divestment of BSA’s 26 concrete plants.

South Africa: Prudential Investment Managers, one of the largest shareholders of PPC, has demanded the resignation of the chairman Peter Nelson. The shareholder sent a formal request to the cement producer because it wants the company to improve its operations, according to sources quoted by Bloomberg. In response PPC issued a statement admitting that it was talking to major shareholders over board positions. However, it defended the record of Nelson, saying that he had, “successfully led the company through a period of significant headwinds.”

PPC added that it has received nominations for Jabu Moleketi as successor to the chairman, and Anthony Ball and Noluvuyo Mkhondo to non-executive directorships.

Nelson was appointed as chairman of PPC in October 2016, shortly before it revived merger talks with AfriSam. Later in 2017 Canada’s Fairfax Financial Holdings made a bid for PPC on condition that it merge with AfriSam. Negotiations with LafargeHolcim, CRH and Dangote Cement but these were all abandoned.

LafargeHolcim’s investigation into its conduct in Syria claimed its biggest scalp so far this week with the shock resignation of chief executive officer (CEO) Eric Olsen. His decision landed with the publication of the group’s investigation into the conduct of the legacy Lafarge operations in the country in 2013 and 2014. As per the initial findings of the investigation that were released in March 2017, it confirmed that selected personnel had engaged in dealings with terrorists in connection to one of its cement plants in the country during 2013 until the unit closed in September 2014. The board decided that Olsen had no connection or even awareness of the misconduct. However, he decided to quit anyway in order to restore ‘serenity’ to the company.

In its latest public statement on the investigation, LafargeHolcim outlines five weaknesses with its compliance led by improper payments related to Lafarge Syria’s security and supply chain. It then goes on to list a failure of line management, inadequate controls over expenses and a failure to detect improper payments and improperly recorded payments. It’s all presented as ‘chaos reigned’ or wayward staff in tough circumstances trying to do their muddled best for the company. Unfortunately for this narrative, selected members of group management were aware of the situation and appeared to have done nothing about it. This then begs the question: who knew what when?

Olsen may have been exonerated by the board on his departure but he was Lafarge’s Executive Vice-President of Operations for Lafarge in 2014. If he didn’t know what was going on in Syria during his watch then he wasn’t doing his job properly or it was being hidden from him. The head of Lafarge itself at the time, Bruno Lafont, might also have been a viable target for discipline but he decided to stand down from the board of LafargeHolcim in early April 2017. No doubt other former members of the Lafarge management team may bear more responsibility. LafargeHolcim’s implementation of its remedial measures may turn up more culprits, as may the on-going criminal complaints process continues in France.

French newspaper Le Monde, the newspaper that originally broke the story, is probably on the money with its assessment that Olsen’s departure is actually the continuation of the boardroom battle between the board and its shareholders that has raged since before Lafarge and Holcim formally merged. Bruno Lafont was originally lined up to become the CEO of the new company until Lafarge’s worsening financial position compared to Holcim’s prompted a backlash from Holcim shareholders. Le Monde describes how LafargeHolcim’s shareholders include four prominent billionaires: Switzerland’s Thomas Schmidheiny, Belgium’s Albert Frère, Canada’s Paul Desmarais and Egypt’s Nassef Sawiris. Schmidheiny, readers may remember, was one of the principal actors who sunk Lafont’s bid to be CEO back in early 2015.

Placed in this context, Olsen’s departure might seem forced, especially if he had no connection to the debacle in Syria. LafargeHolcim has faced a tough couple of years following its formation with consistently falling sales revenue. Asset divestments and cuts have been the cure as the group struggled to find its new size. Yet, the group saw its adjusted operating earning before interest, taxation, depreciation and amortisation (EBITDA) start to rise in 2016 suggesting that the remedial action was starting to work. LafargeHolcim’s management and shareholders will be acutely aware of its performance so far in 2017 ahead of the public release of its first quarter results in early May 2017. Under these circumstances it seems unlikely that serenity will be restored to the upper echelons of LafargeHolcim any time soon.

People matter in cement companies. Just ask Bruno Lafont, the originally proposed CEO of LafargeHolcim before the merger plans between Lafarge and Holcim changed in mid-2015. Another example is Zhang Bin, the chairman of Shanshui Cement. Some of the shareholders at Shanshui Cement are working hard to remove him. The next attempt has been scheduled for 1 December 2015.

Shanshui Cement, one of the biggest Chinese cement producers, called for the liquidators this week possibly in response. It decided to apply for provisional liquidation after determining that it would default on onshore debt payments due on 12 November 2015. Earlier in the month it had announced doubt whether it could pay its debts.

The scale of this liquidation is monumental for the cement industry. It is broadly similar to a producer at least the size of Dangote going bust. Shanshui Cement is one of China's top ten cement producers. It defaulted on a US$314m onshore debt payment on 12 November 2015.

Based on Global Cement Directory 2015 data, Shanshui Cement is the seventh largest cement producer in the country with 15 cement plants and a cement production capacity of 30.5Mt/yr. Shanshui Cement itself reports that it has a production capacity of 102.6Mt/yr making it the country's fourth largest cement producer. In its 2014 annual results Shanshui Cement reported sales revenue of over US$2.4bn. Its net profit was over US$48m. Sales and profits were down year-on-year in 2014 compared to 2013 and its interim report for 2015 reported the same downward trend. Sales revenue fell by a third to US$793m year-on-year for the first half of 2015. In 2014 its total debt was reported to be US$2.5bn with a gearing ratio of 56.9%, a relatively high figure leaving it vulnerable to decreasing profits.

As the Wall Street Journal and others have reported, the situation has as much to do with corporate politics as it does with over-borrowing. Hot on the heels of Shanshui's liquidation announcement came an offer of help to pay the debts from local rival Tianrui Group if its attempts to change the board of Shanshui were finally successful. Tianrui became the largest shareholder of Shanshui in April 2015 when it increased its stake to 28%. In the process it beat China National Building Material Company and Asia Cement Corporation, who hold 16.7% and 20.9% stakes in Shanshui respectively.

The heart of the Shanshui debacle is the 'key man' clause as reported by Reuters. Borrowing to the company is dependent on current chairman Zhang Bin retaining his position. As soon as he leaves it triggers the repayment of offshore bonds worth US$500m. Normally not due for payment until 2020, the bonds contain a clause that forces the company to sell them within 30 days should Zhang Bin depart.

Shanshui seems likely to be able to pay its debts judging from its sales revenue, assets and the strength of its main shareholders. However, it has chosen to default for the moment. The question for analysts watching this from outside China is whether it masks deeper problems in the Chinese economy as growth continues to slow and industrial overcapacity lingers. Shanshui is the sixth mainland Chinese company known to have defaulted on a bond this year, according to Bloomberg. It's also likely to be operating at a cement production utilisation rate of around 50%.

If the Shanshui Cement situation is more to do with markets than personalities, then it may represent an alarming acceleration of the slowdown of the Chinese economy for the cement industry. If personalities matter more, then the situation is a battle comparable to the politics on the television show 'Game of Thrones.'