TIDMRHIM
RHI Magnesita N.V.
01 August 2018
RHI Magnesita: proposed merger of Indian subsidiaries
RHI India and RHI Clasil to merge with Indian listed Orient
Refractories
-- Simplification of corporate structure and consolidation
of RHI Magnesita's operating entities to better capture
growth potential in the Indian market and enhance shareholder
value
-- On completion of the merger, RHI Magnesita will own
approximately [70%] in Orient Refractories which will
be renamed RHI Magnesita India
-- Combined company in India will have pro-forma operating
revenues of approximately
EUR154 million, two production facilities and more
than 700 employees
Vienna, August 01, 2018 - RHI Magnesita, the leading global
supplier of high-grade refractory products, systems and services,
has today announced the proposed merger of its three Indian
subsidiaries. The merger is designed to optimally position RHI
Magnesita's operations in the strategically important Indian market
to capture growth opportunities more effectively and
efficiently.
The Boards of Directors of Orient Refractories Limited ("Orient
Refractories"), RHI India Private Limited ("RHI India") and RHI
Clasil Private Limited ("RHI Clasil"), at their respective meetings
held this Tuesday, approved the proposal to merge RHI India and RHI
Clasil with Orient Refractories, pursuant to a composite scheme of
amalgamation (the "Scheme"). Orient Refractories is listed on the
Mumbai stock exchange. On completion, RHI Magnesita will own
approximately [70%] in Orient Refractories which will be renamed
RHI Magnesita India. The transaction is expected to be completed in
the next 9-12 months.
RHI Magnesita's three Indian operating entities to be merged
Orient Refractories is currently 70% owned [by RHI Magnesita]
and a leading manufacturer and supplier of special refractory
products, systems and services for the steel industry. RHI India, a
wholly-owned RHI Magnesita subsidiary, is the Indian sales company
of RHI Magnesita group offering a full range of refractories and
related services sourced from various RHI Magnesita group entities
to Indian customers. RHI Clasil, is 53.7% owned [by RHI Magnesita],
is a manufacturer and supplier of mainly Alumina based refractories
for steel and cement.
The key objective of the proposed Scheme is to combine the
strengths and competencies of all three companies to establish one
consolidated listed company that is well positioned to seize future
growth opportunities and enhance shareholder value.
One strong local organization to tap growth potential in the
strategically important Indian market
This merger is part of RHI Magnesita's strategic pillar
"markets" which focuses on building a global presence with strong
local organizations and solid market positions. India's growth
prospects in the refractory market derive primarily from the steel
sector, which is by far RHI Magnesita's largest customer industry
(74% of 2017 pro-forma revenues). India became the third largest
steel producer in the world after a decade of solid growth and an
ambitious government program aims to reach 300m tons of steel
production by 2030, triple the output of 2016. With one strong and
integrated local organization, the industry's most comprehensive
product portfolio and proven supply and sales capabilities RHI
Magnesita India will be optimally positioned to leverage the
positive local market developments in India.
Key Benefits
The proposed merger is expected to:
-- Simplify the corporate structure and consolidate RHI
Magnesita's operating entities in India by creating a leading
manufacturer and supplier of refractories with operating revenues
of Rs. [12,356] mn (EUR154 million) (on a FY 2018 pro-forma basis),
two production facilities and more than 700 employees
-- Establish the industry's most comprehensive product portfolio
including, among others, Magnesia and Alumina based bricks and
mixes for large industrial clients as well as specialty refractory
products, with proven supply and sales capabilities
-- Realize business efficiencies by bundling product offerings,
leveraging sales/ distribution networks and optimizing the
utilization of resources due to pooling of management, expertise,
technologies and other resources
-- Improve the allocation of capital and enhance cash flows
contributing to the overall growth prospects of the combined
company
-- Create a larger asset base and facilitate access to better financial resources
-- Enhance shareholder value as a result of economies of scale and business efficiencies
Key Highlights of the Scheme
-- Equity shares of Orient Refractories will be issued to the
shareholders of RHI India and RHI Clasil as consideration for the
merger in the following ratios, as approved by the Board of
Directors:
- 7,044 equity shares of Orient Refractories (of face value of
Re. 1 each) for every 100 equity shares of RHI India (of face value
of Rs. 10 each); and
- 908 equity shares of Orient Refractories (of face value of Re.
1 each) for every 1,000 equity shares of RHI Clasil (of face value
of Rs. 10 each).
-- Post the Scheme, the shareholding of RHI Magnesita, through
Dutch US Holding B.V. and other group companies, in the combined
company is likely to be around [70%]. Furthermore, around [5%] of
the shareholding will be held by certain individual shareholders of
RHI Clasil who are not part of the RHI Magnesita group.
-- The Scheme will be subject to approvals from various relevant
regulatory authorities including approvals from the stock
exchanges, shareholders and creditors of the respective companies,
the National Company Law Tribunal (NCLT) in India and necessary
corporate approvals and filings with the registrar of companies and
the stock exchanges.
-- The transaction is expected to be completed in the next 9-12 months
Mr. Stefan Borgas, CEO of RHI Magnesita, said: "The proposed
merger of our Indian subsidiaries marks an important milestone
towards expanding RHI Magnesita's market leadership in the
refractory market in India. One strong, integrated organization and
management will increase long term value for all stakeholders and
efficiently combine resources and capabilities. This merger will
significantly enhance the profile of RHI Magnesita in India and
creates a stronger foundation to tap the immense growth potential
we see in the Indian market."
About RHI Magnesita
RHI Magnesita is the leading global supplier of high-grade
refractory products, systems and services which are indispensable
for industrial high-temperature processes exceeding 1,200degC in a
wide range of industries, including steel, cement, non-ferrous
metals, and glass, among others. With a vertically integrated value
chain, from raw materials to refractory products and full
performance-based solutions, RHI Magnesita serves more than 10,000
customers in nearly all countries around the world.
With more than 14,000 employees in 35 main production sites and
more than 70 sales offices, the company has unmatched geographic
diversification. RHI Magnesita intends to use its global leadership
in revenue, greater scale, complementary product portfolio and
diversified geographic presence to target markets and regions
benefitting from more dynamic economic growth prospects.
The combined company generated pro forma EUR2.7 billion in
revenues in the financial year 2017. For further information please
visit www.rhimagnesita.com.
Enquiries:
RHI Magnesita N.V.
Stefan Rathausky, Senior VP Corporate Communications
Tel +43 50213-6059
E-mail: stefan.rathausky@rhimagnesita.com
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END
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