$60m credit facility signed
30 May 2008 - 7:13PM
UK Regulatory
RNS Number : 5965V
West China Cement Limited
30 May 2008
West China Cement Limited
('WCC', or 'the Company' )
US$60 million loan facility with warrants
WCC (AIM: WCC), a leading cement producer and distributor in the Shaanxi province of the People's Republic of China, is pleased to
announce that on 29 May 2008 it entered into a loan facility agreement for up to US$60 million (the "Facility") with accompanying warrants
(the "Warrants"). Completion of the financing is subject to satisfaction of certain conditions including execution of security
documentation. Credit Suisse is acting as facility and security agent. Under the Facility Agreement, West China Cement Co., Ltd is guarantor
of the obligations of the Company and Shaanxi Yaobai will act as covenantor.
It is anticipated that the Facility will enable WCC to progress further towards achieving its medium term target of 8 to 10 million
tonnes of cement capacity per annum. The Directors believe the Facility will enable the Company to actively pursue its growth plans and meet
the increasing demand for cement in western China, particularly following recent events in China which may lead to further increased cement
demand for reconstruction projects.
The loan drawn down from the Facility will be applied primarily, after deduction of relevant expenses and application towards mandatory
provisions, to funding the completion of the Company's ongoing construction of a new cement plant, located in Ankang in the south of Shaanxi
province. On completion, the Ankang cement plant will add an additional 1.8 million tonnes per annum of cement capacity to WCC, bringing the
total capacity of all of WCC's plants to 5.3 million tonnes. Construction of the Ankang plant is expected to be completed in early 2009. The
Ankang project represents a significant opportunity for WCC to be the only producer of cement in the south east of Shaanxi province, an area
where cement prices are significantly higher than other parts of the province.
Interest is payable by the Company on any loan advanced to it under the Facility at the rate of 13.5% per annum. The Company shall repay
50% of the aggregate outstanding loan advanced to it under the Facility on a date falling 24 months from the date of utilisation of the
Facility and the remaining 50% on a date falling 36 months from the date of utilisation of the Facility.
Pursuant to the Facility Agreement, the Company and West China Cement Co. Limited also entered into the Warrant Instrument on 29 May
2008. Under the Warrant Instrument, the warrant holders will receive warrants to subscribe for 7,802,142 ordinary shares in the Company at a
strike price representing a 15% premium to the average equivalent closing price per share over the 20 trading days immediately preceding the
date of the Warrant Instrument, subject to anti-dilution adjustments and strike price resets under certain circumstances. The Warrants may
be exercised at any time up to 36 months after the issuance of the Warrants.
The loan under the Facility is secured by, amongst other things, a charge over all of the shares held by the Company in West China
Cement, a pledge over the equity held by West China Cement in Shaanxi Yaobai, assignments of intercompany loans, charges over bank accounts
of the Company and West China Cement Co., Ltd and a fixed and floating debenture over the assets of West China Cement in each case in favour
of the Finance Parties.
There is an undertaking in the Facility Agreement that the Company shall use its commercially reasonable efforts to achieve a initial
public offering and/or secondary offering of shares with a resulting listing of its shares on the Hong Kong Stock Exchange, Singapore Stock
Exchange, London Stock Exchange, New York Stock Exchange, Frankfurt Stock Exchange or any other internationally recognised stock exchange
("Qualifying Re-listing") for a minimum market capitalisation of $550 million within 30 months from the date of utilisation of the Facility.
No assurance is, however, given by the Company to investors as to the achievability of this undertaking. However, should such a qualifying
listing not place, the outstanding principal of the loan will be mandatorily repaid in full amount in 30 months from the utilisation date of
the Facility.
Certain events, such as a no Qualifying Re-Listing occurring, will give the warrant holders the option to put the then outstanding
Warrants for an amount that would provide the warrant holders an internal rate of return 19%.
Commenting on the Facility, Mr Robbie Robertson, Chairman, said "I am delighted that, despite the credit crunch, we have now put in
place the financing necessary to complete the exciting Ankang project. This is another significant step towards meeting our medium term
objective of an 8 to 10 million tonne producer, as it gets us to 5.3 million tonnes."
Mr Jimin Zhang, CEO said " The Ankang cement plant is situated in an area of Shaanxi where cement pricing is at a premium to the rest of
the province and we anticipate that it will derive very favourable returns for the Company and its shareholders. Based on the Company's
feasibility study, the Ankang project is expected to add approximately RMB528 million and RMB215 million to the Company's revenue and net
profit respectively. With our production lines at Pucheng, and the 2 million tonne production facility we completed last year at Lantian,
this plant firmly establishes WCC as one of the major Shaanxi cement producers."
Enquiries:
Jimin Zhang, West China Cement Limited
Tel: + 8613572570815
Robert Robertson, West China Cement Limited
Tel: 020 7584 3663
Christopher Caldwell, NCB Stockbrokers Limited (Nominated Adviser and Stockbroker)
Tel: 020 7071 5234
In this announcement, the following expressions have the following meaning unless the context requires otherwise:
"Company" West China Cement Limited, a public limited
liability company incorporated under the laws
of Jersey, the shares of which are listed on
the Alternative Investment Market of the London
Stock Exchange;
"Director(s)" the director(s) of the Company;
"Facility" the facility made available to the Company
pursuant to the Facility Agreement;
"Facility Agreement" the facility agreement dated 29 May 2008
entered into between the Company, West China
Cement Co., Ltd, Shaanxi Yaobai, and Credit
Suisse
"Finance Parties" the facility agent, the security agent, the
arranger and the lenders under the Facility
Agreement;
"Group" the Company and its subsidiaries;
"PRC" the People's Republic of China;
"Shaanxi Yaobai" Shaanxi Yaobai Special Cement Co., Ltd., a
wholly foreign-owned enterprise incorporated
under the laws of the PRC and a indirect wholly
owned subsidiary of the Company;
"US$" United States Dollars, the lawful currency of
the United States;
"Warrant Instrument" the warrant instrument dated 29 May 2008
entered into by way of deed poll by the Company
and West China Cement Co., Ltd;
"Warrants" the warrants granted by the Company pursuant to
the Warrant Instrument;
"West China Cement Co.. Ltd" A company incorporated under the laws of the
British Virgin Islands and a wholly owned
subsidiary of the Company.
This announcement contains certain forecasts with respect to the financial condition, results of operations and businesses of the
Company. Such statements and forecasts involve risk and uncertainty because they relate to future events and circumstances.
Many factors could cause actual results or developments to differ materially from those expressed or implied by these statements and
forecasts.
All such statements have been made with reference to assumptions as to forecast price changes and economic conditions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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