West China Cement CEO Zhang Jimin
Namibia’s cement sector is now in the hands of Chinese companies after the German Schwenk Zement entered into a Sale and Purchase Agreement with West China Cement on 3 Jan. 2020.
The Ohorongo Cement Plant is located on Farm Sargberg near Otavi.
Schwenk owned 70%, the Industrial Development Corporation of South Africa has 14%, the Development Bank of Namibia (11%) and the Development Bank of Southern Africa (4%).
Development Bank of Namibia chief executive officer Martin Inkumbi told Eagle FM Sunday that they were aware that Schwenk was looking for buyers.
Inkumbi also said that the bank’s shares are still intact although they are still to have finer discussions with Schwenk.
“It’s a transaction between Schwenk and the buyer. They can sell their shares,” Inkumbi said.
Until the opening of Cheetah Cement in 2018, Ohorongo Cement was the only cement factory in Namibia.
Cheetah Cement is a joint venture between Whale Rock Cement and China’s Asia-Africa Business Management.
West China Cement Limited is an investment holding company principally engaged in the manufacture and sales of cement and cement products. The cement is sold under the trademarks Yao Bai and Yaobaishuini.
The products are primarily used in the construction of infrastructure projects such as highways, bridges, railways and roads and residential buildings.
A statement dated 3 Jan. 2020 and signed off by West China Cement’s board chairperson Zhang Jimin, said a sale and purchase agreement was entered into by closing of business on the same day.
West China Cement, the company said, had agreed to acquire from Schwenk
Zement the Target Shares and the Shareholder’s Loan for an aggregate consideration of approximately US$104,410,774 (N$1, 461, 750, 836 at the current rate) that comprise of the Share Purchase Price and the Loan Purchase Price.
The Share Purchase Price is about US$19,341,515 (N$270, 781, 210) while the Loan Purchase Price is estimated to be US$85,069,259 (N$1 190, 969, 626)
According to the announcement, the consideration of the transaction was determined on normal commercial terms between the parties after arm’s length negotiations and the Share Purchase Price was determined with reference to, among others, audited asset value and excess cash of Schwenk Namibia as of 31 December 2018.
Furthermore, the announcement said, they considered the historic financial performance of Schwenk Namibia, the outstanding book value of the Shareholder’s Loan as at the Closing Date and the production capacity of the cement plant as part of Schwenk Namibia’s asset.
“The Loan Purchase Price was determined based on the outstanding book value of the Shareholder’s Loan as of 31 December 2018 after adjusting for payments received or to be received by Schwenk Namibia (from its subsidiaries) which will be used to repay the Shareholder’s Loan before the Closing Date,” the announcement further said.
West China Cement said they bought Ohorongo Cement because currently, Namibia’s development has been restricted as there is an urgent need for its railway facilities to be improved while the highways are overwhelmed, and the sea freight and land transportation fail to support each other.
“Therefore, highways, railways, sea freight and air freight have been listed as prioritised areas for development, and thus Namibia has increased its inputs towards infrastructure constructions such as railways and airports in recent years. Because Namibia is currently under a steady growth in infrastructure construction and housing market, it is expected that the demand for cement will also continue to grow,” the announcement also said.
West China Cement also said they would want to export cement to neighbouring countries such as Botswana, Zimbabwe and Zambia since the factory is about 540km from the port of Walvis Bay.
Schwenk Namibia value
As of 30 June 2019, the unaudited total asset value of Schwenk Namibia amounted to approximately US$178,451,254 (N$2, 498, 317, 556) and the book value of the Shareholder’s Loan amounted to approximately N$,186,027,000 (equivalent to approximately US$83,852,109).
Schwenk Zement is a company incorporated under the laws of Germany and is principally engaged in the business of production and supply of cement, special building materials, concrete, sand and gravel and construction consulting services through its subsidiaries.
Schwenk Namibia is a company incorporated under the laws of Namibia. It is an investment holding company and is principally engaged in the production of cement in Namibia through its subsidiaries, including Ohorongo. It is a wholly owned subsidiary of Schwenk Zement.
