Intl Cement cancels US$104.4m deal to buy African cement producer

Singapore

INTERNATIONAL Cement Group (ICG) has called off its proposed US$104.4 million cash purchase of African cement producer Schwenk Namibia, the watch-listed cement producer said in a bourse filing on Monday morning.

The deal, which was first announced in March this year, was terminated on Sept 27, 2019.

Out of the US$104.4 million, US$19.3 million would have been used to buy all of Schwenk's shares and US$85.1 million would pay for re-levant shareholders' loans.

ICG had previously extended the deal's long stop date by six months to Jan 31, 2020 from July 31, 2019, to fulfil the deal's closing conditions.

The extension came after the Singapore Exchange (SGX) rejected the acquisition bid in June as Schwenk was not profitable and ICG did not have sufficient cash to pay for the deal.

To fund the purchase, ICG had intended to obtain significant external loans from financial institutions and a shareholders' loan. SGX noted that such loans, when considered with the potential losses of Schwenk Namibia, would have a material adverse financial impact on the enlarged group.

"There is also no certainty that Schwenk Namibia can generate sufficient profits to service these loans. Thus, the proposed acquisition will remove ICG from a healthy financial position," SGX said.

SGX had also ordered ICG to commission pre-deal anti-money laundering due diligence on the source of funds for any future major transactions or very substantial acquisitions.

Schwenk Namibia owns a 69.83 per cent stake in Ohorongo Cement, and a 100 per cent stake in EFF.

Ohorongo Cement owns and operates an operational cement plant at North Otavi, Namibia with an annual production capacity of about one million tonnes. The firm is principally engaged in the business of selling and producing cement.

EFF is mainly engaged in the business of sourcing for alternative energy sources and businesses related to that.

ICG shares closed unchanged at S$0.021 on Monday.