Bidding war for stake in Sinai Cement

28 March 2003
Sinai Cementis considering offers from two investors to take a strategic stake in the company. The company convened a meeting of major shareholders on 26 March to discuss an offer from Vicatof France, shortly after rejecting an initial offer from Egyptian Cement Company (ECC)and Palestine Commercial Services Company (PCSC). However, as MEED went to press, ECC/PCSC announced that they had submitted a revised offer to the board. Both offers propose taking a stake in the company through a strategic capital increase, in return for a guarantee of three of the 11 seats on the board.

The offer submitted by Vicat proposes a capital increase of £E 100 million ($18 million) - raising the company's capital to £E 350 million ($61 million) - in addition to a £E 40 million ($7 million) premium.

Three options were submitted by ECC/PCSC to the board of Sinai Cement. The first proposal involves a capital increase of £E 100 million ($18 million) - raising the company's capital to £E 350 million ($61 million) - in addition to a £E 50 million ($9 million) premium, after which ECC and PCSC would hold a 28.6 per cent stake in the company.

In the second scenario, the two companies would contribute towards a £E 65 million ($11 million) capital increase, in addition to a £E 32.5 million ($6 million) premium. Under this second option, ECC and PCSC would also seek 3.5 million of the company's 31.5 million shares, bringing their total stake in the company to 31.7 per cent.

Under the third proposal, ECC and PCSC would contribute towards a £E 55 million ($10 million) capital increase, in addition to a £E 33 million ($6 million) premium. Under this option, ECC and PCSC would also seek 4.5 million shares, bringing their total stake in the company to 32.8 per cent.

The offer comes two months after ECC, a subsidiary of Orascom Construction Industries (OCI), launched Egypt's largest-ever local currency bond issue, which raised £E 1,000 million ($175 million) to pay off the company's portfolio of medium and long-term bank loans (MEED 28:2:03).

Despite the downturn in the local construction industry, there is still considerable interest from foreign investors in the cement market. In early March CRHof Ireland reconfirmed its offer to acquire a 34 per cent stake in Misr Beni Suef Cement Company(MEED 7:3:02).

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