International Cement Group has further acquired a 15% stake in Sharcem, a cement plant and the group’s subsidiary in the Republic of Kazakhstan, for a total consideration of US$17 million ($23.8 million).
The acquisition of the additional 15% of shares was conducted via a sale and purchase agreement (SPA) on Sept 22 between International Cement Shar, the wholly-owned subsidiary of the group, and Nurzhan Shakirov.
The consideration will be paid in cash in three installments; US$5 million on or before Sept 30, US$7 million on or before Oct 31 and US$5 million on or before March 5, 2023. The amount was arrived at based on arm’s length negotiations, and on a “willing-buyer and willing-seller” basis, taking into account internal five-year cash flow projections of Sharcem. The consideration will be satisfied by the group from internal sources.
Upon its completion, which is expected to take place on Oct 31, the acquisition will bring the group’s stake in Sharcem to a total of 75% from 60% previously.
Prior to the sale, Shakirov had owned 40% of the total amount of the charter capital of Sharcem.
According to the statement released by International Cement Group, 15% of the total amount of Sharcem’s charter capital stood at a nominal value of KZT150,000 ($446), comprising 150,000 ordinary shares of KZT1 each.
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The Sharcem cement plant has an annual production capacity of 1.0 million metric tonnes, and is located strategically in the east of Kazakhstan.
With the cement plant, the group says it will be able to reach out to a broader market in the east of the country, with demand for cement in Kazakhstan expected to remain strong.
The group adds that it commenced its acquisition of the cement-related assets in East Kazakhstan in March 2021. All legal proceedings in connection with this acquisition have been completed and the risk of asset ownership has been “significantly reduced”.
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The plant’s upgrading works were completed in June 2022; the risk of equipment malfunction arising from the purchase of an existing cement production line (instead of a newbuild) has been eliminated. The necessary operating licences have been obtained and cement sales commenced in August 2022.
Furthermore, the increase in its stake in the cement plant is said to be able to generate more earnings for the group.
Shares in International Cement Group closed flat at 2.6 cents on Sept 22.
