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BBMG, Jidong to inject assets into BBMG Jinyu Jidong
Posted on Thursday, 10 January 2019 13:53
A little more than a year after terminating a proposed asset restructuring, BBMG and Tangshan Jidong Cement are trying their hand at injecting capital and a slate of cement and clinker assets into their joint venture company.
In 2016, plans were put in place to consolidate as part of Beijing’s attempt to resolve regional production overcapacity and improve and develop the industrial structure and distribution system.
At the time, the proposal comprised BBMG transferring the entire share capital in 13 subsidiaries, along with majority stakes in 18 other affiliated companies, to Jidong in an all-scrip deal.
The result would have been the building materials powerhouse becoming the largest shareholder of the listed domestic cement, clinker and concrete manufacturer and Jidong Development’s 30.0 per cent stake being diluted to 13.2 per cent.
However, the two terminated the deal as, due to unspecified internal and external circumstances, they did not expect to obtain approval for the restructuring from the China Securities Regulatory Commission.
Today, BBMG holds a 7.0 per cent stake in Jidong, with 30.0 per cent controlled by Jidong Development, which in turn is 55.0 per cent held by the building materials maker.
Now the partners are moving to resolve the issue of competing business, while creating further cooperation opportunities.
The new plan is to transfer a slate of assets – comprising interests in seven BBMG subsidiaries and in five Jidong units - into the joint venture formed after the original restructuring proposal was terminated.
In addition, the two will inject CNY 1.00 billion (USD 146.40 million), in accordance with their respective shareholdings, into BBMG Jinyu Jidong Cement Tangshan.
Jidong, which is, in effect, buying BBMG’s seven assets for CNY 1.54 billion, will also make a cash contribution of CNY 2.48 billion.
This payment represents the shortfall between the valuation of its own five businesses set for transfer and the total amount payable by reference to its 52.9 cent shareholding in BBMG Jinyu Jidong.
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