Recently, China Material International said that in order to promote the international distribution of cement business and achieve the strategic goal of "cement plus" industry development, China Material Cement intends to set up a new SPV company in the United Arab Emirates through its wholly-owned subsidiary, Hong Kong SPV Company, and introduce other investors. Acquisition of 100% equity of CJO in Tunisia and its affiliated GJO with SPV in the United Arab Emirates as the main body. The final acquisition price is based on the consideration of US $130 million, which is determined by adjusting the difference between the audited cash, debt and working capital on the actual delivery date and the corresponding level of the delivery account on the valuation base date, up to US $145 million.
The transaction is subject to the authorization of the Ministry of Trade of Tunisia, the Competition Council of Tunisia and the Competition Commission of the Common Market for Eastern and Southern Africa, the filing of overseas investment by the National Development and Reform Commission of China and the Ministry of Commerce of China, and the foreign exchange registration with the bank designated by the State Administration of Foreign Exchange of China.
The target company has a long history of operation, stable operation, close to the port, superior location conditions, and is a mature comprehensive cement enterprise in the regional market. According to the unaudited financial data prepared in accordance with the International Financial Reporting Standards, the target company had total assets of 102 million US dollars and net assets of 59 million US dollars at the end of 2023, and realized operating income of 91 million US dollars and after-tax profit of 18 million US dollars in 2023. The completion of this
acquisition will help Sinoma Cement to expand its asset scale, enhance its future profitability and improve its sustainable operation ability. Upon completion of the acquisition, CJO and its subsidiary GJO will be included in the scope of consolidated statements of Sinoma Cement. Sinoma International, as an equity shareholder of Sinoma Cement, will enjoy or bear the gains or losses of Sinoma Cement in proportion to its equity participation. It is expected that this transaction will not have a significant impact on the company's main business, sustainable operation ability and asset status. The company will pay close attention to the progress of Sinoma Cement's subsequent operation and management, investment decision-making and post-investment management, promote its scientific decision-making and compliance operation, and effectively prevent and avoid investment risks.
In order to diversify investment risks and improve corporate governance through equity diversification, it is proposed that Hong Kong SPV Company, a wholly-owned subsidiary of Sinoma Cement, and China-Africa Development Fund jointly invest in the establishment of a new SPV Company in the United Arab Emirates to implement the acquisition. At present, we are accelerating the registration of SPV companies, investment filing and other related work. For details, see the relevant announcements of the company.
