Acquisition of the charter capital of Holcim (Vietnam) Co., Ltd (further information added)

Transcription

1 8 August 2016 Subject: To: Acquisition of the charter capital of Holcim (Vietnam) Co., Ltd (further information added) The President of the Stock Exchange of Thailand Reference is made to the resolution of the Board of Directors Meeting of Siam City Cement Public Company Limited (the Company ) No. 141 and No. 143, which was held on 22 July 2016 and 3 August 2016, respectively, approving the Company to proceed with an acquisition of 65% of the total charter capital of Holcim (Vietnam) Co., Ltd ( HVL ) from LafargeHolcim Limited (the Seller ). The Company would like to inform you that the Company entered into the Contributed Capital Transfer Agreement for the sale and purchase of the charter capital of HVL dated 4 August 2016 (the Agreement ) with the Seller, under which the Company will acquire 65% of the total charter capital of HVL from the Seller (the Transaction ). The completion of the Transaction is subject to the following conditions, respectively: (a) (b) (c) Vietnam Cement Industry Corporation (the JV Partner ) being 35% shareholder of HVL does not exercise its right of first refusal to purchase the Capital in relation to HVL pursuant to the joint venture contract between the JV Partner and the Seller. In this regard, the JV Partner can choose to exercise its right of first refusal within 60 days from the date that it has been notified by the Seller; the resolution of the shareholders meeting of the Company approving entry into the Transaction having been obtained by the Company, provided the Company shall fix and further inform the date of the shareholders meeting; and consent and approval from Vietnamese authorities having been obtained by the Seller. The completion of the Transaction is expected to occur in the fourth quarter of The Transaction is considered as an acquisition of assets in accordance with the Notification of the Capital Market Supervisory Board No. TorJor. 20/2551 Re: Rules concerning the Material Transactions in the Acquisition and Disposition of Assets dated 31 August 2008 (as amended) and the Notification of the Board of Governor of the Stock Exchange of Thailand Re: Disclosure of Information and other Acts of Listed Companies concerning the Acquisition and Disposition of Assets B.E dated 29 October 2004 (as amended) (collectively, the Major Transaction Rule ). The highest comparative value derived from the calculation of the transaction size, taking into account the value of the transactions entered into by the Company and/or its subsidiaries during the past six months, is equivalent to not more than 80.91% on a total value of consideration basis. The Transaction is therefore categorized as a

2 Type-1 transaction according to the Major Transaction Rule as the highest comparative value of the transaction size is higher than 50% but lower than 100%. Accordingly, the Company is required to comply with the following requirements: (i) (ii) (ii) (iii) disclose the details of the Transaction to the Stock Exchange of Thailand on the date on which the Company makes a decision to enter into the Transaction or the following day (if the Company is not able to make the disclosure on the same day); an independent financial advisor must be appointed to provide an opinion about the Transaction to the shareholders; the notice of the shareholders meeting must be delivered to the shareholders at least 14 days prior to the meeting and comply with the requirements under the Major Transaction Rule; and obtain an approval from the shareholders meeting for entering into the Transaction with at least 75% votes of the shareholders attending the meeting and eligible to vote, provided the Company shall further fix and further inform the date of the shareholders meeting. Please be informed accordingly. Sincerely yours, Siam City Cement Public Company Limited /S/ Wutthipong Songwisit Company Secretary

3 Information Memorandum Re: Acquisition of Charter Capital of Holcim (Vietnam) Co., Ltd Information under Schedule 1 1 Date of the Transaction Siam City Cement Public Company Limited (the Company ) entered into the Contributed Capital Transfer Agreement for the sale and purchase of the charter capital of Holcim (Vietnam) Co., Ltd ( HVL ) (the Agreement ) with LafargeHolcim Limited (the Seller ) on 4 August 2016, under which the Company will acquire 65% of the total charter capital (the Capital ) of HVL from the Seller (the Transaction ). 2 Relevant parties and their relationship with the Company Seller: LafargeHolcim Limited Relationship with the Company: The Seller has no relationship with the Company in a manner as a connected person under the notification of the Capital Market Supervisory Board No. TorJor. 21/2551 Re: Rules on Connected Transactions. Purchaser: Siam City Cement Public Company Limited 3 General characteristic and size of the Transaction The Company has agreed to acquire the Capital of HVL from the Seller by entering into the Agreement with the Seller. Following completion of the Transaction, the Company will become a shareholder of HVL, holding 65% of the total charter capital of HVL. The total transaction value equals to approximately THB 18,694 million or EUR* 479 million (at the exchange rate of one EUR per THB according to the average of the selling and buying rate available on the Bank of Thailand s website on 3 August 2016) or USD* 524 million (at the exchange rate of one EUR per USD 1.094) subject to the time period taken for closing and pursuant to the terms and conditions of the Agreement. *EUR is the currency agreed for the payment according to the Agreement and USD is the currency reference according to the Company s Board of Directors resolutions. The comparative value calculation for the size of Transaction is based on the reviewed consolidated financial statements of the Company as of 30 June 2016 and the audited consolidated financial statements of HVL as of 31 December 2015 and on the criteria set out under the Notification of the Capital Market Supervisory Board No. TorJor. 20/2551 Re: Rules concerning the Material Transactions in the Acquisition and Disposition of Assets dated 31 August 2008 (as amended) and the Notification of the Board of Governor of the Stock Exchange of Thailand Re: Disclosure of Information and other Acts of Listed Companies concerning the Acquisition and Disposition of Assets B.E dated 29 October 2004 (as amended) (collectively, the Major Transaction Rule ). Details of the calculation are summarised below. 3

4 3.1 Comparison of Net Tangible Assets Size of the Transaction = % Net tangible assets of HVL Net tangible assets of the Company = 65% of THB 5, million THB 20, million = 17.31% 3.2 Comparison of Net Profit Size of the Transaction = % Net profit of HVL Net profit of the Company = 65% of THB million THB 4, million = 12.85% 3.3 Comparison of Total Value of Consideration Size of the Transaction = Total consideration paid Total assets of the Company = THB 18, million = 44.75% 3.4 Comparison of Equity Share Value THB 41, million Size of the Transaction = Number of shares issued as consideration Total number of issued and paid-up shares of the Company = Not applicable as there is no share issuance Based on the above calculation, the highest comparative value derived from the calculation of the transaction size, taking into account the value of the acquisition transactions entered into by the Company and/or its subsidiaries during the past six months, is equivalent to not more than 80.91% on a total value of consideration basis. Therefore, the Transaction is categorised as a Type-1 transaction according to the Major Transaction Rule as the highest comparative value of the transaction size is higher than 50% but lower than 100%. Accordingly, the Company is required to comply with the following requirements: (i) (ii) (iii) disclose the details of the Transaction to the Stock Exchange of Thailand on the date on which the Company makes a decision to enter into the Transaction or the following day (if the Company is not able to make the disclosure on the same day); an independent financial advisor must be appointed to provide an opinion about the Transaction to the shareholders; the notice of the shareholders meeting must be delivered to the shareholders at least 14 days prior to the meeting and comply with the requirements under the Major Transaction Rule; and 4

5 (iv) obtain an approval from the shareholders meeting for entering into the Transaction with at least 75% votes of the shareholders attending the meeting and eligible to vote, provided the Company shall fix and further inform the date of the shareholders meeting. 4 Details of the Assets Acquired The asset to be acquired by the Company is 65% of the total charter capital of HVL. 4.1 General Business Information Overview of HVL Company Registration Name Holcim (Vietnam) Co., Ltd Date of Incorporation 25 February 1994 Place of Incorporation Type of Business Registered Office Ho Chi Minh City, Vietnam Manufacture and sale of cement and ready-mix concrete No Ham Nghi Street, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City, Vietnam Company Registration No Directors Charter Capital Members Council (equivalent to Board of Directors): Mr Daniel Bach; Mr Tran Viet Thang; Mr Hoang Kim Cuong; Mr Gary Schulz; Mr Beat Wafler; Mr William Magennis. VND 3,030,400 million or equivalent to approximately THB 4,849 million being contributed charter capital Registered Shareholders Vietnam Cement Industry Corporation holding shares in an amount of 35% of the total charter capital; and Lafarge Holcim Limited holding shares in an amount of 65% of the total charter capital. Direct Subsidiaries Website Lafarge Cement Limited Liability Company Overview of HVL s wholly owned subsidiary Lafarge Cement Limited Liability Company Company Registration Name Lafarge Cement Limited Liability Company Date of Incorporation 9 January 2003 Place of Incorporation Dong Nai Province, Vietnam 5

6 Type of Business Registered Office Manufacture and sale of cement and ready-mix concrete Ong Keo Industrial Zone, Phuoc Khanh Commune, Nhon Trach District, Dong Nai Province, Vietnam Company Registration No Directors Issued and Paid-up Share Capital Mr Daniel Nikolaus Bach being the sole President VND 812,132 million or equivalent to approximately THB 1,299 million Registered Shareholders Holcim (Vietnam) Co., Ltd being the sole owner (100%) 4.2 Business Description HVL operates one integrated plant and four grinding plants with an annual cement capacity of 6.3 million tons. HVL is also a leading ready-mix concrete producer operating seven plants in Southern Vietnam. 4.3 Key selected financial information of HVL For the years ended 31 December (Units: million) 2014 (restated 1 ) 2015 VND THB 2 VND THB 2 Revenues 4,492,042 7,187 5,339,692 8,544 EBITDA 821,357 1,314 1,159,822 1,856 Net profit 246, , Total assets 5,947,907 9,517 6,363,262 10,181 Total liabilities 2,655,815 4,249 2,657,880 4,253 Total equity 3,292,091 5,267 3,705,382 5,929 Notes: 1/ Certain corresponding figures in the consolidated financial statements of HVL for the year ended 31 December 2014 have been reclassified to reflect the presentation of the current year s consolidated financial statements in accordance with Circular 200 (Vietnamese accounting standards). 2/ THB translation assumed 1 VND = THB with reference to the average of the selling rate and buying rate available on the Bank of Thailand s website on 3 August Total value of consideration 5.1 Value of consideration The total consideration for the acquisition of the Capital of HVL from the Seller is approximately THB 18,694 million or equivalent to EUR 479 million (or USD 524 million), comprising the aggregate of: (a) approximately THB 17,957 million or equivalent to EUR 460 million (or USD 503 million) (the Initial Price ); plus (b) an incremental amount calculated at a rate of 7% per annum (on a 365-day basis) on the Initial Price from the locked box accounts date (i.e. 31 May 2016) to the preclosing date, which will be designated once all of the conditions precedent have been satisfied, as specified in the Agreement. 6

7 5.2 Payment method The payment of the consideration will be made to the Seller at closing. 6 Value of the assets acquired The total value of the acquisition of the Capital of HVL from the Seller under the Agreement is not more than THB 18,694 million or equivalent to EUR 479 million (or USD 524 million) subject to the time period taken for closing and pursuant to the terms and conditions of the Agreement. 7 Basis Used to Determine the Value of Consideration The value of consideration is derived from negotiations between the Seller and the Company. The Company adopted a number of methodologies which are internationally accepted. The Company and the financial advisor have considered that the discounted cash flow and EBITDA multiple methodologies should be the most appropriate methodologies for the valuation of the Transaction. Such methodologies suggest the total enterprise value of approximately THB 31,388 million or equivalent to EUR 805 million (or USD 880 million), whereby the Company will acquire 65% of the total charter capital of HVL, the value of which is estimated to be approximately THB 20,404 million. The Hongkong and Shanghai Banking Corporation Limited has acted as the financial advisor to the Company for the Transaction. 8 Expected Benefits The Transaction is expected to generate the following benefits to the Company: (a) (b) (c) (d) (e) HVL will serve as additional captive channel (directly to customers without any agents) for the Company clinker in Vietnam and reduce the Company s dependence on conventional export markets; HVL will enable the Company to diversify its cash generation from higher growth markets; This acquisition will create several synergies for the Company, i.e. procurement from pool purchasing, increase utilization of IT system and technical knowledge sharing, etc; This acquisitions presents a unique opportunity for higher total shareholders return (TSR) and; The Company s market capitalization is expected to grow faster with the acquisitions. 9 Source of Fund The source of fund is credit facilities support from Bank of Tokyo-Mitsubishi UFJ, Ltd. with 12-month term. 10 Conditions Precedent The acquisition of the Capital of HVL under the Agreement is subject to fulfilment of the following conditions precedent, respectively: (d) Vietnam Cement Industry Corporation (the JV Partner ) being 35% shareholder of HVL does not exercise its right of first refusal to purchase the Capital in relation to 7

8 HVL pursuant to the joint venture contract between the JV Partner and the Seller. In this regard, the JV Partner can choose to exercise its right of first refusal within 60 days from the date that it has been notified by the Seller; (e) (f) the approval of the shareholders meeting of the Company pursuant to the Major Transaction Rule and Section 107 of the Public Limited Company Act having been obtained by the Company, provided the Company shall fix and further inform the date of the shareholders meeting; and consent and approval from Vietnamese authorities as required under the applicable laws having been obtained by the Seller. 11 Opinion of the Board of Directors on the Transaction The Board of Directors Meeting of the Company No. 141 and No. 143 held on 22 July 2016 and 3 August 2016, respectively, resolved to approve the Transaction and the Company to proceed with the acquisition of 65% of the total charter capital of HVL and the entry into a definitive sale and purchase agreement with the Seller. 12 Opinion of the Audit Committee and/or the Director(s) of the Company which is different from the Board of Directors Opinion according to paragraph 11 Neither the audit committee nor any director has any dissenting opinion against those of the Board of Directors in paragraph 11. 8