KHD Humboldt Wedag International AG ("KHD") (Frankfurt Stock Exchange symbol: KWG) (Pink Sheets: KHDHF), a global engineering, equipment and service company in the cement industry, announced today that it has entered into a strategic partnership with Beijing-based CATIC Beijing Co., Ltd. ("CATIC"), a subsidiary of China's state-owned CATIC International Holdings Ltd., to capitalize on the rapidly expanding international market for the construction of cement plants.
KHD's Director Jouni Salo said that KHD and CATIC combined will be able to bid on a wider range of projects, including large turnkey projects, and penetrate the most important cement markets including China itself, the largest single market in the world, and other countries and regions as KHD and CATIC see fit.
The strategy behind the exclusive partnership includes:
- Leverage CATIC resources within China to win project awards;
- Leverage the proven technological expertise of KHD;
- Combine CATIC representation in more than 30 countries and 56 overseas subsidiaries with the traditional strength of KHD in India, EMEA, the Americas and countries of the former Soviet Union;
- Penetrate or further strengthen our position in fast-growing emerging economies, including India, Brazil, Turkey and the petroleum-producing countries;
- More effectively tap into the need of customers to manufacture cement locally, closer to its intended uses.
- Agreement with CATIC for KHD to be their exclusive cement process technology and equipment supplier
- Agreement for KHD to have CATIC as their exclusive EPC (turnkey) contractor.
- Investment in KHD by a CATIC controlled Hong Kong company ("MGI") in the range between EUR 37 million and EUR 45 million.
- MGI will own 20% of the share capital in KHD.
- Method of purchase - Subscription from existing and unutilized subscription rights (in North America, it would be like a non-transferrable rights issue).
- Subscription offer expected to be published on January 5, 2011 with the record date then being January 4, 2011.
- Price - EUR 4.53 per share.
- All shares purchased by MGI will be locked in, and not be available on the market, for a 29 month period.
- MGI and CATIC Group will also be prohibited from buying shares in excess of 29 percent of KHD for 12 months.
- CATIC to have representation on the Supervisory Board and contribute to KHD operations with a management representative.
- KHD to co-invest with CATIC in China's design and manufacturing resources for the Chinese and export markets.
- Closing to occur as soon as practical but no later than March 08, 2011.
- In the United States shares will be made available to accredited or qualified investors by way of a private placement. It is not the intention to burden the company with the costs of compliance of the Sarbanes-Oxley Act and the cost of continuous US registration.
"This is a defining moment for both companies, as we partner to unite KHD's century and a half of experience and its unmatched library of intellectual property with the extraordinary reach and power of CATIC," said Mr. Salo. He further stated that, "KHD and CATIC are already cooperating and jointly preparing several large turnkey RFPs and responding to the needs of new geographies, including China itself."
Salo continued, "Our global network of Customer Service Centers, combined with the branch office networks of both companies, gives us a launch pad for a broader global business. We believe that together we can now compete effectively with the largest companies in our industry."
KHD has now expanded its business horizons considerably following its refocusing two years ago to concentrate on the cement industry. At that time, KHD sold most of its non-cement operations, established its Customer Service Centers, and announced plans to conserve and grow its substantial cash reserves. With that now accomplished, and with KHD's strong market presence in Russia, central Asia, India and the Middle East once again in place, KHD moved its headquarters to its historic center in Cologne, and started trading of its common stock at the Regulated Market segment on the Frankfurt Stock Exchange.
Mr. Salo concluded, "With a protective eye on our strong financial asset base and a keen appreciation of our unique historical legacy, we believe that we are in a strong position to expand, to build our revenue base, and to contribute to the economies of the countries and regions we serve. New jobs will be created and cleaner and greener technologies and designs will help forward-looking governments achieve international goals regarding energy savings, pollutant emissions, clean air and clean water."