New holding a strong step toward ACH's goal of 18.5 million tons per annum (MTA) production capacity by 2011
SEC Cement Holding (ACH), a subsidiary of Citadel Capital's ASEC Group, formally signed an acquisition agreement on December 23, 2007, giving it a 35% stake and management control over Algeria's Zahana Cement Co. The selling shareholder in the transaction was Western Group ERCO, an Algerian public-sector holding company for cement assets. The signing ceremony took place in the presence of Algerian Minister of Trade and Investment Mr. Hamid Temmar, Egyptian Minister of Investment Dr. Mahmoud Mohieldin and Citadel Capital Principal Mr. Abdalla ElEbiary. The sale was approved by Algerian Prime Minister H.E. Abdelaziz Belkhadem in November.
ASEC Algeria General Manager Amr Hosny and Western Group General Manager Bilqasimy Limbarak signed the formal protocol one year after ACH bid 32.6 million for the stake, topping offers from industry heavyweights including France's Lafarge.
According to ACH Managing Director Ahmad Khalifa, the Algerian government privatized the stake on the condition that the new investors double the plant's current capacity. The government has promised to sell the remaining 65% of the company within three to five years.
"We have actually won two contracts in Algeria, one for the acquisition of 35% of Zahana and another for complete management control of the company and a commitment to increase production capacity to 1.8 million tons per annum from approximately 675,000 tons per annum today," said Khalifa.
ACH will invest in developing Zahana's workforce through a combination of in-house and overseas training courses.
Khalifa added that under ACH management, Zahana "will be introducing new products as well as improving the quality standards for existing products in the Algerian market, all while maintaining fair practices and a competitive pricing system."
Zahana Cement Co. is located in western Algeria, 40 kilometers away from the city of Wahran. It was an under-utilized facility fully owned by the Algerian government with a production capacity of 675,000 tons per annum, which represents approximately 61% of its nominal capacity. Zahana's close proximity to Algerian ports will help make its exports highly competitive.
ACH has allocated a total of US$77 million to upgrade the plant starting in July 2008. The upgrade will include the installation of new filters that Khalifa says will reduce emissions from 54mg per cubic meter to 25mg per cubic meter in line with international standards.
"We are highly optimistic about our operations in Algeria," Khalifa noted. "The boom in the Algerian economy has made it an attractive and promising market for us. The under-utilized capacity of Zahana Cement Co. presents an ideal opportunity for ACH, which is backed by the technical expertise of the ASEC Group, particularly when it comes to plant upgrades. We are certain that Zahana will soon make a significant contribution to Algeria's national cement production."
ACH is the cement production arm of ASEC Group, a Citadel Capital company. ACH is expanding its production capacity in the Middle East and North Africa through acquisitions, partnerships and Greenfield operations. The company plans to command a total production capacity of 18.5 MTA by 2011. ACH entered five markets in 2006-07, including Egypt, Algeria, Sudan, Iraq-Kurdistan and Syria; the company is also penetrating the Libyan and Ethiopian markets. ACH currently has 10 regional cement projects with total investments worth US$ 3 billion.
ASEC Algeria, a subsidiary of ACH, is also investing US$ 550 million in a new greenfield cement factory in the central Algerian region of Djelfa with a production capacity of 3 MTA. Construction on the new facility will begin during the first half of 2008.
-Ends-
ASEC Group is a leading cement services and production group with operations in Africa and the Middle East. With 32 years of experience, ASEC's portfolio of services includes plant engineering and technical management, automation, manufacturing, erection and construction.
ASEC's growing production arm includes 10 plants under construction that will have a combined production capacity of 18.5 million tons per annum by 2011. ASEC is a Citadel Capital company and has paid-up capital of EGP 1 billion.
Citadel Capital S.A.E. is a Cairo-based private equity firm focused on acquisitions, turnarounds and greenfields in Egypt and the Middle East. Established in 2004, Citadel now manages investments of more than US$ 7 billion in industries including mining, oil and gas, cement, transportation and food.
Press Release 2007
