Shanshui Cement Board Change Vote Proposal Rejected by Court

2015-07-24 06:07:03.730 GMT
By Lianting Tu

(Bloomberg) -- Hong Kong’s High Court rejected proposals by receivers of a block of shares of China Shanshui Cement Group Ltd. to vote to change the board of the listed company, which is embroiled in a takeover scrap.

The receivers are “trying like a doctor to make the company better” when their appointment was to protect the value of the shares, Judge Queeny Au-Yeung said in a July 23 ruling.

The cement maker’s biggest shareholder Tianrui (International) Holding Co. wants to change Shanshui’s board and oust chairman Zhang Bin, sparking a July 29 extraordinary general meeting. Asia Cement Corp. and China National Building Material Co., which hold 37.6 percent of Shanshui, oppose Tianrui and this week proposed to acquire the shares they don’t already own.

“The ruling means change of control won’t be triggered on Shanshui bonds, which is short-term negative because the bonds would rise” to 101 cents on the dollar if the clause was activated, said Trung Nguyen, an analyst in Singapore at Lucror Analytics. “Now the whole market is looking at the general offer and we believe CNMB and ACC are serious.”

Shanshui’s $500 million of 7.5 percent bonds due 2020 rose 0.67 cents to 93.17 cents as of 2:03 p.m. in Hong Kong. The receivers control 45.6 percent of China Shanshui Investment, which holds 25.09 percent of China Shanshui Cement.

Zhang holds 36.1 percent of CSI. Judge Au-Yeung also said the receivers’ reliance on Tianrui’s financial proposal was “unsafe” as the court hadn’t been provided with an undertaking from the company promising to
repay Shanshui’s debt if the change of control clause is triggered.

Shanshui’s external public relations firm Brunswick Group Ltd. wasn’t immediately available to comment.