Phinma sells 51% of Union Cement to Cemco Holdings

The Phinma Group executed yesterday a share purchase agreement with Cemco Holdings covering its 51- percent interest in Union Cement Holdings Corp. (UCHC).

The agreement calls for Phinma’s divestment of a total of 493.85 million UCHC shares for $214 million. Of these, 206.33 million (equivalent to a 21.31-percent stake in UCHC) belong to Bacnotan Consolidated Industries Inc. (BCII), the flagship holding company of the Phinma Group, while the balance is owned by Atlas Cement Corp., a 53-percent owned subsidiary of BCII.

BCII and Atlas Cement will receive $89.38 million and $124.55 million, respectively, from the sale of their shares. Closing date for the transaction is set on Aug. 12.

Buying party Cemco Holdings is 40-percent owned by global cement player Holderfin and 60 percent by Clinco Corp.

The sale was approved by the BCII board last July after taking into account the profound changes in the cement business brought about by globalization.

UCHC is a joint venture between BCII and Holcim – one of the world’s leading suppliers of cement as well as aggregates, concrete and construction-related services, with businesses in over 70 countries. Holcim and BCII own 76 percent of Union Cement Corp., one of the biggest cement producers in the Philippines.

Union Cement is a fully integrated cement manufacturing operation with plants across the Philippines: two in southern Philippines in Mindanao (Misamis Oriental and Davao City) and two in Luzon (La Union and Bulacan).

Its annual clinker capacity of 5.7 million metric tons is about 25 percent of the country’s total cement production. With four plants, four bulk terminals, three ports and 800 dealers, Union Cement is the only Philippine cement company with a nationwide manufacturing, marketing and distribution network.

In November 2002, Union Cement acquired 98.6 percent of Alsons Cement Corp. through a share-swap agreement with major shareholders and a tender offer for its minorities. With this acquisition, UCC re-established itself as the leading cement company in the country with consolidated assets of P27.8 billion.

Union and Alsons now have a combined annual capacity of about 7.5 million metric tons of cement, the biggest in the Philippines where Holcim, French-British Lafarge and Mexico-based Cemex have come to dominate the industry by acquiring control of most plants at the height of the Asian financial crisis in 1997-98.

Aside from cement, the Phinma Group also has interests in reinforced steel bars, power generation and oil exploration, low-cost housing development, financial services more recently, in educational services.