Holcim plans to participate up to CNY 4 billion in Huaxin Cement -China's private placement

After announcing its plans to acquire Mexican cement maker Cemex SAB de CV's Australian opeartions Switzerland-based building materials group Holcim Group (See: CEMEX  to sell  Australian operations to Holcim Group), plans to invest up 1.6 billion Chinese yuan in Huaxin Cement, the fourth largest cement producer in China, which hopes to increase its share capital through a private placement.

Holcim's investment represents is in proportion to its exisiting 39.88-per cent stake in Huaxin, which is aiming to raise 4 billion yuan through a private placement to increase its capital.

In March, Huaxin Cement said it would issue up to 200 million shares to as many as 10 current shareholders at at least 20.73 yuan each, to strenghthen its market share. It proposes to build two cement plants in new markets and expand capacities in existing markets.

Huaxin currently has 38 million tonnes annual cement making capacity, which it plans to increase by 17 million tonnes.

In 1999, Holcim acquired a 23.4-per cent participation in Huaxin Cement, raising it in 2005 to 26.1 per cent and in February 2008 to the current 39.88.

Holcim's  board of directors will convene an extraordinary general meeting on 8 July 2009, at which the shareholders of Holcim Ltd will be asked to approve a capital increase leading to an inflow of funds in the amount of approximately CHF 2 billion. The newly issued shares will rank pari passu with the existing shares.

In another move, Holcim Group has reached an agreement to buy CEMEX's Australian operations for approximately A$2.02 billion.