KHD Humboldt Wedag International AG: Strategic Partnership with China-based CATIC
Cologne, December 21, 2010 – KHD Humboldt Wedag International AG (‘KHD’), one of the world’s major suppliers of cement manufacturing equipment, has concluded a strategic partnership with Beijing (Peoples Republic of China) based CATIC Beijing Co., Ltd. (‘CATIC’), a subsidiary of China’s state-owned AVIC International Holding Corporation. The co-operation agreement (the ‘Co-operation Agreement’) was signed today. Together, KHD and CATIC aim to become a market-leading force for the construction of cement plants by bidding on a wider range of projects. This includes especially turnkey projects that have traditionally been awarded to competing companies, thus giving access to a larger number of projects with the leading cement producing companies. In addition, the co-operation includes procurement and the right of KHD to co-invest, together with CATIC, in both a design and a manufacturing institute in China. KHD expects that the cooperation will strongly enhance its presence and business in China – the world’s largest cement market, and other countries or regions as KHD and CATIC see fit.
To strengthen the relation with KHD, and as a condition for the effectiveness of the Co- operation Agreement, the Parties agreed that Max Glory Industries Ltd. (‘MGI’), a Hong Kong based indirect wholly owned subsidiary of CATIC shall make a capital investment in KHD and, thereafter, shall hold 20% in the share capital of KHD.
The capital investment shall be implemented by way of a capital increase of up to 16,571,276 new no par value ordinary bearer shares from the existing authorized capital of KHD with statutory subscription rights of the existing shareholders which is currently expected to be completed no later than March 08, 2011, subject to satisfaction of certain conditions as set out therein. For this purpose, KHD and MGI entered today into a subscription agreement (‘Subscription Agreement’). Pursuant to the Subscription Agreement MGI has agreed, subject to satisfaction of certain conditions as set out therein, to subscribe for such a number of new shares from the capital increase from authorized capital that were not subscribed by shareholders on the basis of their statutory subscription rights and that will result in a holding of 20% in KHD after implementation of the capital increase (‘Target Holding’). MGI and CATIC agreed that the new shares issued to MGI will be subject to a lock-in period of 29 months following the date of registration of implementation of the capital increase. Once the subscription of the new shares by MGI is completed, CATIC and MGI agreed further to not acquire, and MGI agreed to procure that its parent company and its subsidiaries (‘CATIC Group’) do not acquire, any additional KHD shares within 12 months if such acquisition would result in MGI or the CATIC Group holding directly or indirectly more than 29% of the shares of KHD. Both the lock-in period and the acquisition restriction will automatically be terminated inter alia in case another person acquiring more than 20% of the shares of KHD or if a take- over offer would be made. Further, for the lock-in period, KHD, except with the consent of MGI, agreed not to issue any shares or securities convertible into securities if this would result in a dilution of MGI. Further, KHD agreed on certain non-dilution rules during the lock- in period.
Both the directors and the members of the supervisory board of KHD have approved the transactions as set out in the Cooperation Agreement and Subscription Agreement by resolutions dated December 21, 2010, including, inter alia,
(I) the exclusive cooperation,
(II) capital increase from authorized capital with statutory subscription rights for all shareholders by up to EUR 16,571,276 by issue of up to 16,571,276 new no par value ordinary bearer shares with a notional par value of EUR 1.00 and entitlement to dividends as from Jan. 1, 2010,
(III) the issue price of the new shares being EUR 4.53 per share
(IV) new shares which will not be subscribed for during the subscription period will be offered to MGI, whereby the maximum number of shares to be subscribed by MGI is the Target Holding, provided that sufficient shares will be available after subscription by shareholders to achieve the Target Holding
(V) new shares not subscribed for neither by the existing shareholders nor by MGI will not be offered to any third persons and no over allotment will occur. The resolutions of the directors and the members of the supervisory board include the relevant resolutions on the utilization of the authorized capital, all subject to the approval of a securities prospectus for the public offering of the new shares in Germany and Luxembourg (‘Prospectus’) by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin).
According to the resolutions and the terms of the Subscription Agreement, the directors will not complete the capital increase if the Target Holding cannot be achieved or MGI does not subscribe for new shares in an amount equivalent to the Target Holding, e.g. if the conditions set out in the Subscription Agreement are not fulfilled. Shareholders are advised that both the Co-operation Agreement and the Subscription Agreement are subject to various conditions.
The offer of new shares will consist of a public offering (subscription offer) in Germany and Luxembourg and, if and where permitted under applicable securities laws, a private placement to eligible investors in other jurisdictions. The shares offered in the subscription offer may not be, directly or indirectly, offered or sold, and the subscription right may not be, directly or indirectly, exercised or otherwise offered or sold in any jurisdiction outside Germany unless such offering, sale or exercise is permitted under applicable laws of the relevant jurisdiction and KHD may require receipt of satisfactory documentation to that effect. Due to such restrictions under applicable laws, KHD expects that some or all investors residing in jurisdictions other than Germany or Luxembourg, including the United States and Canada, will not be eligible to receive or exercise the subscription rights in the course of the subscription offer.
This release is neither an offer to sell nor a solicitation of an offer to buy or subscribe for any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful. This release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended. KHD does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement should not be made in and may not be distributed or sent into the United States, Canada, Australia or Japan.
Securities identification number (WKN): 657800
Market segment: Regulated Market (General Standard) of the Frankfurt Stock Exchange
KHD Humboldt Wedag International AG
51067 Cologne, Germany
Tel.: +49 (0)611 – 205855-11
Fax: +49 (0)611 – 205855-66