Prosperity re-enters into Liaoning JV

Prosperity Minerals Holdings Limited, which recently disposed of most of its cement manufacturing business in China to TCC International Limited (TCCI) for HK$3800 million (approximately £385 million), has announced that on 22 May 2010, Sintex International Holdings Limited, a wholly-owned subsidiary of the company, entered into a conditional sale and purchase agreement with Liaoning Yan Zhou Zhu Xing Cement Co., Limited, under which Sintex agreed to purchase a 25% equity interest in Liaoning Changqing Cement Co. Limited for RMB 100 million (approximately £10 million).

Liaoning Changqing, which is presently undergoing production trials, was established as an equity joint venture between Prosperity and Liaoning Yan Zhou Zhu Xing Cement Co., Limited in 2007, at which time equity interests were split 55%:45%, with the larger percentage belonging to Prosperity. In March 2009, the JV was revised and the equity interest was altered to 75%:25%. Prosperity's 75% equity interest in Liaoning Changqing was transferred to TCCI on 30 April 2010 as part of the disposal of Prosperity's cement business to TCCI. Liaoning Yan Zhou Zhu Xing Cement Co., Limited has since approached Prosperity indicating that it wished to sell its 25% interest in Liaoning Changqing because it did not wish to be part of a joint venture with an unfamiliar party (TCCI).

Prosperity has accepted the offer to purchase the 25% stake on the basis that its value will grow once production at the Liaoning Changqing plant has commenced (expected September 2010). The agreement is currently awaiting approval from the relevant authorities. Once approved, Prosperity will act only as an investor and will not undertake any management of the plant.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/26052010/prosperity_re-enters_into_liaoning_jv/