CHICAGO SYDNEY, Jan 17, 2012 (BUSINESS WIRE) —
Sims Metal Management Limited, the world’s largest listed metal and
electronic recycling company (SimsMM), today announced that it has made
a significant minority investment in Chiho-Tiande Group Limited (CTG)
(hkg:976), a Hong Kong listed and fast growing metals and electronics
recycler with operations in the People’s Republic of China and Hong Kong.
With main processing facilities in Taizhou and Ningbo, CTG is the
largest mixed scrap metals importer in China and operates three core
businesses: a metal recycling business, foundry business and wholesale
scrap metal brokerage business. CTG has expanded into domestic ferrous
and non-ferrous scrap metal recycling in Shanghai and recently announced
further expansion plans to Yantai on the Bohai Coast and Hong Kong with
new metals and electronics recycling facilities.
SimsMM has acquired 16 percent of the existing shares of CTG from
founder Chairman Ankong Fang and Delco Participation B.V. (Delco), a
Netherlands-based scrap metal company. Delco has granted an option to
SimsMM to acquire a further 2 percent of CTG. In addition, subject to
approval by CTG’s independent shareholders, SimsMM will subscribe for a
convertible bond and be issued warrants. After all instruments are
exercised or converted, SimsMM expects to hold 20 percent of the fully
diluted issued capital of CTG. In order to support the continued growth
plans of the company, Chairman Fang and Delco will re-invest two-thirds
of the proceeds received from SimsMM into convertible bonds issued by
CTG on the same terms as SimsMM.
Daniel W. Dienst, Group Chief Executive Officer stated, “After several
years of earnest evaluation of opportunities to enter the physical
recycling arena on Mainland China and in Hong Kong, we have identified
CTG as among the most exciting and attractive companies that will define
and shape the nascent Chinese recycling landscape. Through our
investment and partnership, we are validating not only CTG’s
extraordinary growth prospects under the vision of Chairman Fang and his
leadership team but, as importantly, the shared cultures of our two
companies manifested in unwavering commitments to creation of long-term
shareholder wealth, the safety of our valued employees and the health of
the environment and communities in which we operate and locate. CTG, as
a long-standing trusted and honorable trading partner of SimsMM, made
this investment decision that much more compelling.”
Ankong Fang, Chairman of CTG stated, “As the largest mixed metal scrap
importer and processor in China, we are always exploring opportunities
to grow, both within China and worldwide. SimsMM has been one of our
major suppliers for a number of years and, given SimsMM’s global reach
and customer network, advanced technologies and solutions in the metals
and electronics recycling industry, the proposed strategic collaboration
with SimsMM will add significant value and expertise and complements our
Group.”
Chairman Fang continued, “I believe that SimsMM, the industry leader,
becoming a significant minority shareholder shows a strong recognition
of our Group’s competitiveness and achievements. I look forward to
continuing to lead our company and the opportunity to work with a
world-class management team under the leadership of Mr Daniel Dienst and
particularly Mr Michael Lion, who will become a member of our Board upon
the successful completion of the transaction.”
Michael Lion, Chairman Sims Metal Management Asia Limited, and SimsMM’s
nominee to the CTG Board, concluded by saying, “The complementary
expertise of SimsMM’s global trading reach, material recovery technology
and rigorous controls married to CTG’s exceptional leadership and
fast-growing presence in the China and Hong Kong recycling space
provides a transformational platform for our partnership. As the
domestically generated volumes of recyclable non-ferrous and ferrous
metals and electronics continues to grow, SimsMM’s and CTG’s shared
vision of building a leading best practices position in China together
is an extraordinary and exciting opportunity. I am honored to be
designated to serve.”
Transaction details
SimsMM, through its Hong Kong subsidiary, has entered into a sale and
purchase agreement (SPA) with HWH Holdings Limited, an affiliate of
Chairman Fang, and Delco with respect to 18 percent of the existing
share capital of CTG. Pursuant to the SPA, SimsMM has completed the
initial purchase of 167 million CTG ordinary shares (representing 16
percent of the current issued share capital of CTG) at HK$4.50 per share
from Chairman Fang and Delco. In addition, Delco has granted SimsMM an
option (for nominal consideration) to acquire up to an additional 21
million shares (representing 2 percent of the current issued share
capital of CTG), exercisable between two and three years from the date
of completion of the SPA, at an exercise price of HK$6.00 per option.
SimsMM will subscribe for a three-year warrant (for nominal
consideration) over 13 million new CTG shares at an exercise price of
HK$6.00 per warrant as well as a three-year HK$316 million convertible
bond, which has a 4 percent per annum coupon and is convertible into 53
million CTG shares at a conversion price of HK$6.00 per share. Both the
warrant and convertible bond issues are subject to CTG independent
shareholder approval. Chairman Fang and Delco have also agreed to
subscribe for a convertible bond on equivalent terms.
The upfront investment by SimsMM will be approximately US$137 million
and should all options, warrants and convertible bonds be exercised or
converted, SimsMM expects to have a fully-diluted 20 percent
shareholding in CTG. Provided SimsMM retains a 10 percent shareholding
in CTG, it will have the right to nominate one director to the CTG Board
of Directors.
Based on SimsMM initially accounting for the investment as a financial
asset (as opposed to the equity method of accounting), the transaction
is expected to be EPS neutral to SimsMM in the near term.
Cautionary Statements Regarding Forward-Looking Information
This release may contain forward-looking statements, including
statements about Sims Metal Management’s financial condition, results of
operations, earnings outlook and prospects. Forward-looking statements
are typically identified by words such as “plan,” “believe,” “expect,”
“anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project” and
other similar words and expressions.
These forward-looking statements involve certain risks and
uncertainties. Our ability to predict results or the actual effects of
our plans and strategies is subject to inherent uncertainty. Factors
that may cause actual results or earnings to differ materially from
these forward-looking statements include those discussed and identified
in filings we make with the Australian Securities Exchange and the
United States Securities and Exchange Commission (“SEC”), including the
risk factors described in the Company’s Annual Report on Form 20-F,
which we filed with the SEC on 14 October 2011.
Because these forward-looking statements are subject to assumptions and
uncertainties, actual results may differ materially from those expressed
or implied by these forward-looking statements. You are cautioned not to
place undue reliance on these statements, which speak only as of the
date of this release.
All subsequent written and oral forward-looking statements concerning
the matters addressed in this release and attributable to us or any
person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this release.
Except to the extent required by applicable law or regulation, we
undertake no obligation to update these forward-looking statements to
reflect events or circumstances after the date of this release.
All references to currencies, unless otherwise stated, reflect measures
in Australian dollars.
About Sims Metal Management
Sims Metal Management is the world’s largest listed metal recycler
with approximately 260 facilities and 6,500 employees globally. Sims’
core businesses are metal recycling and recycling solutions. Sims Metal
Management generated approximately 85 percent of its revenue from
operations in North America, the United Kingdom, Continental Europe, New
Zealand and Asia in Fiscal 2011. The Company’s ordinary shares are
listed on the Australian Securities Exchange (asx:SGM) and its ADRs are
listed on the New York Stock Exchange
/quotes/zigman/322499/quotes/nls/sms SMS
+0.22%
. Please visit our
website (
www.simsmm.com )
for more information on the Company and recent developments.
SOURCE: Sims Metal Management
Sims Metal Management
Dan Dienst, +1 212-500-7410
Group Chief Executive Officer,
or
Rob Larry, +1 312-644-8205
Chief Financial Officer
or
Daniel Strechay, +1 212-500-7430
Group Director -- Communications Public Relations
Copyright Business Wire 2012
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