Moody’s could lift West China Cement

Moody's Investors Service said it put West China Cement Ltd.’s B1 corporate family and senior unsecured debt ratings under review for upgrade.

On June 19, WCC announced that Conch International Holdings (HK) Ltd. (unrated) – a wholly owned subsidiary of Anhui Conch Cement Co., Ltd. (unrated) – would subscribe to shares equivalent to a 16.67% equity stake in WCC.

The subscription proceeds of about HK$1.5 billion would be used for general working capital and for potential acquisitions and/or other investment opportunities.

The completion of the share subscription is conditional upon: (a) No material breach of any representation, warranty or undertaking by the company pursuant to the subscription agreement; and (b) the Hong Kong Stock Exchange granting a listing of and permission to deal in the subscription shares on the stock exchange.

"WCC will improve its cash balance and equity positions once the proposed share subscription by Conch Cement goes through," Moody's vice president and senior analyst Franco Leung said in a news release.

The company will benefit from tangible improvements; by 1.4x in its cash position and by 24% in equity – from their levels as of end-2014.

"Furthermore, Conch Cement's state-owned enterprise status could help WCC enhance its access to financing channels, further improving its liquidity profile," Jiming Zou, Moody's assistant vice president and local analyst for WCC, also said in the release.

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