Fitch: West China Cement on positive watch

Fitch Ratings said it placed West China Cement Ltd.’s long-term issuer default rating of BB- on Rating Watch positive, along with its BB- senior unsecured and bonds ratings.

The positive watch follows news that Anhui Conch Cement Co. Ltd. plans to increase its shareholding in West China Cement to about 51%, Fitch said. If successful, Anhui will make a tender offer for the remaining shares in West China, the agency added.

West China and Conch entered into an acquisition agreement whereby Conch will inject four of its cement plants in Shaanxi province into West China in return for new West China shares, Fitch said.

The transaction is subject to several conditions, including the approval from independent shareholders of West China, the agency said.

After the transaction, Conch’s shareholding in West China will increase to about 51% from 21% currently. Conch will make an unconditional cash offer for the remaining West China shares, Fitch said.

The acquisition will trigger the change-of-control clause on West China’s $400 million senior notes due 2019, but only if it results in a rating downgrade by at least one rating agency, the agency said.

Fitch said it will resolve the Rating Watch once the transaction is completed and there is greater clarity on Conch’s plans for West China after it gains control.

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