Concrete facts of man under a cloud
Zhang Jimin, chairman of West China Cement, is caught in a war of words with US short seller Glaucus Research Group that threatens to upset the Chinese company's deal with Italy-listed firm Italcementi Group.
On Wednesday, Glaucus posted on its website a report alleging West China Cement, a cement producer headquartered in Xian, the capital of Shaanxi province, was 'a blatant fraud'.
Glaucus' report listed a series of accusations against the Hong Kong-listed firm, including suspicion over its allegedly expensive acquisition of 65 per cent of loss-making Shaanxi cement producer Shifeng Cement.
Shifeng is involved in a 504 million yuan (HK$617.63 million) deal between Italcementi, the world's fifth-largest cement producer, and West China Cement, which was finalised on June 28 with the central government's approval.
Under this deal, Italcementi sold its 35 per cent stake in Shifeng and other mainland Chinese cement plants in return for a 6.25 per cent stake in West China Cement, becoming the third-largest shareholder of the Chinese company.
On Thursday, Zhang held a press conference in Hong Kong denying Glaucus' allegations, while West China Cement issued an announcement rebutting Glaucus' claims, point by point.
'When people say things about us, I only hope their statement is truthful and objective,' he said. 'West China Cement's growth has been healthy. We have grown rapidly in the two years since we listed in Hong Kong.'
West China executive director Low Po Ling had said Italcementi sent an e-mail on Wednesday saying it would issue a statement of support, but the Italian cement maker has so far refrained from making any comments on the matter.
When West China Cement listed on London's Alternative Investment Market (AIM) in 2006, its production capacity was 1.5 million tonnes, which grew to 10 million tonnes in 2010 when it listed in Hong Kong, Zhang pointed out.
The company has an annual cement production capacity of 23.7 million tonnes, of which 21.1 million tonnes is in Shaanxi and the rest in the Xinjiang Uygur Autonomous Region, according to its website. West China Cement accounted for 30 per cent of Shaanxi's cement production capacity, Zhang said.
West China raised GBP22 million (HK$267 million) from listing on AIM in December 2006. In 2010, it became the first Chinese company to quit AIM and transfer its listing to Hong Kong, where it raised HK$1.4 billion in August 2010.
'The British don't really understand China. Our stock has been severely undervalued in the UK,' Zhang said around the time.
Based on West China Cement's market capitalisation of HK$5.87 billion yesterday, Zhang has a personal wealth of HK$2.25 billion from his 38.37 per cent stake in the company. In 2010, he was ranked 261st among the 400 richest mainland Chinese by Forbes, with an estimated wealth of US$595 million, but was not listed among Forbes' 400 richest mainland Chinese this year.
The 57-year-old had more than 25 years of experience in the cement industry, West China Cement said in its 2011 annual report.
He was the manager of the Second Cement Factory of Hanjing town in Pucheng county, Shaanxi, from 1985 to December 1990, and the manager of another cement factory in Hanjing after that. These two cement factories were the genesis of West China Cement, the annual report said.
Zhang co-founded West China Cement with 13 employees of the company in 1997, when it was called Shaanxi Pucheng Yaobai Special Cement, according to its Hong Kong IPO prospectus.
At that time, the company had just completed its restructuring to a limited liability company from a collective enterprise owned by Hanjing.
The firm subsequently relocated its headquarters from Pucheng to Xian.
In December 2009, Zhang became chairman of the Shaanxi Province Cement Association, the annual report said.
The report said Zhang was a representative of Xian at the 11th Standing Committee of the Shaanxi Provincial People's Congress.