GUANGZHOU Investment, the listed flagship of the Guangzhou municipal government-controlled Yue Xiu Enterprises, is acquiring 51 per cent of Zhujiang Cement Plant in Guangzhou for US$51 million. The investment marks a diversification from Guangzhou Investment's core business of property development only four months after it was listed on the Hongkong stock exchange. The cement plant, established in 1988, is wholly owned by Guangzhou International Trust and Investment Corp, a financial institution of the Guangzhou municipal government. The sale of a controlling stake to Guangzhou Investment is conditional upon the cement plant being converted into a Sino-foreign joint venture, with approval from Chinese authorities. Guangzhou Investment is to pay the renminbi equivalent of US$17.72 million towards the registered capital of the plant, with the balance payable as an interest-free shareholder's loan. The company will finance the purchase through bank borrowing or an unsecured loan from Yue Xiu Finance, a major shareholder in Guangzhou Investment. Guangzhou Investment said it had ''discovered the investment opportunity'' in early March. The stake would give the company access to Guangdong's growing cement production industry. It said products made by Zhujiang Cement Plant were in keen demand in the province. The venture would enable Guangzhou Investment to secure a supply of cement for its properties. Guangzhou Investment has interests in seven property developments in Hongkong and Guangzhou and three properties in Guangzhou that are being held for future development. Upon converting into a Sino-foreign joint venture, the cement firm will have registered capital of 278 million yuan (about HK$377 million at official rates) and interest-free shareholders' loans of 522 million yuan. The cement plant has production capacity of about 1.2 million tonnes a year. For last year, the plant's turnover was 252.2 million yuan and its operating profit, before exchange loss and interest expenses of 102.8 million yuan, was 69.5 million yuan, based on unaudited accounts prepared to Chinese accounting standards.
