Shanshui feud a major distraction from recovering cement sector opportunities
The long-running battle for control of China Shanshui means it may miss out on a construction boom sparked by development of Xiongan New Area
A tussle that began as early as 2014 took a turn for the worse last week, deteriorating into open confrontation involving hired thugs, the use of smoke bombs, pepper spray and water cannons, according to video clips circulated online.
The latest flash point is between management led by Mi Jingtian (宓敬田) and Shanshui’s board under its new controlling shareholder Tianrui Group.
Mi, who was picked by the Tianrui-led board in late 2015 to run Shanshui after a hostile takeover and ouster of the cement maker’s founder Zhang Caikui, has turned against his board.
At issue is a September 2016 plan by Shanshui’s new board to sell shares to institutional investors at HK$0.50 per share, a 92 per cent discount to the company’s last traded price.
The stock sale would raise only a modest sum compared to its huge overdue loans. While it would restore the minimum 25 per cent required public shareholding of the firm, it would dilute the stakes of all existing shareholders, with the 25 per cent held by the Shanshui management and employees cut to 19.6 per cent.