Citadel Capital executes $55m partial exit of ASEC Holding

Citadel Capital sold a 6% stake in ASEC Holding and a further 6% in United Foundries to the Emirates International Investment Company (EIIC) in a deal worth $55m. EIIC, a leading regional investor based in Abu Dhabi, is a long-time limited partner in a number of Citadel Capital's OSFs and is a Citadel Capital shareholder.

Ahmed Heikal, Citadel Capital Chairman and Founder, said:

"This move comes in light of the firm's strategic decision to further diversify its already-broad investment footprint to include new sectors such as solid waste management, where we recently finalized the acquisition of two companies that have become the nucleus of our eighteenth Platform Company. As we gently re-balance our investment allocation, it made sense to execute a partial exit of one of our most important Platform Companies in a way that establishes a clear valuation."

The deal values ASEC Holding at LE28.50 per share, which Citadel Capital Managing Director and Co-Founder Hisham El-Khazindar noted, "Is a very fair valuation that reflects the strong growth potential in ASEC Holding as it continues to expand its regional network of cement plants as well as its engineering and construction operations across the Middle East and Africa."

ASEC Holding controls Portfolio Companies including ASEC Cement, ASEC Engineering, ASEC Automation, ARESCO and ESACO.

"This transaction reduces Citadel Capital's holding in both ASEC Holding and United Foundries to 49% from 55%," El-Khazindar continued. "Going below the 50% threshold will allow us to treat both companies as associates and not subsidiaries. This will become an important distinction for our shareholders starting with the release of our 4Q2009 financial results. This move leaves Citadel Capital and its limited partners in full control of both ASEC Holding and United Foundries, but will allow us to show Citadel Capital shareholders a clearer picture of our firm's financials over time."

After the acquisition, EIIC will hold 10.25% of ASEC Holding and 10.25% of United Foundries.

The news comes as ASEC Holding's Portfolio Companies continue to hit important benchmarks.

ASEC Cement, which will control over 12 million tons of cement production capacity per annum by 2013 in five countries spanning from Algeria to Iraq-Kurdistan, is now entering the final phase of operational testing at Takamol, its 1.6 million-tons-per-annum (MTPA) greenfield grey cement plant in Sudan. The Takamol plant should begin operations early in 2010. Earlier this year, the International Finance Corporation invested $24m in ASEC Cement's Djelfa plant in Algeria, which will supply up to 3.6 MTPA to Algeria's fast-growing construction and infrastructure sectors. Construction at Djelfa is now underway, with the first phase set for completion by the end of the first quarter of 2011.

Meanwhile, ASEC Engineering is actively pursuing new contracts to manage cement plants throughout the region. ASEC Engineering currently manages close to 15 MTPA and is a market leader in the field of technical plant management. ESACO, a civil and steel fabrication firm, has won key civil and mechanical erection contracts this year that will see it meet or exceed its already ambitious annual growth targets.

Finally, ARESCO, a turnkey contractor serving the cement, energy, petrochemical, petroleum and general industrial sectors, announced in September 2009 that it has completed construction of a second production line at Sinai Grey Cement's facility in Al-Arish, Sinai. The $140m fast-tracked project was completed on budget in just 25 months, well below the average of 32 months for projects of that kind.

ARESCO is also close to handing over the Takamol cement plant to its owner, ASEC Cement, after commissioning activities are completed.