Displaying items by tag: Dispute
Is the LafargeHolcim merger doomed?
18 March 2015In the UK there is an expression, coined by former Prime Minister Harold Wilson, that a 'week is a long time in politics.' While the week he was referring to has long since been forgotten, this refrain has since been repeated to the point of cliché by the mainstream media and is often used in the context of rapidly-changing political news stories. Regardless of its origin, this expression could well be used to accurately describe the current situation in France and Switzerland, where the past week has seen a number of serious and unpredictable developments in the preparation of the anticipated LafargeHolcim mega-merger.
Disgruntlement from 'those close to the deal' first surfaced as a 'wild rumour' a few weeks back but, in the past seven days, several of Holcim's shareholders, including the influential Thomas Schmidheiny, have questioned the contribution that can now be made by Lafarge. Holcim shareholders claim that the group has out-performed Lafarge in the 12 months since the deal was announced and they feel that this should be recognised financially. The abandonment of the Euro1.20 cap on the Swiss Franc by the Swiss National Bank (SNB) on 15 January 2015 has loaded the dice even further in Holcim's favour.
This is how the situation has deteriorated in the past seven days. Late last week, we had confirmation that Holcim was seeking to renegotiate the terms of the merger. On Monday we heard what at least part of those terms were, including an assertion that each Lafarge share was now worth just 0.875 of a Holcim share. Lafarge's main shareholders, accepting that their position was compromised to an extent, suggested that each Lafarge share was worth 0.93 of a Holcim share. Since then, it has become apparent that Bruno Lafont, the proposed leader of LafargeHolcim, has also put Holcim in a spin, as he is perceived to have presided over Lafarge's poorer performance.
Then, just yesterday, it was announced that the two current group boards had met separately in an attempt to arrive at new conditions with which to re-start negotiations. Commentators think that Holcim is holding all of the Aces but Lafarge has made it clear that it cannot accept a lower valuation and a CEO from Holcim. Discussions that take place 'in the dark' like this will do little to build confidence between the merging parties and infers that communication has become strained. There are twinges of antagonism in the releases that are not going to be solved by the boards sitting in separate rooms and whipping themselves into a frenzy.
Also caught up in this, like the child of a divorcing couple, is CRH. It only announced its purchase of Holcim and Lafarge divestments in February 2015. It stands to gain a joint Euro158m from Lafarge and Holcim if they fail to merge, but this will not make up for the loss of the many high-quality cement assets it otherwise stands to gain.
What will happen in the coming weeks? You have to be brave to predict how this will turn out, but our LinkedIn Group is a great place to discuss this rapidly-changing story. One thing we can be sure of is that there will be a lot to write about in another seven days. After all, a week is a long time in the cement industry!
Holcim chases Venezuela over missed payment
06 October 2014Venezuela/Switzerland: Holcim Ltd has said that it will continue to pursue a final payment of roughly US$100m from Venezuela after the country's government failed to complete compensation payments related to the nationalisation of the Swiss cement company's operations in the country.
Holcim has already received US$552.5m out of a total of US$650m compensation that it expected following the nationalisation of Holcim Venezuela in 2008.
However, Corporación Socialista Del Cemento, SA, the state-owned company that now operates the former Holcim plants, hasn't transferred a final installment of US$97.5m, according to Holcim. The payment was been due on 10 September 2014.
"Holcim is in contact with the relevant parties in Venezuela to address this situation and, if necessary, will pursue all legal steps to collect the amounts due," said a Holcim statement.
MAM Ramaswamy removed from Chettinad board
03 September 2014India: The succession battle within the Chettinad group of companies has culminated in the removal of chairman MAM Ramaswamy from the board of its flagship enterprise, a position he has held for more than three decades.
A resolution to reappoint Ramaswamy was defeated at the 51st shareholders meeting of the Chettinad Cement Corporation on 27 August 2014. However, Ramaswamy was later named as chairman emeritus by his foster son and managing director MAMR Muthiah, who has taken over the reins.
An official statement from the group said, "In acknowledgement of his contribution at the helm of the company's operations until 1999, the managing director announced that Ramaswamy would be appointed as chairman emeritus for life."
Muthiah, who has powered the group's expansion over the last decade in cement, healthcare and logistics, has instilled a managerial culture that is in sharp contrast to the conservative approach favoured by Ramaswamy. Muthiah has announced that the group would push itself into newer geographies in north India. Currently all of the group's cement assets are located in the south.
Nigeria: Lafarge Cement WAPCO, Ashaka Cement and Unicem have started court action against the Standards Organisation of Nigeria (SON) regarding its plan to limit the application of 32.5 grade cement. The action follows a publication by SON restricting the application of 32.5R grade cement to plastering use only.
"We have instituted a suit against the SON over its recent pronouncement and plan to implement a new mandatory industrial standard order for cement manufacturing, distribution and usage in the country," said the three cement producers at a briefing in Lagos. The producers added that 32.5 grade cement is a widely used multi-purpose product and has 'never' been associated with building collapses.
Boral on a sticky-wicket down under
27 August 2013This week's news that Boral's operations have been disrupted by the Construction, Forestry, Mining and Energy Union (CFMEU) in the Australian state of Victoria highlights an increasingly difficult situation for the company and the Australian cement industry in general.
Boral's worksite at Footscray, near Melbourne, was allegedly blockaded by the CFMEU last week over the union's separate and long-running dispute with site contractor Grocon. The CFMEU wants Boral to stop supplying Grocon sites. Boral says that it has been forced to address the issue at Footscray and two other sites by issuing injunctions against the union. After its first half results announcement last week, which showed a loss of US$192m for the year ending 30 June 2013, this is clearly the last thing that Boral needs to be dealing with.
So far, 2013 has seen mainly trouble for Boral. In January it announced that it would shed 1000 jobs across its global operations, including 885 in its native Australia. In February it announced that the company made a US$25m loss in the half year to 31 December 2012. In March, it restructured by merging production divisions to save additional cash. It also had to suspend production at its Waurn Ponds plant. However, revenues have been rising. Boral is not Titan.
Elsewhere in Australia, Adelaide Brighton announced that its first half 2013 profit fell by 9% year-on-year. It expects no improvement over 2012 in the rest of the year.
With the onset of the carbon tax, cement manufacturing is increasingly expensive in Australia, a fact that is especially difficult when combined with lower demand. China, Indonesia and Vietnam all produce similar quality cement 'nearby' at considerably lower cost, making the long-term future of cement manufacturing in Australia look fragile. Indeed, this is a trend that Australia shares with its antipodean neighbour. In New Zealand, after years of indecision, Holcim recently decided to not build a new cement plant at Weston. A new import terminal is its new preferred strategy. Could Australia, a country with such vast reserves of fuels and minerals, also be gradually heading towards cement import dependency?
Boral hampered by construction union action
27 August 2013Australia: Cement maker Boral is claiming that Construction, Forestry, Mining and Energy Union (CFMEU) officials in Victoria have defied court orders and are blocking it from accessing sites in an attempt to pressure it not to deal with construction firm Grocon. The CFMEU is in a bitter legal dispute with Grocon over its blockade at a different site in 2012.
Boral says that members of the CFMEU parked their cars across the entrance to the Regional Rail Link site in Footscray, near Melbourne, Victoria, stopping the company from making deliveries. In a letter to staff on 22 August 2013, Boral manager Paul Dalton said that the union had 'banned' Boral from accessing sites because it supplied Grocon.
Dalton said that the blocking of delivery trucks by the CFMEU had increased, saying, "At present, we have no fewer than three injunctions from the Supreme Court in Victoria ordering the CFMEU to stop unlawfully interfering in our business."
Saudi Arabia: Since 20 March 2013 the Northern Region Cement Company (NRCC) has been forced to halt production, due to the closure of a road leading to the plant. This has blocked trucks entering the plant for cement collection and has meant that the plant has now been forced to halt production.
The decision to close the road leading to the plant was taken by a committee drawn up from representatives from the Governorate of Northern Border, the Ministry of Transportation and the Department of the Police in the area, following NRCC's 'failure' to construct an upper bridge road connecting the plant with a nearby international highway.
NRCC was required to construct the bridge road by the authorities in order to safeguard the lives of the people driving in the area. However, an NRCC official said that it cannot be constructed as it would cost US$4.8m, an amount that requires approval through a meeting of the company's general assembly. Additionally, the official called for the formation of a committee to inspect the roads around the plant as he believes that the present road layout poses no danger to road users. He added that the local market would start to feel the effects of the plant shutdown 'very soon.'
UltraTech shuts Awarpur cement plant due to unrest
06 March 2013India: UltraTech Cement announced on 1 March 2013 that it had temporarily shut down its 3.6Mt/yr Awarpur plant in Maharashtra due to workers' unrest. UltraTech reinforced that the closure would not substantially effect the company's financial performance.
Merger threat to Lagan boss
31 January 2013Ireland/UK: The Irish Times has reported that a rifle bullet was sent to the chief executive of the Ireland-based Lagan Group, Kevin Lagan, during the third week of January 2013 in what is thought to be a direct threat linked to Lagan's proposed merger with part of the Quinn Group, which is based in Northern Ireland in the UK.
The rifle bullet was contained within a cigar box, which had, 'Quinn...is this what you want?' written on it. It had apparently been sent from Northern Ireland.
Lagan said he was 'totally amazed' by the package. He said the group's proposed merger with Quinn Building Products posed no threat to jobs. "In fact it secures the future of both Quinn and ourselves going forward," he said. "This is clearly an attempt to intimidate myself and the Lagan Group at a time when we are engaged in discussions with Quinn on combining our cement and building products businesses."
Lagan said that the person or persons behind the 'crude intimidatory tactic' were obviously not interested in protecting jobs. "We will not be swayed from our determination to complete our discussions successfully," he added.
Seán Quinn lost control of the Quinn Group in April 2011 when a receiver was appointed by the former Anglo Irish Bank. There have since been a number of incidents believed to have been carried out by people angry about what has happened.
Commission hits back over Lafarge accusations
03 August 2012South Africa/Pakistan: Pakistan's Trade Commission in South Africa has defended products made by a Pakistani cement company, Lucky Cement, saying that they meet all quality standards in South Africa. The move follows accusations from senior figures within Lafarge's South African unit. The Commission also pointed out that the products were cheaper than established South African-manufactured products.
Lafarge had earlier said that it was considering approaching the International Trade Administration Commission of South Africa to protect the local market from what it deemed to be low-quality, cheap cement from Pakistan.