New Milestone in CKI's
Infrastructure Materials Business
GIC Acquires Canadian Asphalt Company
2 March, 2000 -- Hong Kong
Cheung Kong Infrastructure Holdings Ltd (CKI) announced today that its wholly owned subsidiary, Green Island Cement (Holdings) Ltd (GIC), has acquired a Canadian listed asphalt company ¡X Polyphalt Inc (ticker: PLYF). This follows close on the heels of earlier announcements confirming the company's investment in the Panyu Bridge, the completion of the acquisition of ETSA Utilities in Southern Australia, and the formation of an alliance with Japan's Itochu Corporation for the bidding of the LNG project in Guangdong. As such, in the true spirit of CKI's ambitious globalisation and diversification plans, all three core businesses of CKI, in transportation, energy and infrastructure materials, have each made marked progress early on in the new Millennium.
Green Island Cement (Holdings) Ltd, a wholly owned subsidiary of Cheung Kong Infrastructure Holdings Ltd, has signed a letter of intent earlier in the month with Canadian-based Polyphalt Inc (Polyphalt) for the acquisition of 21,750,000 common shares of Polyphalt issued by way of private placement at the price of C$0.46 per share; with total investment being C$10 million (about HK$53.6 million). The agreement was signed yesterday, and following approval of the acquisition in a special meeting of Polyphalt's shareholders scheduled to take place on March 22, GIC will have a controlling stake in Polyphalt amounting to approximately 65% of the then currently issued shares. Following news of a possible acquisition early last month, the closing price of Polyphalt rose to C$1.10/share yesterday (March 1, 2000), a 52-week record high.
Polyphalt Inc., a Canadian-based technology company, was formed in 1992 to develop and commercialize novel polymer modified asphalt products and technology. The Company already has a portfolio of nine proprietary processes for polymer modified asphalts (PMAs), which has received wide acclaim around the world; and an international network of eight licenses using Polyphalt's processes in Canada, United States, Australia and Northern Europe.
Asphalt is one of the most widely used and basic construction materials, with over 100 million tons produced annually worldwide, equivalent to a total value of approximately US$15 billion. Polyphalt's advanced proprietary processes combine blends of plastics and rubbers, including recycled materials, in asphalt to produce durable, high performance materials capable of withstanding a high volume of traffic, high load and extreme climatic and service conditions. Polyphalt's asphalt is widely used as paving materials for roads, highways, racetracks and airport runways as well as for roofing and building materials. It is also used in the production of other industrial products.
GIC's acquisition of Polyphalt creates a 3-win situation for all three parties involved. For a start, Polyphalt would not only be able to utilize the sizeable proceeds from the financing to enhance the company's research and development activities in new pellet process and other specialty asphalt products, the deal would also give Polyphalt a foothold in the vast China market through CKI's network in the Mainland. Market response for this acquisition has been very favorable as reflected by the sharp increase of the share price in the past one month.
As for GIC, recognized as the leader in Hong Kong's infrastructure materials market, the acquisition of Polyphalt, itself a premier asphalt technology company, would not only complete their existing range of products; more importantly, both companies are dedicated to the development of environmental technology and have made significant progress in turning waste into cost effective raw materials. With the combined efforts of the two companies, it is anticipated that further contributions will be made in the advancement of the technology in waste handling.
To CKI, the acquisition marks a breakthrough in its business of infrastructure materials, and creates good synergy with its transportation infrastructure businesses. Road surfaces paved with polymer modified asphalts could prolong their usage and reduce the cost of maintenance, and would greatly benefit the transportation infrastructure projects of the Group.
Green Island Cement (Holdings) Limited is a wholly owned subsidiary of Cheung Kong Infrastructure Holdings Limited, and has a fast claim as the leading supplier of cement in Hong Kong with a market share of 36% in 1998. The company is also the supplier of cement to various principal projects in Guangdong Province. In the Asia Pacific Economic Council (APEC) held in 1999, the company was presented a newly established Environmental Award due to its long-term strategy in turning potentially hazardous waste into cost effective raw materials and fuel.
Cheung Kong Infrastructure Holdings Limited is a constituent
stock of the Hang Seng Index. It is the largest diversified
infrastructure company listed in Hong Kong in terms of market
captalization, with investments spanning the Mainland, Hong
Kong, the Phillippines and Australia.