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Official deal between VCW and CCC

12/03/2007 10:53
Vasiliko Cement Works and the Cyprus Cement Company have officially reached an agreement to join forces in the cement market. As we have already announced, VCW will undertake the operations of CCC on the production and distribution of cement. The agreement provides for the issue of 18.2 million shares from Vasiliko to CCC for the undertaking of the latter’s activities and the acquisition of its investments. Based on the closing price of VCW’s share on Friday (€2.78), the agreement has reached €50 million. Sources have noted that the idea belongs to Archbishop Chrysostomos, who represents the interests of the Cyprus Church in Vasiliko.

Via CCC Building Materials Limited, VCW will acquire the direct and indirect stake of CCC in Latouros Quarries Ltd, C.C.C. Aggregates Limited, Athinodorou Beton – Transport Limited, Athinodorou Beton – Estates Limited and Athinodorou Beton Ltd, as well as the direct and indirect stake in ELMENI (Quarries) Limited.

If the EGMs and the supervisory authorities approve the deal, Vasiliko will undertake immediately the activities of CCC cements in Moni, which is expected to close in 4 or 5 years. Its operations will be transferred gradually to the new production line that will be launched in Vasiliko. According to the two companies, “with this, it is expected that the environmental pollution from the operation of the Moni cement factory will be eliminated. As it is already known, this area is currently designated for housing and tourist development”.

The new unit will be able to produce up to 2.4 million tons of cement per annum against 1.7 million today. The Boards of Directors of VCW and CCC are sure that this agreement will contribute to the substantial reduction of the damaging co2 emissions by 40%, an argument that will be used in order to convince the Commission for the Protection of Competition on the advantages of the deal.

The deal must be approved by the Extraordinary General Meetings of VCW and CCC, the supervisory authorities (CSE and SEC) and the Commission for the Protection of Competition.

At the current stage, Vasiliko controls 75% of the cement market and CCC 25%. CCC has also secured a license for the import of cement, which will be transferred to Vasiliko.

Following the disposal of its activities and investments, CCC will become actively involved in the development of 960 donums of seaside land in Moni. According to sources, the land is situated in the tourist and housing zone of the area with a ratio of 30%.

CCC will also have a stake of 25.3% in Vasiliko. Other stakes will be held by the Archbishopric, other major shareholders and the Italian company Italmed. The stake of Leventis Foundation is expected to drop to 5.3%.

The share of CCC recorded sharp gains in the past few weeks, closing at 84 cents on Friday, which is 25% higher than its closing price in early February. Its capitalization has reached €100 million against €150 million of Vasiliko.

According to their indicative results, CCC generated profits of 1.3 million in 2006 against £850 thousand in 2005, while Vasiliko enjoyed profits of £10.7 million compared to £6.9 million in 2005.