AECI rises 2.1% as it receives R1bn land sale payment guarantee

Posted On Wednesday, 06 November 2013 14:09 Published by eProp Commercial Property News
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AECI shares close near record high‚ after announcing it has received a payment guarantee for the sale of land to Shanghai Zendai Property.

Mark DytorChemicals and explosives company AECI Group’s (AFE) shares closed 2.1% higher at R123.50 on Tuesday‚ just R3 shy of its record high‚ taking the total gain to 67% since November 2012 after it announced it had received a payment guarantee for the sale of land to Shanghai Zendai Property.
AECI received a payment guarantee of the R1bn purchase price from the Bank of China’s South African branch‚ CEO Mark Dytor said.
The Modderfontein bulk land acquired by the Hong Kong-listed property developer this week can be developed at a cost of R77bn over the next decade as it is situated in the strategically key development corridor between SA’s financial capital of Sandton and the continent’s busiest airport.
Shanghai Zendai agreed to buy the 1‚600ha piece of land from AECI on Monday for R1bn. The property is situated on land previously approved for spatial development by the local authority.
In a joint statement with Shenghai Zendai yesterday‚ AECI said that implementation of the previously approved development plan for the land would cost about R77bn‚ providing bulk infrastructure to service industrial‚ commercial and retail customers.
Citing a study conducted on its behalf by the Stellenbosch University’s Bureau of Economic Research‚ the parties said the land also had the capacity to accommodate 33‚000 houses to be built over 15 years.
Shenghai Zendai said that through the acquisition it was making a long-term commitment to SA. It may also use the acquisition as a launch pad to expand operations in the rest of Africa.
“We’re looking forward to being part of Africa’s emerging success story for many years to come‚” said Dai Zhikang‚ the company’s chairman and 38.7% shareholder.
Shanghai Zendai has a market capitalisation of the equivalent of $290m (R2.9bn) on the Hong Kong Stock Exchange.
The company manages and has developed property‚ including hotels and shopping malls‚ in 12 Chinese cities and in New Zealand.
AECI has been trying to sell the land for nearly two years‚ saying it has become surplus to its operational requirements. The company considered listing its property arm separately or unbundling it to investors.
In the end‚ Shanghai Zendai’s acquisition of the land was considered a better deal for AECI shareholders.
Last modified on Wednesday, 06 November 2013 19:39

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