Sims Buys Minority Stake in Chiho-Tiande Group

CTG, a Hong Kong-based recycler, says it is China's largest importer of mixed scrap metal.


Sims Metal Management Ltd. (SMM), New York, has made a significant minority investment in Chiho-Tiande Group Ltd. (CTG), a Hong Kong-based recycler with operations in China and Hong Kong.

CTG, which says it is the largest mixed scrap metal importer in China, has processing facilities in Taizhou and Ningbo. The company operates three core businesses: a metal recycling business, a foundry business and wholesale Chiho-Tiande's Hong Kong headquarters.scrap metal brokerage business. Additionally, the company has expanded into domestic ferrous and nonferrous scrap metal recycling in Shanghai and recently announced expansion plans to its facilities in Yantai and Hong Kong with regard to metals and electronics recycling.

According to a news release, SMM has acquired 16 percent of the existing shares of CTG from founder and Chairman Ankong Fang and Delco Participation B.V. (Delco), a Netherlands-based scrap metal company. Further, Delco has granted an option to SMM to acquire another 2 percent of CTG. In addition, subject to approval by CTG’s independent shareholders, SMM will subscribe for a convertible bond and be issued warrants.

After all instruments are exercised or converted, SMM expects to hold 20 percent of the capital of CTG. In order to support the continued growth plans of the company, Fang and Delco will reinvest two-thirds of the proceeds received from SMM into convertible bonds issued by CTG on the same terms as SMM.

Daniel Dienst, SMM’s group CEO says, “After several years of earnest evaluation of opportunities to enter the physical recycling arena on Mainland China and in Hong Kong, we have identified CTG as among the most exciting and attractive companies that will define and shape the nascent Chinese recycling landscape. Through our investment and partnership, we are validating not only CTG’s extraordinary growth prospects under the vision of Chairman Fang and his leadership team but, as importantly, the shared cultures of our two companies manifested in unwavering commitments to creation of long-term shareholder wealth, the safety of our valued employees and the health of the environment and communities in which we operate and locate. CTG, as a long-standing trusted and honorable trading partner of SMM, made this investment decision that much more compelling.”

Fang says, “As the largest mixed metal scrap importer and processor in China, we are always exploring opportunities to grow, both within China and worldwide. SMM has been one of our major suppliers for a number of years, and, given SMM’s global reach and customer network, advanced technologies and solutions in the metals and electronics recycling industry, the proposed strategic collaboration with SMM will add significant value and expertise and complements our group.

“I believe that SMM, the industry leader, becoming a significant minority shareholder, shows a strong recognition of our group’s competitiveness and achievements,” Fang continues. “I look forward to continuing to lead our company and the opportunity to work with a world-class management team under the leadership of Daniel Dienst and particularly Michael Lion, who will become a member of our board upon the successful completion of the transaction.”

Michael Lion, chairman of SMM Asia Ltd. and SMM’s nominee to the CTG board, says, “The complementary expertise of SMM’s global trading reach, material recovery technology and rigorous controls married to CTG’s exceptional leadership and fast-growing presence in the China and Hong Kong recycling space provides a transformational platform for our partnership. As the domestically generated volumes of recyclable nonferrous and ferrous metals and electronics continues to grow, SMM’s and CTG’s shared vision of building a leading best-practices position in China together is an extraordinary and exciting opportunity. I am honored to be designated to serve.”

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