Cascal NV acquires majority stake in Zhumadian China Water Company

Thu. July 24, 2008; Posted: 05:55 AM

Jul 24, 2008 (M2 EQUITYBITES via COMTEX) -- HOO | Quote | Chart | News | PowerRating -- Cascal NV (NYSE: HOO), a provider of water and wastewater services to 4m customers, said on 23 July that the company's China Water subsidiary has acquired a 51% equity stake in a joint venture company (Zhumadian China Water Company) in Zhumadian City, China for a purchase consideration of approximately USD18m. Zhumadian China Water Company, a partnership between Cascal and the Zhumadian Bangye Water Group, has reportedly received its business license from the Zhumadian municipal government on 19 June 2008 and has formally commenced operations with immediate effect. The existing water infrastructure was transferred to the new joint venture company. Zhumadian China Water Company, over the next 18 months, will invest an estimated USD25m to complete the construction of an additional 26 million gallons per day water treatment plant and the associated infrastructure, representing a total investment of USD42m. Cascal, over the initial period of three years, anticipates Zhumadian China Water Company to generate revenues from approximately USD6m to approximately USD13m, and EBITDA margins improving from slightly below 50% to approximately 60%. Reportedly, Cascal's China Water subsidiary currently operates long-term projects in Fuzhou, Yanjiao, Xinmin, Qitaihe, Yancheng and now Zhumadian, providing water services to more than 1.5 million residents.

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