Elkem Company Overview and Financials
Risk factors (VIII/VIII)
2.2
Risks related to the Shares
2.2.1
China National Chemical Corporation has significant voting power
China National Chemical Corporation ("Chem China"), through its subsidiary, Bluestar Elkem International Co.Ltd S.A ("Bluestar"), control more than 50% of the Shares. Accordingly, Bluestar has significant ownership and voting power in Elkem, and is able to exercise significant influence over the general meeting and
have influence over, inter alia, the decision to declare distribution of dividends. This concentration of ownership may not be in the best interest of Elkem's other shareholders as the interest of Bluestar may not always coincide with the interests of other shareholders, and other investors may not agree with the manner in
which Bluestar acts. Additionally, 3 of the Board Members, Zhigang Haoand Yougen Ge are employed by the Bluestar. By being employed by the Bluestar, Zhigang Hao and Yougen Ge have fiduciary duties to Bluestar that may conflict with Elkem's interests.
A significant reduction in ChemChina's or Bluestar's shareholding could lead to Elkem losing future the business opportunities that it previously enjoyed because its business partners took into consideration other business opportunities relating to ChemChina or Bluestar when they entered into business relations with
Elkem. Such a reduction in ownership may result in ChemChina or Bluestar being less supportive of Elkem and its strategic goals, particularly in relation to China. In addition, sale of a substantial amount of the Shares by Bluestar may adversely affect the market price of the Shares. Loss of business and/or a decline in
support from Elkem's largest shareholders may have a material adverse impact on Elkem's business, financial condition and results of operations. Prospective investors should also note that the Chinese government has approved a merger of the Sinochem group and ChemChina group. There can be no guarantee that
the merger will be completed, or completed successfully, and the potential impact on Elkem resulting from the merger is unclear as of the date of this presentation.
2.2.2
The price of the Shares could fluctuate significantly
The trading volume and price of the Shares could fluctuate significantly and the market price of the Shares may decline such that the Shares trade at prices significantly below the Offer Price. Securities markets in general have been volatile in the past. Some of the factors that could negatively affect the Share price or
result in fluctuations in the price or trading volume of the Shares include, for example, changes in the Group's actual or projected results of operations or those of its competitors, changes in earnings projections or failure to meet investors' and analysts' earnings expectations, investors' evaluations of the success and
effects of the strategy described in this Prospectus, as well as the evaluation of the related risks, changes in general economic conditions or the equities markets generally, changes in the industries in which the Group operates, changes in shareholders and other factors. This volatility has had a significant impact on the
market price of securities issued by many companies. Those changes may occur without regard to the operating performance of these companies. The price of the Shares may therefore fluctuate based upon factors that have little or nothing to do with the Group, and these fluctuations may materially affect the price of the
Shares.
2.2.3
Future issuances of Shares or other securities could dilute the holdings of shareholders and could materially affect the price of the Shares
The Company may in the future decide to offer additional Shares or other securities in order to finance new capital- intensive projects, in connection with unanticipated liabilities or expenses or for any other purposes. Depending on the structure of any future offering, certain existing shareholders may not have the ability
to purchase additional equity securities. Accordingly, the shareholders bear the risk of any future offerings reducing the market price of the Shares and/or diluting their shareholdings in the Company.
Elkem
40
46View entire presentation