Key components of CEMEX´s refinancing program are now in place
June 26, 1996
CEMEX, S.A. de C.V. announced today that it had reached an agreement on a US$850 million syndicated loan facility in Spain, thereby significantly advancing its short and medium-term refinancing program. On June 17, 1996, the Company launched a tender offer to purchase its outstanding US$1 billion 8 and 7/8% notes due June 10, 1998, which will be financed through the issuance of two series of long-term debt securities in July. In addition, CEMEX announced that Sunbelt Corporation, which owns its U.S. properties, agreed on a US$125 million five-year senior term syndicated loan. With these three initiatives, the key components of the Company´s refinancing program are now in place.
The syndicated loan will not increase CEMEX´s overall indebtedness and will refinance the credit facilities of Valenciana de Cementos and will be used to acquire certain assets owned by CEMEX. It will be underwritten by a syndicate of international banks and will enable CEMEX to borrow at attractive investment grade rates while extending the average maturity of its liabilities. The facility represents the largest bank facility to a private sector company in Spain. The Sunbelt loan will be used to refinance CEMEX debt as well as for general corporate purposes.
CEMEX also announced today that it is no longer considering issuing US$340 million of Ordinary Participation Certificates. The Company reached its decision after concluding that, given conditions in the equity market, its current share price does not fairly reflect the inherent value of the Company.
In announcing the reconsideration of the equity issue, CEMEX´s Chairman, Lorenzo H. Zambrano stated, "I am excited about the long-term growth prospects for CEMEX. These have only been enhanced by our recent acquisition in Colombia of Diamante and our agreement to acquire Samper. Given that operating cashflow has grown over 20% annually over the past five years, the current price for CEMEX shares in no way reflects the true value of the Company. Both as Chairman, and as a significant shareholder in CEMEX, I believe it is not in the best interest of our shareholders to proceed with an offering at this price."
Gustavo Caballero, CEMEX´s Chief Financial Officer, went on to state, "We have received a very positive reaction from our bondholders to the lengthening of the average maturity of our debt profile, as a consequence of the syndicated loan and the refinancing of the Jumbo facility. With these actions, CEMEX will complete its near and medium-term refinancing goals. We are committed to maintaining a strong and sensible financial structure, and the successful completion of these transactions will provide the Company with added financial flexibility."