LatinFinance - January/February 2013 - 44

____________________________________

Corporate Liability
Management
Cemex $7bn Debt Exchange

____________________________________

C

emex’s $7.2 billion maturity payment
due in 2014 was always going to be
difficult to meet, even in the best of times
for the global construction industry.
But the three years since the $15 billion
restructuring that saved Cemex’s life have
been among the toughest ever for the
sector.

enable them to issue equity in the future.”
Following five months of intense
negotiations the Mexican cement maker
met at least 55 lenders – including the
main bank group of BBVA, BNP Paribas,
Bank of America Merrill Lynch, Citi,
HSBC, JP Morgan, RBS and Santander –
who held debt from the 2009 financing
agreement.
Working in Cemex’s favor was the fact
that it wasn’t asking for a haircut, and was
dealing with the problem in a proactive
way two years before the due date.
In an ambitious move, Cemex targeted
acceptance from creditors representing
at least 95% of existing exposures. This
was a higher-than-needed goal that would

González: seeking flexibility
To head off another disaster, Cemex
would again have to sell creditors on
the soundness of its post-crisis recovery
efforts and convince the markets to give it
more time. The result was the extension
of $6.6 billion in debt, giving the company
breathing room as it sells assets and raises
equity.
“This was an extremely important
transaction for Cemex as the majority of
its debt was bank debt maturing in 2014,”
says Mario Espinosa, co-head of LatAm
DCM at Citi. “Cemex needed to refinance
to continue with its liability management
program on the rest of their debt and
improve its stock price, which would

44 LatinFinance

DOTY stories-Final.indd 44

send a strong message to the markets and
set a positive tone on further restructuring
efforts. In the operation, holders could
exchange their existing exposures for
three classes of debt due 2017 and new
9.5% bonds due 2018.
As demand for the 2018 bonds
exceeded a $500 million cap, creditors
that wanted to receive new notes after
the early deadline would be allocated
approximately 54% of the amount they
elected to receive, with the balance of
their exposures allocated to the other
classes involved in the exchange – new
2017 loans paying Libor plus 525 basis
points, new 2017 dollar private placement

notes paying 9.66%, and new 2017 yendenominated private placement notes
paying 7.735%.
In the end, participation hit 92.7%,
just shy of the target. Creditors agreed
to extinguish their existing loans and
private placement notes in return for
approximately $6.12 billion in new loans,
new private placement notes, and $500
million of new 9.5% senior secured notes
due 2018. Approximately $525 million in
loans and dollar private placement notes
remain outstanding with the original
2014 maturity.
The move bought another three years’
breathing space for the Mexican cement
maker, until 2017. Given expectations
that the construction sector will recover,
this would allow the company either to
repay its loans or refinance them under
easier terms.
Cemex also agreed to make a $1 billion
payment in 2013. If it misses the payment,
the debt maturity reverts to 2014.
“The bankers understood that we
needed the flexibility to deal with our
market debt,” says Fernando González,
CFO at Cemex. “At the end of 2011, the
markets’ perception was much more
negative. The markets are more optimistic
now. It has worked and exceeded our own
expectations.”
The market further applauded Cemex’s
prudent debt management with a strong
reception to a new 2022 bond in October.
The $1.5 billion sale drew $7 billion in
orders, and brought Cemex back to singledigit yields in the 10-year space.
The final leg in the operation came in
November, with the carve-out of 27% of
Cemex’s non-Mexican LatAm assets. The
Colombian IPO of Cemex Latam Holdings
raised 2.09 trillion pesos ($1.15 billion),
attracting three times demand and placing
85% with international buyers.
“Basically this was the largest IPO in
Colombia after Ecopetrol with a majority
of foreign investor participation,” says
Carlos Jacks, chief executive of Cemex
Latam Holdings.

UPDATE

>

For daily news of local market transactions,
see www.latinfinance.com

January/February 2013

1/9/13 12:08 PM


http://www.latinfinance.com

LatinFinance - January/February 2013

Table of Contents for the Digital Edition of LatinFinance - January/February 2013

Latin Finance - January/February 2013
Contents
Remaking of a nation
Moving the market
Full court press
Andean push
Cleaning up
Best in class
Building up
Filling the void
‘Seize the opportunity’
LatinFinance - January/February 2013 - Latin Finance - January/February 2013
LatinFinance - January/February 2013 - Cover2
LatinFinance - January/February 2013 - 1
LatinFinance - January/February 2013 - Contents
LatinFinance - January/February 2013 - 3
LatinFinance - January/February 2013 - 4
LatinFinance - January/February 2013 - 5
LatinFinance - January/February 2013 - 6
LatinFinance - January/February 2013 - 7
LatinFinance - January/February 2013 - 8
LatinFinance - January/February 2013 - 9
LatinFinance - January/February 2013 - 10
LatinFinance - January/February 2013 - 11
LatinFinance - January/February 2013 - 12
LatinFinance - January/February 2013 - 13
LatinFinance - January/February 2013 - 14
LatinFinance - January/February 2013 - 15
LatinFinance - January/February 2013 - Remaking of a nation
LatinFinance - January/February 2013 - 17
LatinFinance - January/February 2013 - 18
LatinFinance - January/February 2013 - 19
LatinFinance - January/February 2013 - 20
LatinFinance - January/February 2013 - 21
LatinFinance - January/February 2013 - 22
LatinFinance - January/February 2013 - 23
LatinFinance - January/February 2013 - Moving the market
LatinFinance - January/February 2013 - 25
LatinFinance - January/February 2013 - Full court press
LatinFinance - January/February 2013 - 27
LatinFinance - January/February 2013 - 28
LatinFinance - January/February 2013 - Andean push
LatinFinance - January/February 2013 - 30
LatinFinance - January/February 2013 - 31
LatinFinance - January/February 2013 - Cleaning up
LatinFinance - January/February 2013 - 33
LatinFinance - January/February 2013 - 34
LatinFinance - January/February 2013 - 35
LatinFinance - January/February 2013 - Best in class
LatinFinance - January/February 2013 - 37
LatinFinance - January/February 2013 - 38
LatinFinance - January/February 2013 - 39
LatinFinance - January/February 2013 - 40
LatinFinance - January/February 2013 - 41
LatinFinance - January/February 2013 - 42
LatinFinance - January/February 2013 - 43
LatinFinance - January/February 2013 - 44
LatinFinance - January/February 2013 - 45
LatinFinance - January/February 2013 - 46
LatinFinance - January/February 2013 - 47
LatinFinance - January/February 2013 - 48
LatinFinance - January/February 2013 - 49
LatinFinance - January/February 2013 - 50
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LatinFinance - January/February 2013 - 55
LatinFinance - January/February 2013 - 56
LatinFinance - January/February 2013 - 57
LatinFinance - January/February 2013 - 58
LatinFinance - January/February 2013 - 59
LatinFinance - January/February 2013 - 60
LatinFinance - January/February 2013 - 61
LatinFinance - January/February 2013 - 62
LatinFinance - January/February 2013 - 63
LatinFinance - January/February 2013 - Building up
LatinFinance - January/February 2013 - 65
LatinFinance - January/February 2013 - 66
LatinFinance - January/February 2013 - 67
LatinFinance - January/February 2013 - Filling the void
LatinFinance - January/February 2013 - 69
LatinFinance - January/February 2013 - 70
LatinFinance - January/February 2013 - 71
LatinFinance - January/February 2013 - ‘Seize the opportunity’
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LatinFinance - January/February 2013 - Cover4
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