Cemex Outlines Debt Proposal

Cemex has unveiled the terms of an offer to creditors to extend the maturity of $7bn in debt to 2017 from 2014, it says. The Mexican cement maker is offering lenders an exchange of their current exposure into one or more of new 9.5% 2018 bonds, new loans paying Libor+525bp, new USD private placement notes paying 9.66%, or new yen-denominated private placement notes paying 7.735%. The interest rates on the loans and private placement notes reduce over time based on prepayment targets. The proposed 2018 bonds are capped at $500m, callable in 2016 and guaranteed by more than 7 Cemex units. Participating creditors receive an exchange fee of 80bp, and a 50bp additional cash fee if the Cemex ADS exceeds US$14.50 during the 90 days after April 1, 2015. As part of the new proposal, Cemex plans to make a $1bn paydown in 2013. If it misses the payment, the debt maturity reverts to 2014. It expects to fund the paydown with asset sales, including minority stakes in Cemex operations in select countries, selected US and European assets and other non-core assets. After the paydown, the remaining debt amortizes $500m in February 2014 and $250m each in June and December 2016. As for the covenants, Cemex must maintain a consolidated leverage ratio under 7.00x through December 2013, reducing to 4.25% by December 2016, and consolidated coverage ratio above 1.50x through June 2014, increasing to 2.25x by December 2016. “The new covenants are less strict and, in our view, should not cause any investor concern going forward,” Barclays says in a report. At least 60 lenders holding debt from the $14bn 2009 financing agreement have met with the Mexican cement maker in New York or are scheduled to meet with the company today in Madrid. The offer is open for 30 days, and must get acceptance from creditors representing at least 95% of existing exposures.