Cemex Seen Mortgaging GCC Stake

Cemex’s grip on Grupo Cementos Chihuahua (GCC), in which it holds around 46%, is loosening fast as the debt-laden company grasps at near-term liquidity to stave off default. Analysts point to Cemex’s GCC stake as a prime asset to be sold, and there are rumors locally that Cemex has pledged the stake to obtain financing. “The way the government has operated in the past is the following: if it were to extend some kind short-term bridge financing to a company, they might take some assets as collateral,” says Anne Milne, corporate debt strategist at Deutsche Bank. She points to a case in November where Vitro received a $100m loan from a government development bank after pledging real estate assets to a trust. Gerardo Rodriguez, head of public credit, told LatinFinance in late March that Mexico was looking at various ways to support Cemex, including having development banks extend short-term loans backed by contracts or flows. The official was not immediately available for an updated comment on loans to Cemex backed by equity stakes. GCC, which has a market cap of $695m, according to Economatica, is seen as a valuable asset for Cemex, as it is the company’s most significant minority stake in a Mexican entity, according to Citi. Citi analyst Stephen Trent pegs the stake’s value at around $320m at the end of December and notes that selling minority stakes would not hurt Cemex Ebitda. Asset sales – which have for months been at the top of Cemex’s debt resolution agenda – have so far failed to generate any significant new cash for the company, say its lenders. Buyers are said to be hesitant to lever up for new acquisitions, and some bankers say Cemex has shown little interest in selling quality holdings that might draw a real bid. Instead, the troubled cement maker is placing several smaller ticket and lower priority assets on the block. Cemex controls around half of the Mexican cement market. A New York-based analyst says the government may be interested in seeing Cemex’s i