Banks Push Back on Cemex Refi

Cemex, which sought to wrap up a restructuring of around $5bn in short term loan maturities in December, is hoping for more commitment letters from lenders and may take several weeks to close the process, say people close to the company. Syndications officials away from Cemex’s lead group say banks would have been keener to participate if the company had offered a juicier return, and cite this as a likely cause for delay. Still, the Mexican cement maker – until last year one of the bank market’s favorite clients – has had some success in securing commitments to extend a substantial part of its loans, which include a $3bn portion of its Rinker acquisition facility and several bilaterals. For the Rinker deal, of which $3bn matures in December 2009, Cemex says it received commitments worth $1.5bn to extend until December 2010. It had been targeting $1.5bn-$2.0bn and Cemex offered lenders an amendment fee of 50bp to permit the extension. For those who agreed to participate, an additional commitment fee of 60bp was added to the 45bp margin the deal already offered. In total, that brought the 2009 return on the facility to 155bp. The all in payment for 2010 steps up to 200bp, according to bankers on the transaction, though company officials claim the figure is marginally lower. Cemex also wants to refinance $2.7bn in bilats – $900m in Cemex holdco loans and $1.8bn at Cemex Espana – and has secured $2.2bn in commitments for extension. Rates on the bilaterals are heard being bumped up to 200bp-300bp. Prior to the refinance, Cemex’s run rate on all loans stood at around 30bp-50bp over Libor through last year, according to company officials. In Q1 2008, Cemex’s Ebitda jumped to 3.7x from 1.2x a year prior, which coincided with a downturn in the company’s revenues as the real estate and construction sectors softened. In 2007, it paid $14bn for Rinker. Cemex aims to close the refinance by the end of February. BBVA, Citi, HSBC, RBS and Santander are leading the deal.