Cemex Fails to Allay Debt Concerns

Cemex CEO Lorenzo Zambrano spoke to the press and shareholders Thursday, but the vagueness of his remarks regarding a resolution with bank lenders leaves analysts uneasy. “I think [the market] was expecting something more about the debt talks,” says Actinver head of equity research Francisco Suarez, who says he shares the market’s apparent slight disappointment. Cemex shares fell 1.5% to MXP10.16 Thursday, despite a broader IPC rally. Still, Zambrano’s comment that a near-term resolution with regards to immediate maturities is in the cards gives hope that Cemex has gained breathing room to continue renegotiating. “It’s not very clear [what is happening with the] banks, but the positive part is that they were able to roll over short-term maturities and are working on a broader structure,” notes Patricio Rivera, analyst at Ixe. While Zambrano told reporters in a press conference that Cemex would seek to continue growing through acquisitions, dismissing the suggestion it would have to stop these in the next several years, analysts are skeptical. “I see Cemex having to work a lot for creditors and very little for shareholders in next 2 years,” says Suarez. “I believe this model of theirs to grow inorganically will have to change,” he adds, noting that after downgrades, Cemex’s cost of funding is much higher than competitors like Lafarge, which managed to keep its investment grade status. Zambrano also notes the company’s plan to issue some $200m worth of local shares in late May in lieu of paying dividends.