Cemex Propositions Banks

Cemex has unveiled its long awaited restructuring proposal at meetings with lenders yesterday in New York and Madrid. Details on the new structure are being kept under tight wraps, but bank market participants say initial impressions are that it is a reasonable offer, albeit at pricing that is still below market. The proposal was heavily negotiated between the company and its lead banks over the past months. The main features involve an extension of maturities through one or more new facilities, and a commensurate increase in margins. One banker overseeing Cemex facilities with new tenors ranging from 5-7 years estimates updated pricing could stand at around 400bp over Libor. The proposal is far from ideal for creditors and it remains to be seen how smaller lenders, of which there are more than 50 in total, will respond. Market participants will also want an update on the loan restructuring, especially since Cemex said earlier this year that it had extended all of its H1 2009 maturities until June 30. After beginning its most recent round of restructuring discussions more than 3 months ago, Cemex has provided virtually no information. It is clear that it will need much more time to wrap up the restructuring, despite hopes from many investors for a H1 resolution. One executive involved in the process says it could take another month or more, assuming banks are generally in agreement with the proposal. Cemex will also file a 20-F form with the SEC today, detailing the major events and financials of the past year. That could also provide insights into the state of the company. Earlier this month, Cemex was able to divest some Australian assets to Holcim for $1.6bn, which was viewed as a debtor-friendly move by equity analysts. Cemex also obtained a MXP5bn working capital line from Banobras, along with other similar facilities from Nafin and Bancomext. Most of the funding it has accessed from the government has been backed by its assets. The leading Cemex lenders includ