Cemex Completes Debt Exchange

Investor participation in Cemex’s debt exchange has reached 92.6% of existing exposures as of the September 7 deadline, it says, shy of its self-imposed 95% target but still enough to successfully extend maturities of $7bn in debt due 2014. In the operation, holders could exchange their existing exposures for three classes of new debt due 2017 and new 9.5% bonds due 2018. As the demand for the 2018 bonds exceeded a $500m cap, creditors who elected to receive new notes after the July 19 early deadline will be allocated approximately 54% of the amount they elected to receive, with the balance of their exposures allocated to the other classes involved in the exchange – new 2017 loans paying Libor+525bp, new 2017 USD private placement notes paying 9.66%, and new 2017 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 2018 bonds are callable in 2016 and guaranteed by more than seven Cemex units. Participating creditors receive an exchange fee of 80bp, and a 50bp additional cash fee if the Cemex ADS exceeds $14.50 during the 90 days after April 1, 2015. As part of the proposal announced in June and launched in July, 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 pay-down with asset sales, including minority stakes in Cemex operations in select countries, selected US and European assets and other non-core assets. A plan to raise at least $750m-equivalent through an IPO of its ex-Mexico assets is also in the works. BBVA and Citi are heard having been hired so far to manage the sale, for which the timing is unclear.