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Cemex, the Mexican cement producer, said on Tuesday that creditors holding more than 90 per cent of a $7.3bn loan maturing in 2014 had accepted the company’s offer to extend it to 2017.
The announcement marks a big step forward in the drive by the world’s third-largest producer by installed capacity to resolve its hefty short-term debt problems.
Cemex shares gained more the 2 per cent on the news, trading at 10.31 pesos by mid-morning on Tuesday. The shares have increased about 50 per cent so far this year.
Cemex said that it would now extend its refinancing offer, which also involves a $1bn payment next year, until September 7 as it looked to get more creditors on board. The original deadline for accepting the offer expired on Monday.
It also said that creditors had chosen to receive $470m in a new high-yield note that the company was offering debt holders who no longer wished to participate in the refinancing agreement. In June, when Cemex first announced the terms of its offer, it said it would issue up to $500m of the new high-yield notes, which have a maturity of 2018.
On Tuesday, analysts reacted favourably to the acceptance levels. In a research note, JPMorgan said: “We see this development as positive for the credit,” though it added that a successful exchange was probably mostly priced into the bonds.
Cemex, which became a global company during the 2000s thanks to a string of high-profile international acquisitions, came unstuck after its 2007 purchase of Rinker, the Australian building-materials supplier for $15.3bn, including debt.
The purchase massively exposed the Monterrey-based company to the US market just at the onset of that country’s housing crash and financial crisis. To compound matters, the deal was funded with short-term debt – a fact that left the company facing possible bankruptcy in early 2009. The current $7.3bn refinancing offer covers the remainder of a $15bn bank loan that the company secured in August 2009 to avoid going under.
The refinancing deal is understood to involve changes to the terms of covenants attached to the loan, which place strict targets for the company’s ratio of total funded debt to earnings before interest, taxes, depreciation and amortisation (Ebitda). However, it is still unclear what the new terms will be.