Four years after Cemex’s biggest-ever acquisition, the Mexican cement maker is still not generating enough cash flow to pay down its debts and an US$8bn repayment bottleneck threatens to undermine investor confidence, Reuters reports.
Cemex has covered almost all its obligations until 2013 with a string of bond issues, but needs to repay US$8.3bn of mainly bank debt in 2014 to avoid defaulting, its latest effort to juggle US$18bn of debt since its takeover of Australian rival Rinker in 2007.
A delayed economic recovery in the United States, where Cemex is the top cement maker, means its only options are to sell more bonds, issue more shares or go back to its bankers to extend the maturities of existing loans. Anything short of a clear strategy from Monterrey-based Cemex could plunge it into fresh uncertainty and pressure its long-suffering stock price.
"Obviously 2014 is the big outstanding issue," said Francisco Suarez, an analyst at HSBC in Mexico City. "With its current cash flow generation, Cemex’s capacity to reduce its leverage is very limited."