Cemex announced the closing of an offering of US$1.67bn aggregate principal amount of two series of convertible subordinated notes, one of which matures in 2016, and the other in 2018. This amount reflects the full exercise of the US$267.5m over-allotment options granted to the initial purchasers.
Substantially all the new shares approved at Cemex’s extraordinary shareholders’ meeting on February 24, 2011 are being reserved by Cemex to satisfy conversion of the notes. Consequently, Cemex does not expect to undertake any additional equity capital rising in the near future.
Cemex is using a portion of the net proceeds from the offering of the notes to fund the purchase of capped call transactions, which are expected generally to reduce the potential cost to Cemex upon future conversion of the notes, and to prepay indebtedness under Cemex’s Financing Agreement, as amended, and expects to use the remaining net proceeds to repay Certificados Bursatiles.
As a result of the prepayments made under the Financing Agreement, Cemex will avoid an increase of 150 basis points in the agreement’s annual interest rate and has also made all required principal payments under the Financing Agreement until June 2013.
Completion of this transaction marks a significant milestone in Cemex’s 2011 financial plan, allowing Cemex to further reduce refinancing risk and improve its capital structure.