HeidelbergCement two-for-one share sale to repay debt

HeidelbergCement two-for-one share sale to repay debt
Published: 14 September 2009

HeidelbergCement AG plans a two-for-one share sale to raise funds that will help cut debt.

Major shareholders and “certain banks” that own holdings in Germany’s largest cement maker have pledged their rights to additional shares to institutional investors, the Heidelberg- based company said in a PR Newswire statement late yesterday.

The sale is another step by HeidelbergCement to bring debt of more than 11 billion euros ($16 billion) under control after talks with about 30 creditors. The company inflated borrowings with the 2007 purchase of rival Hanson Plc for $12 billion. A construction slowdown and wrong-way bets on Volkswagen AG shares by the Merckles left the company struggling with repayments.

Spohn Cement GmbH and VEM Vermögensverwaltung GmbH, two investment vehicles owned by the Merckle family, will assign their subscription rights once a price is determined, HeidelbergCement said. The offer price will be detailed on Sept. 22, and subscription rights will begin trading on the Frankfurt stock exchange two days later.