HeidelbergCement, the German cement maker owned by billionaire Ludwig Merckle, rose the most in more than three months in Frankfurt trading after announcing a “comprehensive” refinancing agreement involving more than 50 international lenders.
The new syndicated loan totals €8.7bn (US$12.2bn) and runs until December 15, 2011, the company said in an e- mailed statement. It did not identify the lenders.
HeidelbergCement ran up debt in the US$12bn takeover of Hanson Plc in 2007. The statement said acquisition facilities tied to this deal and other bilateral loans have been rolled in under a new facility, with existing covenants being “adjusted to a level reflecting the change in the economic environment.”
The refinancing leaves the company “in a good position” to look at other ways to refinance its balance sheet, the cement maker said. HeidelbergCement is “working consistently to further deleverage” and will continue to pursue its programme of divesting non-strategic business units, it said.
“We have secured our financing structure, which, coupled with sufficient liquidity, will provide us with a stable base to confront the extremely challenging economic environment,” Chief Executive Officer Bernd Scheifelesaid in the statement.
HeidelbergCement shares rose 17 per cent to close at €31.09 in Frankfurt, their biggest gain since March 10.
Credit-default swaps on HeidelbergCement dropped 127 basis points to 761, according to CMA DataVision prices. The decline means it cost less for investors to protect themselves against the risk of a default by HeidelbergCement.