Cemex announced yesterday that, in line with the company's current initiatives of enhancing financial flexibility and reducing risk, it has obtained the required consents to amend its facilities agreement dated 29 September 2014, as amended and restated to delay the scheduled tightening in its consolidated financial leverage and coverage ratio limits by one year.
The formalisation of the amendment is subject to customary conditions and is expected to be finalised in the following days.
Pursuant to the amendment, the leverage ratio covenant in the Credit Agreement will remain at six until and including 31 March 2017 and will gradually decline to four by 30 June 2020. The margin grid in the Credit Agreement will be modified such that if the consolidated leverage ratio is greater than 5.5 in the reference periods ending on 31 December 2016, 31 March 2017, 30 June 2017 and 30 September 2017, the applicable margin will be 425bps instead of 400bps. All other levels in the margin grid remain unchanged.
In addition, the Credit Agreement will be amended to allow Cemex the right, subject to meeting local requirements in the Philippines, to sell a minority stake in a subsidiary that directly and indirectly mainly owns Cemex’s cement manufacturing assets in the Philippines.
"The amendment underscores the recognition given to Cemex's business and financial strategy by its core banks," said Jose Antonio Gonzalez, Cemex’s CFO. “We are pleased by their continued support and we remain committed to our stated targets of enhancing free cash flow, asset disposals and debt reduction, which should contribute to our objective of receiving an investment grade credit rating.