USA: Martinsburg plant sale to reduce HeidelbergCement's debt funding

USA: Martinsburg plant sale to reduce HeidelbergCement's debt funding
Published: 12 September 2016


The gap to repay a EUR2.7bn bridge facility that supports HeidelbergCement's purchase of Italcementi is set to close, once the HeidelbergCement cashes in the sale of its Martinsburg cement plant.

On 8 September HeidelbergCement sealed an agreement to sell Essroc's plant in West Virginia to Colombian cement producer Cementos Argos for EUR580m. This follows HeidelbergCement's acquisition of Italmobiliare in July for EUR6bn.

Talking on the sale of Martinsburg, analysts from Moody said: “We expect the proceeds to partially fund the acquisition of Italcementi, which will reduce the need for debt financing.”

A company source said that the Italcementi operation included a disposal package of EUR1bn to improve the net financial position of HeidelbergCement. "We sold non-core assets of Italcementi as well as assets in the overlapping regions in Europe and the US," he said. "In total, we clearly exceeded the EUR1bn target."

Initially, the bridge financing to support the buyout had a size of EUR4.4bn. It was provided by a consortium of 19 banks, led by bookrunners Deutsche Bank and Morgan Stanley. That bridge financing rapidly shrunk to EUR2.7bn, and the Dax 30 company said in January this year that it would issue high yield bonds for less than EUR2bn.