So far the news is good. Cemex has held two meetings. One was held this Monday in New York and another on Wednesday in Madrid with Cemex saying that it’s making "significant progress with its core banks who represent a majority of the company’s outstanding bank debt." The main component of the plan is a credit facility that would run through to 2014, moving debt maturities for 2009-2011 "substantially into the future," Cemex said.
Certainly the markets appear relieved at this news with shares in the world’s number three cement maker closing up 2.11 per cent to 12.63 pesos, while its shares on Wall Street added 2.89% to $9.61 yesterday.
Cemex said it expects the refinancing, along with asset sales, cost-cutting and access to capital markets, to strengthen its capital structure and give it greater flexibility and more diverse sources of financing. But how much extra this needed financing will cost Cemex remains under debate, with JP Morgan analysts suggesting that Cemex’s interest costs, which were measured at 5.5% in 2008 should rise to no more than 8%, which in fact is rather better than what others in the financial markets had been predicting.
Whether further asset sales are in the offing remains more than speculative. Cemex’s UK businesses, including various cement, ready-mix and aggregates operations, which continue to underperform on earlier expectations – partly as a result of the dramatic downturn in the UK construction sectors – may well fall into this category, but much will depend on the banks acceptance of these latest Cemex proposals.
