CEMEX Reduces Debt

Yesterday, CEMEX, S.A. de C.V. (CX - Snapshot Report) completed the global offering of 1,495 million Ordinary Participation Certificates (CPOs), directly or in the form of American Depositary Shares (ADSs). The underwriters fully exercised their options to purchase additional CPOs and ADSs to cover over-allotments.

Out of the 1,495 million CPOs offered, 1,121.3 million CPOs, were sold in the United States and elsewhere outside Mexico, and 373.8 million CPOs were sold in Mexico. The ADSs were offered at a price of US$12.50 per ADS, and the CPOs was offered at a price of MXN16.65 per CPO.

The estimated net aggregate proceeds from the global offering, including proceeds from the exercise of the over-allotment option, were approximately US$1.782 billion. The over-allotment option relating to the Mexican portion of the offering is expected to be completed today. CEMEX intends to use the net proceeds from the global offering to pay down debt and for general corporate purpose.

CEMEX’s huge leverage is an urgent problem. Net debt at the end of the second quarter was US$18,272 million, and is more than 5x the expected EBITDA for 2009.

It is all the more urgent for CX as it is battling leading cement makers like France's Lafarge SA and Switzerland's Holcim Ltd in a difficult market.

CEMEX intends to reduce its net debt by approximately US$3.6 billion in 2009 to reach US$14.3 billion at the end of the year in order to restore financial flexibility as soon as possible and meet its financial commitments. The company is indeed making a huge effort to restore its creditworthiness and adapt itself to new and much more difficult market conditions.

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