building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
building a STRONGER foundation - Cemex
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On August 14, 2009, we entered into the Financing Agreement. The Financing Agreement extended the maturities of<br />
approximately U.S.$15.1 billion in syndicated and bilateral bank and private placement obligations, providing for a semi-annual<br />
amortization schedule, with a final amortization payment of approximately U.S.$6.8 billion on February 14, 2014, based on prevailing<br />
exchange rates as of December 31, 2010.<br />
As of December 31, 2010, after giving pro forma effect to (1) the issuance of the January 2011 Notes, the 2011 Optional<br />
Convertible Subordinated Notes and the April 2011 Notes, (2) the 2011 Prepayments and (3) the 2011 Private Exchange, we had<br />
approximately Ps208,100 million (U.S.$16,837 million) of total debt, not including approximately Ps14,342 million (U.S.$1,160<br />
million) of Perpetual Debentures, which are not accounted for as debt under MFRS but are considered to be debt for purposes of U.S.<br />
GAAP. As of December 31, 2010, after giving pro forma effect to (1) the issuance of the January 2011 Notes, the 2011 Optional<br />
Convertible Subordinated Notes and the April 2011 Notes and (2) the 2011 Prepayments, our indebtedness under the Financing<br />
Agreement was approximately Ps92,271 million (U.S.$7,465 million), and our other debt not subject to the Financing Agreement,<br />
which remains payable pursuant to its original maturities, was approximately Ps115,829 million (U.S.$9,372 million). As of<br />
December 31, 2010, after giving pro forma effect to (1) the issuance of the January 2011 Notes, the 2011 Optional Convertible<br />
Subordinated Notes and the April 2011 Notes and (2) the 2011 Prepayments, we had reduced indebtedness under the Financing<br />
Agreement by approximately U.S.$7.5 billion (thereby satisfying all required amortization payments under the Financing Agreement<br />
through December 2013), and we had an aggregate principal amount of outstanding debt under the Financing Agreement of<br />
approximately Ps8,605 million (U.S.$696 million) maturing during 2013; and approximately Ps83,666 million (U.S.$6,769 million)<br />
maturing during 2014. See “Item 3 — Key Information — Risk Factors — We have a substantial amount of debt maturing in the next<br />
several years, including a significant portion of debt not subject to the Financing Agreement and, if we are unable to secure<br />
refinancing on favorable terms or at all, we may not be able to comply with our upcoming payment obligations” for a description of<br />
our total debt and related maturities.<br />
As part of the Financing Agreement, we pledged the Collateral and all proceeds of such Collateral to secure our payment<br />
obligations under the Financing Agreement and under a number of other financing arrangements for the benefit of the participating<br />
creditors and holders of debt and other obligations that benefit from provisions in their instruments requiring that their obligations be<br />
equally and ratably secured. In addition, the guarantors under our existing bank facilities (other than CEMEX, Inc. (one of our<br />
subsidiaries in the United States)) have guaranteed the obligations to the participating creditors under the Financing Agreement. See<br />
“Item 3 — Key Information — Risk Factors — We pledged the capital stock of the subsidiaries that represent substantially all of our<br />
business as collateral to secure our payment obligations under the Financing Agreement, the Senior Secured Notes and other financing<br />
arrangements.”<br />
The Financing Agreement requires us to comply with several financial ratios and tests, including a consolidated coverage ratio<br />
of EBITDA to consolidated interest expense of not less than (i) 1.75:1 for each semi-annual period beginning on June 30, 2010<br />
through the period ending December 31, 2012 and (ii) 2.00:1 for the remaining semi-annual periods to December 31, 2013. In<br />
addition, the Financing Agreement allows us a maximum consolidated leverage ratio of total debt (including our perpetual debentures)<br />
to EBITDA for each semi-annual period of 7.75:1 for the period beginning on June 30, 2010 and ending June 30, 2011, decreasing to<br />
7:00:1 for the period ending December 31, 2011, and decreasing gradually thereafter for subsequent semi-annual periods to 4.25:1 for<br />
the period ending December 31, 2013.<br />
On November 11, 2009, we launched an exchange offer in Mexico, in transactions exempt from registration pursuant to<br />
Regulation S under the Securities Act, directed to holders of CBs maturing on or before December 31, 2012, in order to exchange such<br />
CBs for mandatory convertible securities of CEMEX, S.A.B. de C.V., or the Mandatory Convertible Securities. After giving effect to<br />
any dilution adjustments in respect of the recapitalization of earnings approved by shareholders at the 2010 shareholders’ meeting, the<br />
conversion price for the Mandatory Convertible Securities is approximately Ps22.12 (402.3552 CPOs per Ps8,900 of principal amount<br />
of Mandatory Convertible Securities), as of the date hereof. Under MFRS, the Mandatory Convertible Securities represent a combined<br />
instrument with liability and equity components. The liability component, approximately Ps1,994 million as of December 31, 2010,<br />
corresponds to the net present value of interest payments due under the Mandatory Convertible Securities, assuming no early<br />
conversion, and was recognized under “Other Financial Obligations” in our balance sheet. The equity component, approximately<br />
Ps1,971 million as of December 31, 2010, represents the difference between principal amount and the liability component and was<br />
recognized within “Other equity reserves” net of commissions in our balance sheet.<br />
On March 30, 2010, we closed the offering of U.S.$715 million of our 4.875% Convertible Subordinated Notes due 2015,<br />
including the initial purchasers’ exercise in full of their over-allotment option, in transactions exempt from registration pursuant to<br />
Rule 144A under the Securities Act. The conversion rate has been adjusted to 79.5410 ADSs per U.S.$1,000 principal amount of 2010<br />
Optional Convertible Subordinated Notes, reflecting the issuance of CPOs in connection with the recapitalization of earnings<br />
approved by shareholders at the 2010 annual shareholders’ meeting.<br />
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