Mexico's Cemex extends exchange offer and consent solicitation

By Angela McDaniels

Tacoma, Wash., Aug. 21 - Cemex, SAB de CV extended its exchange offer and consent solicitation, according to a company news release.

The exchange offer began on July 5 as part of the company's refinancing plan and will now expire at noon ET on Sept. 7 instead of noon ET on Aug. 20.

The exchange offer is being made to banks that are party to the company's financing agreement dated Aug. 14, 2009. Its terms were negotiated with banks that hold about 50% of the financing.

As of Aug. 21, the company had received acceptance notices representing about 90% of the exposures under the financing agreement and indications of an intent to participate from creditors representing 1.5% of the exposures.

The participating creditors wishing to exchange into new high-yield notes represent an anticipated issuance of about $470 million principal amount of those notes.

The acceptance notices received so far satisfy the requisite thresholds for the amendment consents, which means the financing agreement will be amended and restated once the exchange offer closes and all conditions are satisfied.

The refinancing plan is subject to participating creditors representing at least 95% of existing exposures accepting the exchange offer. The company said that unless this condition is met by the new expiration, it will amend the condition to lower the threshold to 91% of the existing exposures.

Exchange offer background

The company announced plans for the exchange offer on June 29 and presented the refinancing proposal to its lenders at meetings in New York and Madrid on July 2.

According to a prior company news release, Cemex proposed that creditors exchange their existing exposures under the existing financing agreement for one or a combination of the following:

• New loans or, for private placement notes, new private placement notes; or

• Up to $500 million of new 9½% notes due June 2018 (the "new high-yield notes") to be issued by Cemex.

The terms of the new high-yield notes will be substantially similar to those of senior secured notes previously issued by Cemex and/or its subsidiaries.

The new high-yield notes will be callable in 2016 and will be guaranteed by Cemex Mexico, SA de CV, Cemex Espana, SA, Cemex Corp., Cemex Concretos, SA de CV, Empresas Tolteca de Mexico, SA de CV, new Sunward Holding BV and some new guarantors.

In the case of over-subscription, new high-yield notes will be allocated pro rata, and the remaining balance of any subscription would be reallocated to new loans or new private placement notes, as applicable.

Priority is being given to tenders received during an early tender period that ended on July 19. As of that date, participating creditors had elected to receive about $421 million of new 9½% notes. Those creditors will be allocated the full $421 million principal amount.

Creditors that participate in the exchange offer will receive an exchange fee of 80 basis points.

New facilities agreement

Cemex said that the proposed transaction effectively treats the exposures of exchanging creditors as being extended to Feb. 14, 2017 from Feb. 14, 2014 under a new facilities agreement.

The new facilities agreement will have the following required amortization payments: $500 million on Feb. 14, 2014, $250 million on June 30, 2016 and $250 million on Dec. 16, 2016.

If Cemex does not pay down $1 billion by March 31, 2013, the maturity date of the new facilities agreement will revert to Feb. 14, 2014. The company has a 90-day extension option for the March 31, 2013 milestone date subject to two-thirds participating creditor approval. Cemex said the sources for the initial $1 billion paydown may include asset sales.

In addition, the Feb. 14, 2017 maturity date will be reset to earlier dates if any capital markets debt of Cemex and/or its subsidiaries maturing prior to Feb. 14, 2017 is not entirely refinanced prior to maturity.

After April 1, 2015, if the volume-weighted average closing sale price of Cemex's American Depositary Shares on the New York Stock Exchange exceeds $14.50 during the preceding 90-day period, the holders of the new loans and the new private placement notes will be entitled to an additional cash fee of 0.5%. It will be payable 120 days after the trigger date and at the end of each following quarter.

If the company has repaid $2 billion to $3 billion of the new facilities agreement exposures prior to the date of payment, this additional fee will be reduced pro rata based on the amount repaid, with no fee being payable at any time the total exposures have been reduced by at least $3 billion.

Consent request, amendment fee

The proposed consent request includes the following:

• The consent of the majority of participating creditors under the existing financing agreement (66.67%) to some amendments to the existing financing agreement, including deletion of all mandatory prepayment provisions, representations, information and general undertakings, financial covenants and covenant reset date provisions and events of default other than payment, insolvency and insolvency proceedings; and

• The consent of the super majority of participating creditors under the existing financing agreement (85%) and the super majority of the instructing group (85%) to release, on the date of closing of the proposed transaction, all of the security created or granted in favor of the secured parties under the existing financing agreement documentation.

Participating creditors that consent to the proposed amendments will receive a consent fee equal to 20 bps.

If at least one holder of existing private placement notes provides the consent to the proposed amendments, all holders of existing private placement notes will receive the amendment fee as required under the existing note purchase agreement.

The exchange agent is Citibank International plc (+44 0 207 508 3867 or exchange.gats@citi.com).

Cemex is a Monterrey, Mexico-based building materials supplier and cement producer.

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