Fitch puts Cemex on watch

Fitch Ratings said it placed the BBB senior unsecured foreign currency and local currency ratings of Cemex SA de CV and of its wholly owned subsidiary Cemex Espana SA, as well as the AA+(mex) national scale rating on Cemex on Watch negative following the announcement Monday morning that the company intends to purchase RMC Group plc.

If the acquisition is completed, the resulting company will become the second-largest cement producer based on revenues and the largest ready-mix producer in the world. Cemex announced that it intends to purchase RMC for $5.8 billion, consisting of $4.1 billion in cash, $1.5 billion in debt assumption, and $200 million in transaction costs.

Fitch said Cemex's acquisition of RMC is leveraging and will pressure credit fundamentals over the short to medium term. The acquisition will be financed with debt in the form of bank facilities that have been committed by Citigroup and Goldman Sachs.

Fitch noted that strategically, the acquisition of RMC is positive. It should improve Cemex's operating profile by reducing the proportion of EBITDA sourced from non-investment-grade countries, as well as the proportion of EBITDA derived from Mexican operations, which would drop from one-half of 2003 EBITDA to roughly one-third.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.