Syndicated Loan of the Year - Cemex
January 17, 2018 |
The Mexican cement maker taps a wide range of banks in a well-timed transaction
Reducing its debt load and lowering the costs of its debt have been a top priority for Mexican cement maker Cemex.
The company, the largest cement maker in the Americas, has in recent years focused on cutting costs and selling assets as it works toward regaining its investment grade rating.
In July, Cemex secured a $4.05 billion loan with a group of more than 20 banks to help refinance $3.6 billion of existing bank credit. The total loan amount includes a $1.14 billion five-year revolving credit facility. The remaining $2.95 billion are under term loan tranches and include $1.6 billion, €741 million ($891 million) and £344 million ($466 million). The term loan will be repaid in five equal semi-annual payments beginning July 2020.
The average life of both facilities was 4.3 years, extending the maturity and reducing the cost of the debt.
“This was a very important transaction for us,” says Cemex CFO José Antonio González. “Several banks increased their exposure to Cemex, and we were able to improve the conditions compared to what we had before.”
Both facilities priced between 125 basis points to 350 basis points over Libor and will be tied to Cemex’s consolidated leverage ratio. Once the ratio falls below 4.5x, the spreads will tighten 50 basis points and 125 basis points compared to a revolving credit facility the company signed in 2014. Cemex expects to save more than $100 million this year under the new credit agreement.
Joint mandated lead arrangers and joint bookrunners included Bank of America Merrill Lynch, Banorte, BBVA Bancomer, BNP Paribas, Citi, Credit Agricole, HSBC, ING, JPMorgan, Mizuho and Santander.
The heavy interest from banks signaled growing confidence in Cemex’s efforts to get its financial house in order and the reduction in debt costs helped the transaction stand out as Syndicated Loan of the Year.
With Mexico heading into a presidential election this year, the deal also allows Cemex financial flexibility.
“It helps us to be prepared in a year that will like see uncertainty and volatility,” says González. LF