CEMEX makes progress in asset disposal programme
Published by Lucy Stewardson,
On 19 March CEMEX announced that it has reached a binding agreement to sell its aggregates and ready-mixed assets in the North and Northwest regions of Germany to GP Günter Papenburg AG. This is for €87 million.
CEMEX currently expects to sign a final agreement for the sale of assets in April 2019 and to close the divestment in 2H19. The assets being divested in Germany consist of four aggregates quarries and four ready-mixed facilities in North Germany, as well as nine aggregates quarries and 14 ready-mixed facilities in Northwest Germany.
On 20 March, CEMEX also announced that it has reached a binding agreement to divest its white cement business, including its Buñol cement plant in Spain. The agreement has been made with Çimsa Çimento Sanayi Ve Ticaret AS for approximately US$180 million.
CEMEX currently expects that it could sign the final agreement in April 2019, closing its divestment in 2H19. The proposed divestment includes neither CEMEX’s white cement business in Mexico, nor its investment in Lehigh Cement in the US.
The transaction is part of the ongoing rebalancing of the company’s portfolio, which was announced as part of the ‘A Stronger CEMEX’ plan in 2018. Once closed, it would allow the company to concentrate on the assets best suited to grow in the context of its current business plan.
The proceeds that the company expects to obtain from its aggregates, ready-mixed, and white cement divestments would be mainly used for debt reduction and general corporate purposes. Once a final agreement is reached, the closing of this transaction would be subject to the satisfaction of standard conditions for this type of transaction. This includes authorisation by regulators.
In a further statement, on 21 March, the company announced that it has made significant progress in its asset disposal programme. The company has done this by closing or reaching binding agreements for the sales of approximately US$750 million. This represents 50% of the low end of the December 2020 divestment target range.
The company announced its ‘A Stronger CEMEX’ plan in July 2018. The plan includes a between US$1.5 billion and US$2 billion asset disposal target by the end of 2020. Since then, the company has announced the divestment of assets in the Baltics and Nordics, its terminal in Manaus, Brazil, aggregates and ready-mixed assets in Germany, and its white cement business, including the Buñol cement plant in Spain, among other assets. The expected proceeds of these transactions represent a double digit multiple relative to 2018 EBITDA.
For transactions that have closed, the proceeds were used for general corporate purposes, including debt reduction. For those transactions that have not closed, the proceeds expected to be obtained from these divestments would be mainly used for debt reduction and general corporate purposes. In relation to the divestments that have been announced but not closed, the closing of the announced sales is subject to finalising definite sale agreements and/or the satisfaction of standard conditions for this type of transaction, which includes authorisation by regulators.
“We are pleased with the progress of our asset sale initiative under our ‘A Stronger CEMEX’ plan,” said Fernando A. Gonzalez, CEO of CEMEX. “We remain completely committed towards the goal of achieving an investment grade capital structure and will continue our disciplined deleveraging and improvement of our capital structure.”
Read the article online at: https://www.worldcement.com/the-americas/22032019/cemex-makes-progress-in-asset-disposal-programme/
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