Trinidad Cement Limited (TCL) says that its largest shareholder, cement company CEMEX, plans to sell the 20% shares that it holds in TCL as that company feels the effects of the global financial crisis.
In an advertisement in today’s newspaper, TCL said that its Board wishes to alert TCL shareholders about developments in the financial fortunes of the Mexican cement giant, as a result of the worldwide financial turmoil. The advertisement said that while TCL’s Board of Directors has not been officially informed of CEMEX’s plans, information had been received from “credible sources” that the 20% shareholding in the Company currently held by CEMEX will be divested as a part of its debt restructuring exercise.
TCL said that the sale of CEMEX’s TCL shares will not affect the TCL Group’s operations or its future prospects but TCL’s Board is mindful of its responsibility to all its stakeholders and will seek to ensure an orderly disposal of CEMEX’s interest in a manner which does not result in a loss in shareholder value. “In this regard, steps have been taken to engage CEMEX and/or their representative agents in discussions on the matter.
Shareholders will be kept advised of any further significant developments”, the advertisement said.
It had noted that this year has been a difficult one for CEMEX and it has been severely impacted by a sharp contraction in sales volumes in the United States, Spain and the United Kingdom. Other difficulties faced included a significant increase in the cost of debt and the difficulty in refinancing.
A Bloomberg report yesterday stated that banks have agreed to refinance US$3.7 billion of CEMEX’s debt, reducing concern about the company’s ability to repay borrowings. It said that CEMEX’s American depositary receipts rose 6.6 percent, to $9.20 at 12:45 pm in New York Stock Exchange composite trading. The shares had dropped 65 percent this year before yesterday on concern about plummeting cement demand and $5.7 billion of debt maturities next year, the Bloomberg report noted.
Meantime, the ad also stated that CEMEX faced high energy and transportation costs, US$700M losses on derivatives in the third quarter 2008, downgrades from rating agencies, nationalization of the Group’s Venezuelan Assets, a negative tax ruling in Mexico, and a significant decline in its stock price.
Bloomberg also reported that in light of the refinancing agreement, Credit Suisse rating on CEMEX’s shares was raised to “neutral” from “underperform.” Credit Suisse raised its rating “given that the debt rollover is no longer a concern and that the re-pricing was achieved at a favorable rate, considering the scarce liquidity in credit markets,” the report quoted an analyst at Credit Suisse as saying.
