Aug. 17 (Bloomberg) -- Cemex SAB, the largest cement maker in the Americas, agreed to issue $1 billion in new shares by June, repay $5 billion in debt by the end of 2011 and limit capital spending under a $15 billion refinancing concluded last week.

The Monterrey-based company’s capital expenditures will be limited to $700 million next year and $800 million in each of the following three years as the company concentrates on repaying debt, Chief Executive Officer Lorenzo Zambrano said on a conference call with analysts. The transaction allows Cemex to weather a construction recession without defaulting.

“This refinancing is an important milestone in our integrated strategy to rebuild our balance sheet, reinforce our business model, and take full advantage of the coming recovery of the global economy,” Zambrano said on the call.

Cemex said Aug. 14 it would pay 4.5 percentage points over the London Interbank Offered Rate on the new bank debt and have semi-annual amortization payments with a final maturity of Feb. 14, 2014. The company committed to a minimum cumulative payment of $2.9 billion of the loan by December 2010 and $5 billion by the end of 2011. The refinancing loan has a one-time fee of 2 percentage points, said Chief Financial Officer Rodrigo Trevino.

Cost Increases

The cost of the loan will increase between 50 and 100 basis points if Cemex doesn’t repay $4.8 billion by December 2010 and $7.6 billion by December 2011, Hector Medina, vice president for finance and legal, said on the call. The company must raise $1 billion of net proceeds from an equity sale by June or face a $100 million penalty and an interest-rate increase of 75 basis points. Medina said in an interview that Cemex can meet the bank loan payments with new debt.

The company had struggled to repay borrowings after cement and concrete shipments began to plummet in the U.S., Spain and the U.K. only months after Cemex paid $14.2 billion for Rinker Group Ltd. in July 2007. At the end of June, Cemex had debt of $19.3 billion, not including about $3 billion of perpetual bonds.

The company expects a steady recovery of its markets, especially in the U.S., to boost earnings and help it pay back debt, Zambrano said. Still, it will take five years for cement demand to return to peak levels, he said.

“We are finally seeing clear signs that most of our markets are stabilizing as well as a return to normally functioning capital markets,” Zambrano said. “I want to emphasize that we are not counting on a new boom.”

Revenue Forecast

Cemex revenue will rise annually in the “high single digits” through 2013 and earnings before interest, taxes, depreciation and amortization -- a measure of income known as Ebitda -- will rise at a “low teens annual rate,” Zambrano said. Free cash flow, which is money remaining after meeting all expenses that can be used to pay debt, will increase at a faster rate than Ebitda.

In the U.S., where Cemex is the largest cement producer, the company expects Ebitda to reach $1.6 billion by 2013 and cement sales by volume to climb by 11 percent as demand recovers. Demand fell 50 percent from 2006 to this year.

Ebitda from Mexico is forecast to rise by about 30 percent from 2009 to 2013, while Ebitda in Spain isn’t expected to grow at all during the period.

The company will continue to sell assets to reduce debt and meet its main objective of regaining an investment-grade rating, Zambrano said.

Cemex announced on March 9 it would seek to refinance about $15 billion of debt after it failed days before to sell a $500 million international bond.

Credit Ratings

On March 10, Standard & Poor’s reduced Cemex’s credit rating by five levels to B-, which is six levels below investment grade. S&P had reduced Cemex’s rating to BB+, a junk- bond level, on Jan. 21 from its lowest investment-grade rating of BBB-.

Cemex’s American depositary receipts rose 20 cents, or 1.9 percent, to $10.96 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 25 percent this year.

To contact the reporter on this story: Thomas Black in Monterrey at tblack@bloomberg.net

Last Updated: August 17, 2009 16:24 EDT