Cemex Said to Hire Citigroup, BBVA, Santander for Unit’s IPO

Cemex SAB (CEMEXCPO) hired Citigroup Inc. (C), Banco Bilbao Vizcaya Argentaria SA (BBVA) and Banco Santander SA (SAN) to manage the initial public offering in Colombia of its Central and South America unit, according to two people familiar with the matter.

While the details of the sale are still under discussion, the company may raise about $1 billion by listing the unit, known as Cemex Latam Holdings SA, said one of the people, who asked not to be identified because the process is private.

Cemex, the largest cement maker in the Americas, said last month that it planned to sell a minority stake in its Central and South American businesses as it seeks money to repay creditors. The Monterrey, Mexico-based company, working to halt 11 consecutive quarterly losses, must make a $1 billion payment to banks next year under a proposed new refinancing agreement.

Spokesmen at Citigroup, Cemex, Santander and BBVA declined to comment. Cemex said Aug. 21 that it would seek to list the unit on the Colombian stock exchange and complete a private placement. The Central and South American assets don’t include operations in Mexico.

Carvajal Empaques SA and Construcciones El Condor SA are the only companies to have gone public in Colombia this year, following one IPO last year, data compiled by Bloomberg show.

Cemex rose 1.2 percent to 10.47 pesos at the close of trading in Mexico City. The stock has soared 46 percent this year, compared with an 8 percent advance for the benchmark IPC index of 35 Mexican stocks.

Rinker Purchase

The cement maker’s debt levels jumped after it paid $14.2 billion for Rinker Group Ltd. in 2007 to boost its presence in the U.S. market. In 2009, Cemex restructured its bank debt as the U.S. housing slump sapped demand for construction materials.

Yields on Cemex’s dollar bonds due in 2020 fell 18 basis points, or 0.18 percentage point, to 9.56 percent today, according to data compiled by Bloomberg. They have tumbled 137 basis points in the past month.

Cemex’s sales in South America, Central America and the Caribbean rose 25 percent to $1.1 billion in the first half of the year, contributing about 14 percent of total revenue. The operating margin for the region in the first six months of the year, based on earnings before interest, taxes, depreciation and amortization, was 34.9 percent, about double Cemex’s margin for all of its businesses.

To contact the reporters on this story: Jonathan J. Levin in Mexico City at jlevin20@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net

To contact the editors responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net; Jeffrey McCracken at jmccracken3@bloomberg.net

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