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Cemex $7.25 Billion Debt-Exchange Offer Wins 90% Backing

Aug. 21 (Bloomberg) -- Cemex SAB, the largest cement maker in the Americas, won more than 90 percent acceptance of an offer to extend maturities on $7.25 billion of loans by three years.

“This means it’s a successful deal,” Jim Harper, an analyst at BCP Securities, said in a telephone interview from Greenwich, Connecticut. “This is good for the bonds, it’s good for the stock.”

Support for the proposal, whose acceptance deadline was extended to Sept. 7, bolsters Cemex’s efforts to prevent a financing crunch in 2014 by pushing maturities to 2017. The company has posted 11 straight quarterly losses after the U.S. housing slump and global economic slowdown hurt demand for building materials.

Yields on the company’s 9.25 percent bonds due in May 2020 fell 81 basis points to 9.3 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes rose 4.3 cents on the dollar to 99.75 cents at 3:58 p.m.

“There has been a lot of work, a lot of negotiation to get there,” Maher Al-Haffar, Cemex’s chief of communications and investor relations, said in a telephone interview today from Panama City. “I don’t want to be overly optimistic, but it seems like after going through a major storm, things are beginning to look up for us.”

Deadline Extended

Cemex, which originally planned to close the transaction if it won backing from holders of 95 percent of the debt, said today the terms will be modified to allow completion with 91 percent acceptance if the higher target isn’t met by Sept. 7. In addition to the 90 percent who agreed to the offer already, another 1.5 percent have already indicated they plan to do so, the Monterrey, Mexico-based company said.

“We could have more as soon as the holidays in Europe are over,” Al-Haffar said. “There’s a cautiously optimistic view that we may get to the 95 percent, which is a high threshold.”

Cemex climbed 1.7 percent to 10.26 pesos today in Mexico City. The shares have advanced 43 percent this year.

Based on current acceptance notices from creditors wanting new high-yield notes that are part of the offer, Cemex said it anticipated issuing a principal amount of $470 million. The company said in June that it would issue as much as $500 million of the notes.

To contact the reporter on this story: Brendan Case in Mexico City at bcase4@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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