Desarrolladora Homex SAB shares and bonds fell amid speculation that the Mexican homebuilder’s sale of its stake in two prisons to companies controlled by billionaire Carlos Slim won’t stop the drain on operating cash.
Shares of Homex, the country’s biggest homebuilder by sales, sunk 11 percent to 15.03 pesos at the close in Mexico City, after surging a record 40 percent on April 19 on the announcement of the prison sale. Today’s drop was the biggest on Mexico’s benchmark IPC index. Homex bonds due 2020 fell 4.97 cents to 74.14 cents, according to data compiled by Bloomberg.
While cash flow from the prison deal “produces significant liquidity relief” for Homex, it’s unclear how much time the proceeds buy the Culiacan, Mexico-based homebuilder, Barclays Plc analysts Autumn Graham and Christopher Buck wrote today in a note to clients. The company said on April 19 it will raise about 4 billion pesos ($325 million) in the sale to Slim’s Grupo Financiero Inbursa SAB and Impulsora del Desarrollo y el Empleo en America Latina SAB.
“We still find debt levels to be unmanageable,” Grupo Bursatil Mexicano SA analyst Javier Gayol wrote in an e-mailed note to clients. “This only buys the company a bit of time before more measures are implemented.”
Homex is scheduled to report its first-quarter earnings on April 25. The company’s cash fell 1.7 billion pesos last year, the biggest drop since Bloomberg started compiling the data in 2001.
The company said in the filing on April 19 it will use about half of the money from the asset sale as working capital and the rest to pay down debt ahead of schedule.