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HeidelbergCement to Sell 1 Billion Euros of Bonds

Oct, 12 2009

(Frankfurt, Germany) -- HeidelbergCement AG the German cement maker, said it plans to sell at least 1 billion euros ($1.47 billion) of five- and seven-year bonds to refinance borrowing in its first note issue in almost two years.

Each portion of the high-yield bonds will be at least 500 million euros with the final amounts and terms dependent on investor demand, the company said in a statement on its Web site. The notes will be guaranteed by Hanson Ltd., the company’s wholly owned U.K. unit, the statement said.

Chief Executive Officer Bernd Scheifele, who is seeking to bring debt of more than 11 billion euros under control, raised 2.25 billion euros in a share sale last week. The company boosted borrowing when it paid $12 billion for Hanson in 2007, after which a construction slowdown and wrong-way bets on Volkswagen AG shares by the cement maker’s owners, the Merckle family, left the company struggling with repayments.

Scheifele is aiming to restore HeidelbergCement’s investment-grade credit rating by improving maturities, debt-to- earnings ratios and cash reserves, he said in an interview last month. The cement maker’s debt is rated B1 by Moody’s Investors Service, four levels below investment-grade status, and two steps lower at B- by Standard & Poor’s. High-yield bonds are graded below Baa3 by Moody’s and lower than BBB- by S&P.

HeidelbergCement’s new senior, unsecured bonds will be governed by German law and will have a face value of 1,000 euros each, according to a banker involved in the transaction.

The sale is being managed by Deutsche Bank AG and Royal Bank of Scotland Group Plc and helped by Bank of America Merrill Lynch and Commerzbank AG.

HeidelbergCement last tapped bond investors in January 2008 when it sold 1 billion euros of 7.625 percent notes due 2012 according to independent reasearch.

By: John Glover





















Source: www.bloomberg.com