Cemex plans to raise $500m in IPO of Philippines unit

Cemex is planning to raise up to $500 million in an initial public offering of its Philippines unit to cut debt levels at its US-listed parent, according to people familiar with the situation, reports the Wall Street Journal.

The US-listed company said late last week it was planning to list its unit Cemex Holdings Philippines Inc., but didn’t specify the amount it seeks to raise nor the timing of the offering.

Cemex declined to comment beyond last week’s announcement.

Last year, Cemex announced plans to reduce debt and reduce financing costs through asset sales, with an aim to raise between $1 billion to $1.5 billion. The company has high levels of debt that were taken on for acquisitions made before the global financial crisis in 2008.

Last week the company said that it has made changes to its credit agreements which allows it to extend the terms of its debt by one year until March 2017.

Cemex’s total debt including perpetual bonds was at $15.3 billion at the end of 2015. As part of its efforts to cut debt, the company last week announced that it has agreed to sell its operations in Bangladesh and Thailand for about $53 million.

People familiar with the IPO plans said that Cemex is looking to tap the Philippines equity market after the country holds elections scheduled for May. Cemex, which initially entered the Philippine market in 1997, is one of the leading cement producers in the country.

In the Philippines, Cemex has a cement production capacity of 5.7 million tons as of end 2015.

The IPO, if successful, will be the biggest such transaction in the Philippines in more than two years after a US$626 million IPO by retailer Robinsons Retail Holdings Inc. in Oct. 2013.

Investors have shied away from buying into new share offerings given the weak global economy that has hit commodity-dependent Southeast Asia particularly hard. So far this year companies in Southeast Asia have raised just US$159 million through new listings, compared with US$1.7 billion in the same period last year, according to Dealogic data.

Worries of an economic slowdown in China have added to these woes, prompting many companies in the region either to delay or scrap fundraising plans. For example, Malaysia’s Sime Darby Bhd, the world’s largest listed palm-oil producer by market value, is now considering an outright sale of $500 million of real-estate assets in Australia and Singapore to cut debt after dropping IPO plans of its automotive business last year due to weak markets.

Wall Street Journal

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