Thailand’s second largest cement producer Siam City Cement Pcl (SCCC) has entered into an agreement to acquire Mexico’s cement and construction materials firm Cemex’s operations in Bangladesh and Thailand for $53 million.
The proceeds obtained from this transaction will be used mainly for debt reduction and for general corporate purposes, the company cited. The sale to SCCC is scheduled to complete in the second quarter.
This exit is a part of Cemex’s plan to sell assets for $1 billion-$1.5 billion this year, following its asset sales worth $700 million in 2015. It attempted to lower its $15.3 billion debt by as much as $2 billion over the next two years.
“Although the proceeds from the asset sale with $53 million are rather small, we believe the benefit of cost savings going forward and the company’s ability to focus in Asia on its operations in the Philippines will deliver improving profitability and ultimately cash generation,” Barclays said in a report.
The Thai operation has an annual clicker capacity of 600,000 metric tonnes and an annual cement capacity of 820,000 metric tonnes.
Meanwhile Cemex’s grinding mill in Bangladesh has a production capacity of approximately 520,000 tonnes per year. It supplies a majority of the clinker for the mill from its operations in the region.
Cemex unit applies for IPO in Philippines
Meanwhile Cemex Holdings Philippines Inc (CHP), an indirectly wholly-owned subsidiary of Cemex España SA, is seeking the approval of the Securities and Exchange Commission of the Philippines of its application for an initial public offering (IPO).
CHP presented its application to SEC for potential sale of minority stake of its assets, consisting primarily of its cement manufacturing assets in the Philippines.
In its registration statement with the SEC, the cement maker is willing to offer its common shares to investors in the Philippines and, in a concurrent private placement to eligible investors outside of the country, offer a minority interest in CHP’s capital stock.
“The filing of the registration statement with the Philippine SEC is a first step in one of the alternatives Cemex is exploring in the context of Cemex’s previously announced asset divestiture plan,” CHP said in a statement. “Cemex continues to explore other alternatives, and the ultimate implementation of any such alternative remains at the discretion of Cemex.”
In May 2015, Cemex chief executive officer Fernando Gonzalez met with Philippine president Benigno Aquino III and disclosed plans of investing another $300 million in the country shortly after making an $80 million investment.
The new investment cited by Gonzalez included the construction of a new 1.5-million-ton, integrated cement-production line at Cemex´s Solid Plant in Luzon. It is expected to double the capacity of the Solid plant and will increase the company’s cement capacity in the Philippines by 25 per cent .