Mexico's Cemex, the world's No. 3 cement maker, sealed a $1.8 billion share offer on strong demand on Tuesday in a sign of investor optimism in the debt-laden company's recovery.
In Mexico's biggest stock offering in years, Cemex priced 1.3 billion Ordinary Participation Certificates and American Depositary Receipts at $12.50 each, or 16.64825 Mexican pesos, the company said on Tuesday.
The share sale, due on Wednesday, should raise around $1.8 billion as the Monterrey-based company plans to sell another 195 million shares in an over-allotment option.
Earlier, an underwriter in New York told Reuters the offering was worth about $1.6 billion, but Cemex widened the deal as investors bought in, raising more capital.
Cemex owes banks and bondholders $15 billion but was forced to refinance with creditors last month as slumping sales and cash flow raised fears the company might default on its debt.
Cemex will use the net proceeds from the global offering to pay down debt as required by the financing agreement recently entered into with its creditors, the company said.
The offer follows German building materials maker HeidelbergCement's $6.5 billion share sale on Tuesday in the biggest equity placement in Germany this year.
TARGETS FOREIGN INVESTORS
Cemex gave investors a discount versus Tuesday's closing price of 17.62 pesos in Mexico City and $13 a share in New York in a deal that had initially set out to sell 1.2 billion shares with an over-allotment option of 180 million shares.
The offer is a mixture of new shares and stock from companies that Cemex owns, with about 75 percent of the stock targeting foreign investors in the United States and outside Mexico.
Cemex, which operates in more than 50 countries, had needed to raise at least $1 billion in a share offer by June 2010, or face higher interest rates and a $100 million penalty, part of its deal with creditors.
The money from the share offering is crucial for covering debt obligations until mid-2011, along with cash flow and income from asset sales.
Investors deserted Cemex earlier this year as the global downturn pummeled its sales. That raised concerns the company could default on the short-term debt it took on in 2007 to make its biggest-ever acquisition, that of Australia's Rinker.
Cemex took on the debt to fund its $16 billion acquisition of Rinker, but was quickly hit by the housing crisis in its key U.S. market, crippling its sales and ability to generate cash to pay off its loans.
But since Cemex won a deal in August to stretch out its $15 billion debt payments to 2014, investors are buying in again.
J.P. Morgan, Citigroup, Santander Investment and BBVA were the global coordinators in the share offer. (Additional reporting by Phil Wahba in New York and Gabriela Lopez in Monterrey; Editing by Valerie Lee)