Cemex: Cracked, But Still Sturdy -- The Fool
Cemex is the world's third largest cement company, behind France's LaFarge (OTC : LARGY. PK) and Holcim (OTC: HCMLY. PK). After a lengthy search for cash infusions abroad, it became clear that Cemex would have had to fork over an interest rate of between 15% and 20%, according to some reports, to sell its bonds last week. It'll therefore return to banks for a fresh supply of pesos.
Unfortunately, Cemex is paying penance for a number of recent acquisitions. Its latest purchase was last year's $15.3 billion devouring of Australia's Rinker Materials. The deal gave the company exposure to markets in such places as the United States, the U.K., and Spain -- just in time to see housing and construction slowdowns put a big crimp on those nation's economies.
In the wake of the deal, Cemex's net debt reached $17.8 million, or five times its most recent years' earnings before interest, taxes, depreciation, and amortization (EBITDA). Partly as a result, rating agencies Fitch and Standard & Poor's have reduced Cemex's bonds to a below-investment-grade BB+.
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