Cemex selling new shares to existing shareholders to raise up to $250M

Cement maker Cemex Holdings Philippines Inc. has received the green light from its board to raise as much as $250 million from the sale of new shares to existing investors.

An increase in authorized capital stock, followed by an equity deal, is seen by Cemex as the best option to improve its capital structure, provide balance sheet flexibility and fund the ongoing expansion of its Solid Cement plant in Antipolo, Rizal.

Cemex, which is part of Mexican multinational cement group Cemex S.A.B. de C.V., said in a disclosure to the Philippine Stock Exchange that its board had authorized a rights offering wherein eligible stockholders would have the opportunity to subscribe to the common shares.

The board gave the company’s senior management the power and authority to fix the terms and conditions of the rights offering, including the final issue size that will be up to the peso equivalent of $250 million, the entitlement ratio, offer price, payment term and others.

Cemex broke ground in May for the cement plant expansion, which will cost around $235 million. Upon completion, the new line is expected to increase the capacity of this plant from 1.9 million metric tons to 3.4 million MT a year.

Based on an earlier announcement, the new cement line will use less energy as it is designed to reuse waste hot gases from drying raw materials. A high-efficiency bag filter technology will also be used to improve dust emission control. It will employ a proprietary technology called low temperature clinker that will help reduce carbon dioxide emissions.

Cemex turned profitable in the first semester on higher cement prices, foreign exchange gains and lower income tax expenses. Six-month net profit hit P802 million, reversing the net loss of P584 million in the same period last year.

Net sales rose 4 percent year-on-year in the first six months to P12.4 billion, as higher cement prices—a result of price adjustments implemented since 2018—made up for the sluggish sales volume. Prices rose by an average of 6 percent year-on-year during the semester.

Cemex sees cement demand rising by 8-12 percent for the rest of 2019.

Shares of Cemex fell by 7.67 percent to close at P2.77 a share after the announcement of the rights offer.

The company, which listed on the local stock exchange in 2016, is currently valued by the stock market at about P15.6 billion. —DORIS DUMLAO-ABADILLA