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Cemex has taken action towards its debts over the course of the last week. First, it announced that it had amended its credit agreements in order to delay the looming effects of consolidated financial leverage and coverage ratio limits by one year to March 2017 with other similar deadlines also delayed. Then it announced the pricing of US$1bn of Senior Secured Notes due in 2026, a form of secured borrowing. This was followed by confirmation of asset sales in Bangladesh and Thailand. Finally, it announced that it was seeking regulatory permission to sell a minority stake in its subsidiary in the Philippines.

This column has discussed the on-going financial travails at Cemex a few times, notably recently when the group released its fourth quarter results for 2015 and in the wake of HeidelbergCement’s announcement to buy Italcementi. Basically, it all comes down to debt, as the following graph shows.

Figure 1 - Cemex assets, debt and equity, 2006 - 2015

Cemex took on large amounts of debt following its acquisition of Rinker in 2007. Since then the value of its assets have been falling faster than it has been able to reduce its debts. However, its equity (assets minus debts) is looking like it might dip below its debts in 2016. Hence, action needs to be taken. Cemex appears to have attempted to do this over the last week. Will it be enough?

The credit amendment was probably the most pressing issue for the Cemex management given that the terms have been reliant on maintaining a leverage ratio (debt divided by assets) below a set limit. Cemex has extended the terms of the borrowing in its favour so it can keep the leverage ratio higher for longer without penalty from its creditors. Note that the leverage ratio here means the ratio between debt and operating earnings before interest, taxation, depreciation and amortisation (EBIDTA).

Selling assets and shares in Asia is the next step in cutting debt in the window the group has negotiated for itself. It holds minor cement production assets in Thailand and Bangladesh that it is selling to Siam City Cement for US$53m. These include a 0.8Mt/yr integrated cement plant in Saraburi, Thailand and a 0.52Mt/yr cement grinding plant in Madangonj, Bangladesh. Unfortunately for Cemex it purchased the Saraburi plant for US$77m in 2001 from Saraburi Cement making it a loss of at least US$24m.

A minority sale of shares in its Philippines assets is more promising. The group runs two integrated cement plants in the country, the Solid Cement Plant in Rizal and the APO Cement Plant in Cebu with a combined cement production capacity of 6.23Mt/yr and a new 1.5Mt/yr production line on the way at Solid Cement also. Local media estimate that the sale could earn Cemex as much as US$850m from the booming market. The Cement Manufacturer's Association of the Philippines reported that cement sales volumes grew by 14.3% to 24.4Mt in 2015 with more growth predicted for 2016.

The credit amendment and asset sales of US$0.9bn may give Cemex the breathing room it requires to keep the creditors at bay for a while longer. It originally refinanced its debts in 2009 at the height of the financial crisis to keep the business running until the markets picked up again. They haven’t. A question that might be legitimately asked at Cemex’s analyst day later this week, on 17 March 2016, is this: when is Cemex going to seriously tackle its debts? As the situation continues the group may end up devoting more time to managing its debts than it will to actually making cement and other building products.

Germany: Johan Cnossen has resigned as the Chief Executive Officer and a member of the Management Board of KHD with immediate effect from 11 March 2016. He cited personal reasons. Other Management Board members will take over his responsibilities for an interim period.

India: Burnpur Cement has signed an agreement with Saurabh Ganguly as a brand ambassador for the company for three years from 11 March 2016. Ganguly was the former captain of the Indian cricket team. As the brand ambassador for the company he will endorse the product and brand of the cement producer to help increase of sales.

Philippines: Republic Cement has inaugurated its new cement grinding mill at its Norzagaray cement plant in Bulacan. The US$19m expansion will add 0.85Mt/yr of cement production capacity to the plant, according to the Philippines Star.

“This capacity expansion initiative reaffirms Republic Cement’s commitment to support our country’s growth through the provision of top quality cement and building materials,” said Renato Sunico, president of Republic Cement. The new mill will also decrease the plant’s energy consumption.

Republic Cement, formerly Lafarge Republic, is owned by a joint venture of Aboitiz Equity Ventures and CRH.

China: Shanshui Cement has issued a profit warning, predicting a significant loss in 2015 compared to 2014. It has blamed the impending financial result on poor market demand for cement, industry production overcapacity and management distractions with legal proceedings the company has undertaken concerning the company and its subsidiaries.

In late January 2016 Shanshui Cement defaulted on a US$270m bond. The default followed a battle for control of the company between Tianrui Cement, its biggest shareholder, and the Zhang family, its second-largest shareholder and former owners.

Russia: Eurocement and Sberbank CIB, Sberbank’s corporate and investment banking business have agreed on conditions for restructuring the company’s loan portfolio. The restructuring involves postponing the repayment of loans worth a total of US$592m and US$360m for up to six years, as well as optimising interest rates for the company’s loan portfolio at Sberbank.

“Sberbank CIB is a strategic partner of Eurocement. This agreement will help us cut debt servicing costs and minimise the influence of negative macroeconomic factors on our company,” commented Mikhail Skorokhod, President of Eurocement. The conditions for restructuring the debt portfolio will enable Eurocement to take a more flexible approach to financing its operational activities and help it achieve strategic goals.

Colombia: Cementos Argos has launched energy saving measures that could contribute close to 10% of the energy saving goals of the Colombian national government. The cement producer has joined the energy savings campaign promoted by the government by taking additional measures at its plants and offices that can help conserve this important resource.

Cementos Argos intends to deliver excess energy from its self-generation plants of about 30MW to the domestic electrical network and limit the use of its 16 cement mills during peak hours, which will represent savings of about 38MW. In addition it will maximize its use of flexitime and day work to limit the use of electrical energy at its administrative offices. With these measures the company hopes to save the equivalent of the consumption of close to 100,000 homes per day and of close to 130,000 homes during peak hours.

“We are convinced that by joining our efforts, we can multiply results. That is why, if all companies and families put their best foot forward, we can all contribute to energy saving and create habits that allow us to preserve resources that are fundamental to our planet’s sustainability,” said Jorge Mario Velásquez, CEO of Cementos Argos.

Germany: The 14th REFRA-Kolloquium will take place on 31 May to 3 June 2016, at the Estrel Hotel & Convention Centre in Berlin. Industry experts and specialists will gather for a series of presentations on technical developments in the cement and refractory industries. The event will also include a panel discussion and a related exhibition.

The REFRA-Kolloquium events are organised by Refratechnik, a manufacturer of refractory materials for the cement industry. In 2012 almost 800 participants from 70 countries attended the REFRA-Kolloquium.

Algeria: Cement production has resumed at the Société des Ciments Sour El-Ghozlane plant following maintenance work and an upgrade to add an electrostatic precipitator filter. The 1Mt/yr plant, a subsidiary of Buzzi Unicem, has been shut for nearly two months causing a shortage of cement in the central region of the country. This has led to some construction projects stalling and the cost of cement rising, according to El Watan.

Uzbeksitan: Uzbekistan has put on sale state shares in Kyzylkumcement. According to the State Committee of the Republic of Uzbekistan for Privatization, Demonopolization and Development of Competition, the government wants to sell a 35.9% state shares or 160,658,567 shares in Kyzylkumcement for a total of over US$160m. Sales of the state-owned cement producer will be handled by the block-trading section of Uzbekistan Stock Exchange.

Kyzylkumcement was launched in 1977. It is the largest cement plant in Uzbekistan with a production capacity of 3.1Mt/yr.