CEMEX, S.A.B. de C.V. (CX: 9.63 +0.08 +0.84%) agreed to sell its assets in Kentucky to Bluegrass Materials Company, LLC, subsidiary of Panadero Aggregates Holdings, LLC, for $90 million. The transaction is expected to close by the third quarter of fiscal 2010. The net proceeds from the sale will be used by CEMEX to reduce its debt.Assets include seven aggregate quarries, three resale aggregate distribution centers, and one concrete block manufacturing facility, which were acquired by CEMEX as part of the Rinker acquisition in 2007.
The net proceeds from the sale will be used by CEMEX to reduce its debt. CEMEX continues to strive toward a leaner debt structure and reduced its total debt by approximately $1 billion since the first quarter of fiscal 2010 ending March 31, 2010.
Although, CEMEX has trimmed its EBITDA and free cash flow outlook for fiscal 2010 by 5% to $2.75 billion and 20% to $800 million, respectively, it expects a high single-digit growth in cement sales volumes in the U.S. in 2010.
CEMEX expects consolidated domestic cement volumes to increase by approximately 3%, ready-mix volumes to decline marginally and aggregates volumes to increase by approximately 1% year over year.CEMEX competes globally with France’s Lafarge SA and Switzerland’s Holcim Ltd and has been struggling in a sluggish U.S. housing market, weakness in Spain and a debt overload. However, following its debt refinancing, equity capital issuance, sale of assets in Rinker and the Australian operations, and cost-reduction efforts it is strategically aligning itself to, become more lean and agile.
Looking forward, the company will remain focused on paying down debt and regaining its financial flexibility. We expect the company to benefit from the gradual economic recovery.
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