Caribbean Cement trades one dependency for another. Oh, the joys of parenting:
CARIBBEAN CEMENT Company Limited signed two loan agreements this week valued at US$102 million for the repurchase of assets on its grounds at Rockfort in Kingston.
The loans from its ultimate parent company marks the next step in the unwinding of Caribbean Cement’s obligations to it immediate parent Trinidad Cement Limited, but now puts it in the debt of Mexican construction powerhouse Cemex.
The loans will mainly pay for the acquisition of Kiln 5 and Mill 5, as initially laid out in an equipment sale and purchase agreement dated April 27.
“The remainder, if any, will be used for general corporate purposes,” said Caribbean Cement in a market filing this week.
The two loans were signed on May 28 with Cemex Espana, a subsidiary of Cemex SAB de CV. Cemex is majority owner of both Trinidad Cement and Caribbean Cement.
The first loan agreement of US$50 million is repayable in seven years and bears interest at an annual rate of 7.25 per cent. The second is a revolving loan agreement for US$52 million, priced at a variable rate of LIBOR plus 4.2 per cent. That loan also matures in seven years.
Caribbean Cement financials up to March show no long-term loans on its books. However, it holds $5.07 billion in preference shares.
The company already reported a $1.3-billion payment towards the acquisition of the assets in the March quarter. The deal terminates an operating lease agreement originally dated July 2, 2010, and returns US$118 million of assets to the Jamaica-based operation, based on its disclosures in March. It also includes redemption of about 52 million preference shares issued by Caribbean Cement to Trinidad valued at US$40.5 million. The prefs will be repaid over nine years.
Caribbean Cement did not respond to requests for comment.