Cemex M&A/Other Teleconference CEMEXCPO M

2009-08-17 16:18:13.71= 3 GMT

Event Date: 08/17/2009=

Company Name: Cemex

Event Description:Busi= ness Update Call

Source: Cemex

For more event informa= tion and transcripts, visit <a href=3D"bloomberg:EVTS%20%2FD%3AF%2D1712688%3CGO%3E">EVTS</= a>

= &nb= sp; Business Update Call

MANAGEMENT DISCUSSION SECTION

Operator:

Good day ladies and gentlemen and welcome to CEMEX's, Refinancing Plan

Conference Call. My name is Glenn = and I'll be your coordinator for today.

I would now like to turn the presentation over to your host for today's call,

Mr. Lorenzo Zambrano, Chairman and= Chief Executive Officer of CEMEX. P= lease

proceed.

Lorenzo H. Zambrano, Chairman and = Chief Executive Officer:

Thanks. Good morning. I'm pleased = to announce - hello? I'm pleased= to

announce that we have reached an agreement with our creditor banks and

private placement note holders to refinance 15 billion in debt. The agreement

takes effect today. The refinancing is an important milestone in our

integrated strategy to rebuild our balance sheet, reinforce our business

model and take advantage of the co= ming recovery of the global economy.

Over the past year, we have been implementing a recovery strategy based on

several key foundations including = the debt refinancing. First, cost=

reduction. As you know we have taken 900 mill= ion out of our cost base, not

only adjusting for the reduced lev= el of market activity but also improving

our operational efficiency. Around= 60% of these savings are structural, which

means they are sustainable in the = long term.

Second, capital expenditures from payment. We have reduced maintenance and

expansion capital expenditures by = $1.5 billion for a sustainable level of 650

million in 2009. By the agreement = with the banks, we will limit CapEx to 700

million in 2010 and 800 million by= year during 2011 to 2013.

Third, asset sales. We have agreed= to sell our Australian operations for the

equivalent of around $1.5 billion.= We are making good progress closing that

transaction. The progress we have = made in implementing our overall strategy

will allow us time to sell other identified non-core assets once markets

recover.

Four, increased equity. We have ca= lled a shareholders' meeting to be held on

September 4 to ask for approval fo= r an increase in our equity in order to

strengthen our balance sheet. Assuming that our shareholders agr= ee with that

proposal, we will go to the market= when the time is right.

Of course our debt refinancing agr= eement is an integral part of this

strategy. The revised maturity sch= edule that results from the agreement will

shift near term maturities into the future with final maturity during 2014.

As part of this agreement, required amortization during 2009 to 2014 will be

covered by free cash flow, non-core asset sales and other capital markets

operations. I'm confident that the cumulative = effect of our efforts will

allow us to regain our financial flexibility and eventually our

investment-grade capital structure= .

The successful execution of most o= f the key elements of our repositioning

strategy in the CEMEX is now emerg= ing from the biggest recession that has hit

our industry and our Company in 80 years, are finally seeing clear signs that

most of our markets are stabilizin= g as well as a return to normal functioning

capital markets. To some extent that reflects the i= mpact of government

stimulus spending which is finally= being translated into real project

spending. The good news for the fu= ture is that most of the committed

anti-recession spending in our mar= kets is still in the pipeline. That

spending is likely to provide a substantial catalyst to demand in the coming

month.

At the same time, prices in local currency have been broadly stable in most

of our markets. Even in the U.S. w= here the building materials market has

suffered the deepest and longest decline, prices have only recently softened.

In general, I expect prices to rem= ain resilient as demand recovers. Taken

together, these trends tell us tha= t the worst of the global construction

downturn seems to be over. While I= 'm reluctant to predict its exact shape or

speed of the recovery, I think it = is safe to say that our markets have

bottomed and are entering the reco= very part of the cycle.

CEMEX is well positioned to take f= ull advantage of the upturn. Our reduced

cost base, expected operating marg= in improvement and disciplined operating

strategy mean that increasing reve= nues will substantially flow to our bottom

line.

Now I want to share with you some = of the headline elements of our five-year

business plan that we've prepared = to support our integrated financial and

operating strategy and our negotia= tions with the banks. As we look at our

markets, we expect the key demand drivers to be the implementation of

government infrastructure programs= in our key markets, positive demographic

trends and pent-up housing demand = and underlying economic recovery,

particularly in the United States.= I want to emphasize that we are not

counting on a new boom. Our baseli= ne anticipates that cement volumes which

produce two-thirds of our EBITDA, = will not return to prior peak levels during

the next five years.

On a global consolidated basis, the consequence of these factors is that we

expect a growth of top line sales = at a compound annual rate in the high

single-digits from 2009 to '13. We expect to grow EBITDA at a low teens

annual rate. In large part because= of reduced CapEx spending we expect our

free cash flow available to date t= o debt to increase at a more rapid rate

than EBITDA starting from a roughl= y 1.6 billion that we are likely to

generate this year.

This strong EBITDA of free cash fl= ow conversion will allow us to pay down

debt and help to rebuild our finan= cial strength. I believe we have built our

baseline plans on realistic assump= tions. We are not betting on a surge in

demand or prices, but we are betti= ng on our ability to execute our business

plan with the discipline and profe= ssionalism that are CEMEX's hallmarks.

Want to make a final point about t= he near-term future. Our immediate priority

is to strengthen our balance sheet, which is the key to our long-term growth.

Thus, we will continue to implemen= t our cost reduction and right sizing

initiatives, maintain tight discip= line on our capital investments and use as

much of our free cash flow as poss= ible to reduce debt.

As a result, I'm confident that CE= MEX will emerge from this crisis stronger,

more focused and more efficient th= an when we where hit by the U.S. housing

market. In large part that confide= nce rests on my belief that CEMEX's

management and employees are among= the best in the industry as they're

demonstrating during the difficult= times through which we have passed.

Finally, I want to thank the finan= cial institutions with whom we have worked

closely over the past months to bu= ild a refinancing agreement that is in

their interest as well as in the interest of the rest of our CEMEX

stakeholders. Their professionalis= m and commitment have helped us to get

where we are today.

Now, Hctor Medina will explain our business plan and refinancing agreement

and then we will of course answer = your questions. Thanks.

Hctor Medina, Executive Vice Presi= dent of Finance and Legal:

Thank you, Lorenzo. We have worked closely with our creditors over the past

months to develop the agreement we= are presenting to you today. I have

enormous respect for the professionalism, commitment and dedication of the

teams that negotiated this refinan= cing. I think we have produced an agreement

that is in the best interest of all parties, including of course those of

CEMEX's stakeholders.

This morning I will focus on two i= ssues. First, the five-year business plan

that underpins the refinancing agr= eement we have announced; and second, the

key terms and conditions of the refinancing agreement itself.

As you know over the past several = years we experienced a sharp decline in

demand throughout our global netwo= rk. However we are now seeing signs that

the markets have bottomed and that= we are also seeing early indications of

recovery. That said, I want to emphasize tha= t we built our five-year

business plan that covers 2009 to = 2013 assuming that this recovery is real

but modest.

The U.S. market is key to our recovery. Our cement volumes = pro forma dropped

by almost 50% during - between 200= 6 and 2009, reflecting historic decline in

housing and other construction sectors. We expect the modera= te recovery that

seems to be starting at some parts= of the country to gradually gain strength,

although our assumptions are somew= hat more conservative than consensus

macroeconomic and industry forecas= ts.

Nevertheless, the contraction over= the past several years was so dramatic

that we expect cement demand in ou= r U.S. market to increase at an average

annual rate of around 11% over the= next five years, representing a 40%

increase by the end of the period.= That growth would represent fully half of

CEMEX's total expected cement grow= th - cement demand growth between now and

2013. We expect similar growth in = our Ready Mix and aggregate business.

Without assuming increased real pr= ices, the consequence will be a substantial

recovery in the performance of our= U.S. operations.

With ongoing cost discipline, our baseline expectation is for U.S. EBITDA to

recover to around $1.6 billion by = 2015, roughly the level we produced in 2007

pro forma with Rinker for the full= year.

Mexico is currently our largest market. Proportionately, ceme= nt volumes have

remained stable despite the deep recession that has hit the rest of the

economy. This primarily reflects t= he government's successful programs to

increase infrastructure spending. = In addition, once the recession passes we

expect housing growth to resume be= cause of the large pent-up demand from the

country's growing middle class. In turn that will drive volume inc= reases in

our Ready Mix and other constructi= on material businesses.

With the stable prices, lower cost= s and the contribution of our self-supplied

clean energy projects our baseline expectation is for Mexican EBITDA

generation to increase by almost one-third between 2009 and 2013. In

contrast, we do not expect any substantial recovery in the performance of our

Spanish operations. Demand volumes= have declined more than half since 2006

and are not expected to recover du= ring our baseline period. Although= we will

continue to right size our operati= ons, we are not forecasting any increase in

EBITDA generation during the next = five years.

Reflecting the geographic diversification of our portfolio, we anticipate

growth in cement and other product demand market - in markets as diverse as

Poland, Columbia and the U.K. Overall we expect EBITDA generatio= n from our

Europe, Middle East, Africa and As= ia region excluding Spain to increase at an

average annual compound growth rat= e of more than 5%. For our South American

and Caribbean region, we expect EB= ITDA growth of more than 7%. Taken

together, we expect to grow EBITDA= at low teens annual rate to 2013. In turn,

this will produce even stronger gr= owth in free cash flow and that provides

the basis of our refinancing.=

As Mr. Zambrano said earlier, we b= elieve this business plan is based on

realistic assumptions and it has b= een reviewed and accepted by our major

banks and their advisors. We are n= ot betting on a new boom, but we are

betting on CEMEX's ability to crea= te value in markets that we know well as

they gradually recover from the sh= ock of the global downturn. This is based

in part from the sharp adjustment = in our fixed cost base that we have

implemented during the recession.<= o:p>

Now I will turn to the details of = the refinancing agreement that rests on

this business plan. The agreement = covers $15 billion in debt extended to

CEMEX through a variety of bank facilities as well as private placement

notes. More than 50 banks and 25 p= rivate placement investors are

participating in the agreement. The refinancing is structured to provide us

with flexibility to amortize exist= ing debt through increased cash flow as

well as asset sales, equity and de= bt issuances and other initiatives. In

turn, we are undertaking important obligations. We will make substantial debt

repayments in the coming years, pr= ovide by several covenants and work to meet

key milestones.<= /p>

Let me provide some context. CEMEX= 's total financial obligations stand at

$22.3 billion, excluding the perpe= tual - including the perpetuals. Thus, the

refinancing agreement excludes pub= licly held securities and bank debt

primarily associated with our work= ing capital need at the operating level.

The agreement we have reached exte= nds the final maturities of $15 billion to

February 2014. We have committed ourselves to repay approximately $2.9

billion by December 2010 and a cumulative $5 billion by December 2011,

representing 19% and 33% of the co= vered debt.

Prior to our refinancing agreement= , we were facing unsustainable amortization

requirements during 2009 to 2011. = The new debt maturity profile, which

excludes our perpetual obligations, provides time and flexibility to

deleverage our balance sheet as our markets, our performance and the

financial environment recover.

In addition, we will undertake cap= ital markets operations and non-core asset

sales beyond the sale of our Austr= alian operations as needed to meet the

balance of our repayment obligatio= ns between now and 2011. This agreement is

a sign to allow us to undertake th= ose operations in an ordered way without

the pressure of immediate amortiza= tions and at a time when markets are likely

to have normalized.

The refinancing agreement includes= the following major terms and conditions.

Refinance obligations will carry a= 450 basis points margin over LIBOR to bank

creditors and at a fixed rate of 8= .91% to private placement creditors that

represent $895 million of the total refinancing package. Both rates subject

to adjustments and although the de= cline in LIBOR means that the cost of

accounting - and although this -- = the decline in LIBOR means that the cost of

remanding remains manageable.=

We are obligated to maintain certa= in consolidated coverage and leverage

ratios starting in June 2010. We h= ave agreed to limit our total capital

expenditures including maintenance= and growth CapEx through 2013. We are

extending the share pledges requir= ed by refinancing institutions to our

public securities that carries that contractual right. We are pro= viding

additional growth guarantees on the refinanced debt. And we are s= ubject to

incremental costs if we have not i= ssued at least $1 billion in net proceeds

of additional equity by June 2010.=

This agreement is based on CEMEX's recognition that we need to reduce our

balance sheet leverage and debt le= vels and our creditors' recognition that

time and flexibility are required = for a sustainable solution. It allows us to

be leveraged in an orderly fashion= over a decline time period and then to

refinance the remaining maturities= . That will improve the overall credit

quality of CEMEX's securities to t= he benefit of all of our stakeholders.

Finally I have been asked to tell = you that any forward-looking statements we

make today are based on our current knowledge of the market in which we

operate and could change in the fu= ture due to a variety of factors beyond our

control.

Thank you. We have asked Rodrigo T= revio, CEMEX's CFO to join us in answering

your questions which I hope will be focused on the issues we have presented

today in order to ensure that we c= an take as many questions as possible.

Operator?

Q&A

Operator:

Your first question comes from Jac= ob Stanfield from JPMorgan. Please proceed.

<Q>: Hi, good morning. Thank= s for the call. I - in terms of the refinancing,

was any of your debt repaid with t= he new facility or were - was there any

flow of funds or were all the faci= lities just extended under these new terms?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No the -

100% of the facilities that includ= ed in the - this agreement are being

refinanced. We think it's a show o= f the confidence of the - of these

financial institutions and private placement note holders. So it is all the

debt that is being refinanced.

<Q>: Right, but it was there= any flow of funds? I mean was the= new facility

created and...

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No.

<Q>: The old agreements repa= id?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No. That

is - 100% of the old debt was exte= nded in March. It's being refinanc= ed under

this agreement.<= /p>

<Q>: Okay, and then in terms= of the asset sales and capital market

transactions, do 100% of the proce= eds need to be used to repay the

rescheduled debt?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>:

Essentially yes. Although there is= a liquidity provision there. We= need to -

the Company announced $650 million= in a liquidity facility. So as long as

this is there, all the proceeds fr= om asset sales or other initiatives will go

to prepayments.<= /p>

<Q>: Okay. I guess my final question is which subsidiaries pledged stock as

part of the refinancing?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Well, all

the subsidiaries under CEMEX Mexic= o, and between CEMEX Mexico and CEMEX Spain

<Q>: Okay, great. Thank you = very much

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

The next comes from Dan McGoey from Deutsche Bank. Please proceed.

<Q - Dan McGoey>: Good morni= ng, gentlemen. My question is regarding the, I

think it was mentioned semi-annual amortizations, how much those are, when

they begin? And then I think Hctor you mention= ed a - by June 2010, the

Company would need to raise $1 bil= lion in equity or face stepped up borrowing

cost. Can you outline in a little = bit more detail what are the - what would

be the increase in costs? And then finally any additional fees associated -

commitment fees associated with cl= osing the refinancing?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: The

initial amortization is in December 2009, and it's for less than $500

million. Then there is an additional amorti= zation in June 2010 which is

around $200 million, and then it g= oes up. The amortization for December 2010

is more than $2 billion. And so it goes. We'll get you of c= ourse the details

of that. Those are the semi-annual amortizations that are part of the

amortization schedule.<= /span>

Now there is also a payment target= in terms of milestones that if not reached

then would step up the margin from= 50 to 100 basis points depending on the

size of the difference between the= total cumulative amortizations and the

milestones. The milestones operate in December= 2010 and December 2011. I'll

get Rodrigo to talk to us to about= those details.

<A - Rodrigo Trevio>: Yeah, I guess just going through the other part of your

question, Dan, regarding the incre= ased cost, we would say is if we were not

to place at least $1 billion in eq= uity proceeds by June 30, 2010. This would

be an incremental fee slightly in = excess of $100 million and a step up in the

spread of 75 basis points going fo= rward. So this would be the consequence of

not raising these funds to prepay = the maturities that are coming due in

December 2010 with the net proceed= s from the acquisitions.

<Q - Dan McGoey>: Okay, great. And then sorry, I thin= k can - if you can

detail a little bit more between t= he difference, I think some of them sound

like they are hard amortizations t= hat must be paid and then I think Hctor was

just mentioning that that post 201= 1 if payments are not made then you're

subject to increased fees, is that correct?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes, the

target milestones are around $4.8 billion in December 2010. And if that's not

reached then there is a 50 to 100 = basis points step up depending on the

business we would be to that $4.8 billion milestone. And then the other

milestone is about $7.6 billion of= total amortization - of cumulative

amortizations by 2011, December 2011. And there's another 50 = to 100 basis

points step up depending on the bu= siness to that. And then I think you asked

also about the closing fees. There= is a -- what we call the consent fee of

200 basis points which is payable = now essentially.

<A - Rodrigo Trevio>: Which = we can amortize over the life of the loans

increases caused by close to 60 ba= sis points.

<Q - Dan McGoey>: Okay. Grea= t, thank you. Congratulations on the closing.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you,

Dan.

Operator:

Your next question comes from Gord= on Lee from UBS. Please proceed.

<Q - Gordon Lee>: Yeah, hi.<= span style=3D'mso-spacerun:yes'> Just a couple questions just to cl= arify on the

requirement of issuing equity. One, I just wanted to make - confirm that

that's common equity, that any pre= ferred would not count towards that? And

the second question related to tha= t is would the issuance of a convertible

from the standpoint of the agreeme= nt represent common equity as this

agreement stands? And then second question is just whether you are able to

share with us what some of the cov= enants are, the renewed covenants following

this agreement in terms of net deb= t to equity or whatever ratios you chose?

Thank you.

<A - Rodrigo Trevio>: Yes, o= n the first part of your question, the increased

costs would result starting in Jul= y 1, 2010 if we have failed by that date to

raise at least $1 billion in net proceeds from an equity issuance. Any other

securities issuance, be it a convertible, be it a preferred wouldn't qualify.

It would have to be net proceeds f= rom equity issuances by that date.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: In terms

of the covenants other than what w= as already mentioned in terms of capital

expenditures and the case of the e= quity that we need to issue, there is total

debt to EBITDA covenants and an in= terest coverage ratio covenant. What this

agreement has focused more on the reducing of the leverage of the Company and

less on that. There is a plenty of= room for the Company. These debt covenants

are in effect until June 2010.

And what I could tell you is that = the Company's objective to double debt to

EBITDA remains at the same level t= hat we had before. And so we want to reach

that level so as to be able to facilitate a return to investment grade, and

that is 3.5 times total debt to EB= ITDA. Now we - as I said, I mean the -

these covenants to start in June 2= 010 and have sufficient room for us to

orderly reduce our debt.

<Q - Gordon Lee>: Great, tha= t's clear. Thanks very much and congratulations.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Vane= ssa Quinoa from Credit Suisse. Please

proceed.

<Q - Vanessa Quiroga>: Thank= you. My question is regarding on the operational

side. When's the assumption that you are making regarding the federal

highway program, the SAFETEA-LU re= newal in the U.S. for your forecasts? And

my other question would be regardi= ng the refinancing. If you could pro= vide

the new debt breakdown that you ha= ve in terms of banks, how much is perpetual

and capital markets debt in peso a= nd dollars or any other currency that you

are having now? Thanks.=

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: On the

U.S. SAFETEA-LU renewal, well, we = have mentioned the fact that there is a

proposal by the Congress to renew SAFETEA-LU for around 500 billion U.S.&nbs= p; But

we have built very conservative as= sumptions into our estimates for the U.S.

recovery. And as we mentioned, the= se are in fact lower than the consensus of

some agencies like the Portland Ce= ment Association and the consensus of the

industry. So we believe the - our estimations for the SAFETEA-LU that are

built in the - in our recovery pla= n are really modest. Rodrigo, could you

help us with the...

<A - Rodrigo Trevio>: Yeah, = on the debt breakdown, we recently published our

20-F filing documents and we recen= tly reported our second quarter results.

And the debt breakdown hasn't chan= ged and is fully disclosed there. So

regarding the mix of dollars, euro= s, pesos, as well as bank versus public

market debt and perpetuals is more= or less the same. That was recen= tly

published.

<Q - Vanessa Quiroga>: Okay.= Thank you.

Operator:

The next question comes from Carlos Peyrelongue from Merrill Lynch Mexico.

Please proceed.<= /p>

<Q - Carlos Peyrelongue>: Th= ank you. Congratulations on the refinancing. I

apologize if you already answered = this question, I had some problems with the

line. My question is can you tell = us the cost, the up front cost of the

refinancing of the debt, please?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: The margin

on the refinance debt as explained= is 450 basis points over LIBOR for the

bank debts and a 8.91% yearly coup= on for the private placement note holders.

And there is a 2% - 200 basis poin= ts consent fee.

<Q - Carlos Peyrelongue>: Ok= ay. So it's 200 basis points is the consent fee?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes.

<Q - Carlos Peyrelongue>: Excellent.

<A - Rodrigo Trevio>: Maybe.= ..

<Q - Carlos Peyrelongue>: Th= ank you very much.

<A - Rodrigo Trevio>: Maybe = this a good opportunity to - also related to your

question Carlos, to provide further details. The average cost of our debt for

2008 was approximately 4.9%. We es= timate that our prevailing market

conditions today and given the cos= ts we had for the first seven months and

adjusting for everything, fees tha= t get amortized and what have you, the

average cost of our debt for 2009 = will be about 5.0%. If you were to look

only at the debt that is being refinanced and is subject to the mass override

agreement, the $15 billion of refi= nanced debt, we estimate that the all-in

cost of this debt is approximately= 6.0% at current prevailing rates, which

were less than 6%, which includes = of course peso debt which is more

expensive. But as a result of the = drop in LIBOR rates and EURIBOR rates a lot

of the increased cost to the incre= ased margin are being offset by the lower

base rates.

<Q - Carlos Peyrelongue>: Un= derstood. Now for this year, are you including

already the 200 basis points for t= he consent fee? No.

<A - Rodrigo Trevio>: Well, = yes. But remember that since we are financing

this through February 2014, you ne= ed to amortize these fees during the life

of the loan.

<Q - Carlos Peyrelongue>: Ri= ght. Sorry, so the amortization will be how you -

the 200 basis points, you will pay= them over - until 2014 equal payments?

<A - Rodrigo Trevio>: No, ev= en though you pay them upfront, the way...

<Q - Carlos Peyrelongue>: Ok= ay.

<A - Rodrigo Trevio>: The accounting works is you amortize them during the

life of the loans. So when you loo= k at the cost of debt, even though you do

have a cash outflow today, you nee= d to amortize the cost during the life of

the loans.

<Q - Carlos Peyrelongue>: Understood, got you. Thank you.

<A - Rodrigo Trevio>: Thank = you.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Christopher Buck from Barclays Capital. Please

proceed.

<Q - Christopher Buck>: Good morning. I'm just hoping for a few

clarifications on some of the new covenants on this facility. First of all,

forgive me if I missed this, but d= id you declare the actual leverage ratio

covenants? I know you mentioned that you shou= ld have plenty of room, but did

we actually get a number there?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No, we

didn't. And as I said the focus is on debt repayment and lowering the

exposure of financial institutions rather than measuring the leverage and if

so that the fact that debt leverage covenants start to measure until June

2010 and not immediately.

<Q - Christopher Buck>: Okay= . And how about in terms of some of your other

debt instruments outstanding, are = there any implications on the covenants,

the new package for those? I know the C5 perpetual notes are callable in

2011. Is that something that you would b= e able to do at that time under this

facility and any other impacts not= able for the 2014 euro notes in terms of

covenant?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No. The -

all the facilities that we have ou= tside this $15 billion refinancing

agreement remain the same, at the = same covenants, the same issues and have no

problems.

<Q - Christopher Buck>: Okay= . So in theory the current new facility that you

have arranged here would allow for= a payment on the call of the 2011

perpetual C5s?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Rodrigo.

<A - Rodrigo Trevio>: No, th= at is still a long ways out for us. The - once

you see the full details of the restrictions from the refinanced debt, you

will realize that the objective of= all the restrictions that we have covenant

to comply and abide by are designe= d to maximize free cash flow and allow the

Company to apply that free cash fl= ow to prepaid debt and as soon as we can

recover our financial flexibility,= our investment grade capital structure,

and of course seek to refinance th= is just recently refinanced debt on less

restrictive terms. But for that, w= e need to recover our capital structure and

we need to prepay as much of the d= ebt as we can through all of the

initiatives and the increased free= cash flow that we expect to generate

during the next three to four year= s.

<Q - Christopher Buck>: Okay, great. And final question just to clarify that

all of the equity of the subsidiar= ies at Espaa and Mexico have been pledged

into the new facility?<= /span>

<A - Rodrigo Trevio>: The sh= ares of CEMEX Espaa as well as the shares of

CEMEX Mexico and the sub-holding companies in between have been used as

security for the refinanced debt a= s well as for the publicly traded debt that

has a contractual right to that security, it will also be shared pro-ratably

with them.

<Q - Christopher Buck>: Okay, great. Thanks for that.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Patr= icio Rivera from IXE. Please proceed.

<Q - Patricio Rivera>: Hi, g= ood morning. Congratulations on this important

step for CEMEX. Just a couple of questions please. What are the major

non-refinanced pre-existing debt maturities that you have in the next couple

of years? And also on the operating side, do you estimate a slow recovery

throughout 2013, or do you believe= that 2010 will be a good year for CEMEX?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Sorry,

Patricio, the first part of the question?

<Q - Patricio Rivera>: Yes, = the pre-existing non-refinanced debt maturities,

the capital markets debt etcetera,= what are the major maturities for these

debts in the next couple of years?=

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Well,

there are of course facilities tha= t are of local nature that were not

refinanced. There are bank facilities that ref= er essentially to working

capital that have maturities but a= re expected to be refinanced and kept in

place. There are some fixed income maturities short-term which are very, very

small, 172 million in 2009, 240 in= 2010. And so this is relatively small. So

the maturities scheduled for CEMEX= is mainly the one that is being with - the

ones we have refinanced. And the s= econd part of the question was?

<Q - Patricio Rivera>: Yes, = do you expect a slow recovery throughout 2013? Or

do you expect a strong year in 201= 0 or 2011 to take place?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Well, it

happens in different regions, in different places and the geography is like

the U.S. It's so diverse and large= that it's a bit difficult to pinpoint

statistics and that. But certainly= as we said, I mean for the U.S. market,

the recovery long term which is wh= at we're aiming at is different - from our

point of view a slower recovery th= an the market is forecasting. And so we

think we are on the - in our basel= ine projections on the conservative side of

it.

<Q - Patricio Rivera>: Okay. Perfect. Thank you.

<A - Rodrigo Trevio>: Nevertheless, I mean with the very strong operating

leverage that we have in the U.S. = as volumes do recover, we do benefit

considerably. And the U.S. is the largest contributor to the low teens

compounded annual growth rate we're expect - forecasting for EBITDA for the

period of '09 through '13 that was= used as the basis for the refinancing

agreement.

<Q - Patricio Rivera>: Okay.=

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Yase= en Zahari. Please proceed. Please proceed.

Okay, your next question comes from Diego Torres from ING. Please proceed.

<Q - Diego Torres>: Good mor= ning, I just have one question regarding the

dividends. Does the financing agreement put a restrictions in the dividend

payment?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes,

there's a restriction on cash divi= dend payment.

<Q - Diego Torres>: Either c= ash or stock dividends, I mean it would be any

kind of restrictions that's at the= end, the cash dividends will be restricted

until you'll - you pay down all the refinancing debt or you cannot also issue

a new stock dividend?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: That's way

to the future, but what I can tell= you is that for the refinancing agreement,

cash dividends are not allowed.

<Q - Diego Torres>: Right. C= ash dividends are not allowed.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: That's

correct, that's it.

<Q - Diego Torres>: Yeah tha= t's it. Thank you.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator?

Operator:

And your next question comes from = Jamie Nicholson from Credit Suisse. Please

proceed.

<Q - Jamie Nicholson-Leener>: Thanks again for the call. On your last call

you had mentioned expectations to = close Australia by September, October. I'm

wondering if that gets delayed, if= you still to have the proceeds, I guess

cash on hand to meet your December= '09 amortizations? That's my firs= t

question. And then also there are = some guarantees at some of your existing

Rinker debt or other debt that are= n't guaranteed by Australia. I'm just

wondering if those guarantees have= moved to CEMEX Espaa once these assets are

transferred, how will they be hand= led? Thank you.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Well, we

still keep our estimation of the completion of the Australia operations,

transaction for late September, ea= rly October. And yes, of course the

proceeds of that would first go up= to the formation of these liquidity funds

and then to prepayment.=

<Q - Jamie Nicholson-Leener>: And....

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Go ahead.

<Q - Jamie Nicholson-Leener>= : No, and if it gets delayed, is there - do you

have proceeds available to meet th= ese amortizations in December? How will you

handle the December amortizations = should this transaction get delayed for

some reason?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yeah, well

there's - we don't see any problem= in that with free cash flow. We covered

that. Remember first two amortizations relatively small.

<Q - Jamie Nicholson-Leener>: Okay. And then some of the guarantees that -

some of your existing debt has gua= rantees from CEMEX Australia assets, what

will happen to those? Will they be transferred to CEMEX = Espaa?

<A - Rodrigo Trevio>: Yes, a= s the assets are sold the guarantees are

relieved, of course we then receiv= e the net cash proceeds and apply those to

prepay existing debts.

<Q - Jamie Nicholson-Leener>= : Then my other question is in your refinancing

agreement, is there - were there a= ny restrictions on paying interest on your

perpetual bonds? Those coupons are deferrable, I'm just wondering if any of

the banks have asked for you to implement any deferral features on that?

Thanks.

<A - Rodrigo Trevio>: No. Th= ere is no restriction on paying the coupons as

they come due if we do not defer t= hem.

<Q - Jamie Nicholson-Leener>: Okay. Thank you.

Operator:

Your next question comes from Mike= Betts from JPMorgan. Please proceed.

<Q - Mike Betts>: Yes. Congratulations from me. I had two questions, one is

just clarification and then I guess second one is more fundamental. The

clarification question Hctor, when you're talking about - you gave two

numbers for December 2010, December 2011, I think it was 2.9 billion had to

be repaid by 2010 and five by 2011= but then you gave numbers of 4.8 and 7.4.

Just as clarification, could you e= xplain to me as a non-credit expert what

the difference is between those two numbers?

And then the second question, whic= h I guess is a bit more fundamental. I

mean obviously here you're very mu= ch exposed to, as you were before, the

vagaries of what happens to U.S. LIBOR. But I mean you're no l= onger using

derivatives or anything. I mean will you - what are the intentions if

anything to take any steps to prot= ect yourself against any significant

increases in LIBOR rates?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Good.

Thank you, Mike. Well, the first p= art of your question, the number, the lower

number refers to the mandatory cumulative amortization that we need to make.

<Q - Mike Betts>: Okay.=

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: That is

2.9 billion by December 2010 and cumulative five billion for December 2011.

The larger numbers are what we cal= l the milestones that if not achieved would

then step up the margin by 50 to 1= 00 basis points depending on how we have

advanced in the cumulative amortizations. So that if we have cumulative

amortizations of more than $4.8 bi= llion by December 2010 then there is no

step up.

<Q - Mike Betts>: Okay. That= 's clear. Thank you.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: And for

the derivatives.=

<A - Rodrigo Trevio>: Yes, o= n the question of the mix of fixed versus

floating, currently what we have in total if we include the perpetuals in the

mix is slightly less than 75% is floating and the rest is fixed. Now, when we

look at the component of the debt = that is floating, the biggest weight is

accounted for by the margin which = is fixed as well as the amortization of the

fees, which is also fixed. And so = when you look at the actual exposure that

we have to floating LIBOR or EURIB= OR, as a percentage of the total interest

expense on an annualized basis we = estimate that we're exposed to

significantly less than 20% of our= total interest expense for the floating

rates.

And remember that our business cyc= le does track the interest rate cycle. So

we tend to have lower volumes in m= any of our markets when interest rates are

lowest and we tend to sell and see growth in our volumes when interest rates

begin to rise. So we don't feel ov= erly exposed to the floating rate

environment when you look at our f= ree cash flow and how it is generated. But

nevertheless we will explore the different options for hedging. What I can

say at this point is that any hedg= ing strategy that would have a call on

liquidity through margin calls we'= re likely going to avoid as we're trying to

use as much as we can of our free = cash flow to pay and prepay the debt that

we have so we can recover our capi= tal structure and our financial

flexibility.

Operator:

Your next question comes from Carl= os Hermosillo from Vector. Please proceed.

<Q - Carlos Hermosillo>: Yes, morning. Just a follow up, could you repeat the

milestone you have to achieve in 2= 011 in order to don't be punished with the

step up?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes, of

course, Carlos. It's $4.8 billion = by December 2010.

<Q - Carlos Hermosillo>: Oka= y.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: And 7.6 by

December 2011.

<Q - Carlos Hermosillo>: Okay. And those are the only = two milestone you

have?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes.

<Q - Carlos Hermosillo>: Oka= y. Thank you very much.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

The next question comes from Anne = Mill from Deutsche Bank. Please proceed.

Anne Mill, please proceed, your li= ne is open. [Operator Instructions] Your

next question comes from Antonio D= avila from GBM. Please proceed.

<Q - Antonio Davila>: Hello, thanks for the call. Just a follow up on your

hedging strategies with the deriva= tives. Could you please tell us if you're

planning on using any sort of derivatives for foreign exchange rate risk in

order to convert part of these maturities to pesos or some other currency?

<A - Rodrigo Trevio>: No. We believe we have the currency mi= x that we need

given our assets and cash flow distribution, and we don't plan to use foreign

exchange derivatives to change the nature of our debt. I don't know if you

have a follow-up question on that.=

Operator:

Okay, your next question. And your= last question comes from Yaseen Zahari

from Exane BNP Paribas. Please pro= ceed.

<Q>: Yes, good morning. I ha= ve got two question. My first questi= on is on the

U.S. business. Your volumes declined much more th= an - or significantly more

than the average because of your exposure to California and Florida. Do you

think that your volume in 2010 are= going to rebound more strongly because

demand is very low?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Well,

certainly...

<Q>: That refer to...

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Yes, the

fact that place like Florida were = hit primarily by the housing sector. And

while the housing sector is not recovering that is going to take longer. But

it is the investment in infrastruc= ture that is really taking up the top in

our recovery scenario for the U.S.= And then of course as soon as the housing

market really recovers, which is g= oing to take longer because of the

inventory workout process, then we= will see additional volumes in the states

like Florida. But again, I would s= tress the long term function of our

business plan, which takes in the = case of the U.S. volume recovery in terms

of cement of around 11% a year upo= n the average annual growth.

<Q>: I mean do you have a fi= gure in mind for 2010?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Sorry?

<Q>: Do you have a figure in= mind for 2010 in terms of demand growth for the

U.S.?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: We're not

disclosing the details of our busi= ness plan except for the - what is the long

term assumption.=

<Q>: Okay, I understand. And= my second question was on your debt repayments.

I think you gave us a debt repayme= nt until 2010. And what are your= debt

repayment thereafter in 2011, 2012= until 2014?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Rodrigo?

<A - Rodrigo Trevio>: Well, = the two most important dates as Hctor mentioned

is December 2010 and December 2011= with the cumulative amortizations of the -

those two, 2.9 billion and 4.8 bil= lion. I would say that 2012 and '13, we

would expect to be able to satisfy= with our free cash flow generation during

those years. And as we - and yes, = we would have important maturities by

February 2014, that is the remaind= er of the debt, which we would hope that by

then we have recovered our capital structure targets and are able to

refinance that on much better term= s well before that date.

<Q>: Okay. And are you consi= dering further disposals?

<A - Rodrigo Trevio>: I'm so= rry. Can you repeat your question?

<Q>: Are you considering fur= ther disposals?

<A - Rodrigo Trevio>: Further asset disposals?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: That's

certainly part of the whole propos= al of this refinancing, that we use our

free cash flow primarily but also = other initiatives like asset disposals,

access to the capital markets and = other type of liability management to

reduce our debt, as much as we can= , as fast as we can, and that is precisely

why this maturity settlement was p= ut in and also the milestones. The idea is

to facilitate the orderly reductio= n of our debt through all those

initiatives.

<Q>: Okay. And is there any particular area t= hat you're working on?

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: No, that's

precisely what we need to work now= on.

<Q>: Okay, I understand. Tha= nk you very much.

<A - Hctor Medina, Executive Vi= ce President of Finance and Legal>: Thank you.

Operator:

I would now like to turn the call = over to Hctor Medina for closing remarks.

Hctor Medina, Executive Vice Presi= dent of Finance and Legal:

Well, thank you very much. In clos= ing, we would like to thank you all for

your time and attention. We look f= orward to your continued participation in

CEMEX. Please feel free to contact= us directly or visit our website at any

time. Thank you and good day.=

Operator:

Thank you for your participation in today's conference. This concludes the

presentation. You may now disconne= ct. Good day.

This transcript may no= t be 100 percent accurate and may contain misspellings and other inaccuracies. T= his transcript is provided "as is", without express or implied warran= ties of any kind. Bloomberg retains all rights to this transcript and provides it solely for your personal, non-commercial use. Bloomberg, its suppliers and third-party agents shall have no liability for errors in this transcript or= for lost profits, losses, or direct, indirect, incidental, consequential, speci= al or punitive damages in connection with the furnishing, performance or use of such transcript. Neither the information nor any opinion expressed in this transcript constitutes a solicitation of the purchase or sale of securities= or commodities. Any opinion expressed in the transcript does not necessarily reflect the views of Bloomberg LP