Cemex 1999 Annual Report Download - page 57

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Investment held by subsidiaries in the Parent Company amounting to $6,051,455 (113,625,709 CPO’s and 3,663,615
warrants) and $4,280,151 (171,064,911 CPO’s) as of December 31, 1999 and 1998, respectively, are offset against
majority interest stockholders’ equity in the accompanying financial statements. As part of the hedge transaction
carried out by the Company during 1999 (see notes 2C and 15(d)), a total of 105 million CPO’s held by subsidiaries
in the Parent Company were sold.
a) On November 22, 1999, the Company acquired from the Egyptian government 77% equity interest in Assiut
Cement, Co. (“Assiut”), the largest cement-producing company in Egypt for US dollars 318.8 million ($3,031.8
million). Additionally, the Company has an option until June 30, 2000 to acquire an additional 13% for an
approximate amount of US dollars 53.8 million. As of December 31, 1999, the consolidated financial statements
of the Company include the balance sheet of Assiut with figures as of November 30, 1999, and the results of
the one-month period ended November 30, 1999.
b) During 1999, the Company entered into capitalization and subscription of shares agreements with institutional
investors in Asia, represented by AIG Asian Infrastructure Fund II, L.P. and GIC Special Investments Pte Ltd., to
co-invest in Cemex Asia Holdings Ltd. (“CAH”), subsidiary of the Company created to make cement
investments in Asia. Based on the agreements, on September 30, 1999, the investors in Asia contributed capital
to CAH for approximately US dollars 87 million, and the Company, through subsidiaries, contributed to CAH
its direct participation and its economic benefits in Rizal Cement and APO Cement, subsidiaries in the
Philippines. As a result of this transaction, on September 30, 1999, the direct participation and economic
benefits of the Company in Rizal and APO decreased to 60% and 86%, respectively. Due to this transaction, a
minority interest increase in the consolidated stockholders’ equity was reflected.
c) On September 21, 1999, the Company successfully completed a tender offer for the acquisition of the Costa
Rican cement producer, Cementos del Pacífico, S.A. (“Cempasa”). Through this transaction, a subsidiary of the
Company acquired an additional 79.5% of the shares outstanding of Cempasa for approximately US dollars 72
million ($685 million), increasing the equity interest of the Company in Cempasa to 95.3%. As of December 31,
1999, the consolidated financial statements of the Company, include the balance sheet of Cempasa with figures
as of December 31, 1999, and the results for the three-month period ended December 31, 1999.
d) In June 1999, the Company acquired 11.92% equity interest in Cementos Bio Bio, S.A., the largest cement
producer of Chile. The total of this transaction amounted to approximately US dollars 34 million. As of
December 31, 1999, the investment in Cementos Bio Bio was accounted for under the equity method of
accounting, and is included in the investments in affiliated companies’ caption for $294,126.
e) In February 1999, a subsidiary of the company acquired 99.9% interest in the economic benefits of APO Cement
Corporation (“APO”), a Philippine cement producer, for approximately US dollars $400 million. As of December
31, 1999, the consolidated financial statements of the Company include the balance sheet and results of APO
for the year ended December 31, 1999.
f) Through transactions carried out in 1999 and 1998 for approximately US dollars 126 and 114.6 million,
respectively, a subsidiary of the Company acquired 25.53% of the common stock of PT Semen Gresik (Persero),
Tbk. (“Gresik”), an Indonesian company with several cement plants. As of December 31, 1999, the investment
in Gresik was included in the consolidated financial statements under the equity method of accounting, and is
included in the investments in affiliated companies’ caption for $2,715,781. As of December 31, 1998, the
investment in Gresik was accounted under the cost method of accounting and totals $1,169,446. Under the
terms of the Company’s agreement, entered into with the Indonesian government in connection with our
investment in Gresik, the Indonesian government has an option until October 2001 to require the Company to
purchase its 51% interest in Gresik for a purchase price of approximately US dollars 418 million ($3,975 million),
plus accrued interests since October 1998 at 8.2% per annum.
g) In December 1998, through a public offering, the Company acquired an additional 21.96% of the shares
representative of the capital stock of its Colombian subsidiary. Through this acquisition, the Company’s
investment in this subsidiary increased from a 68.7% to 90.7%. This transaction amounted to approximately US
dollars 47.3 million.
h) In November 1998, a subsidiary of the Company increased its equity interest in Rizal Cement, Inc. (“Rizal”), a
Philippine cement producer to 40%, for an approximate amount of US dollars 130 million. Likewise, as part of
this transaction, a Philippine investor, through the subscription of a special series of shares, purchased an
additional 30% of Rizal. The Philippine investor and Cemex formed an alliance that grants the Company control
of the operations not reserved for nationals, and the administration of Rizal. Through these transactions, the
Company has 70% of the economic benefits of Rizal. As of December 31, 1999, the consolidated financial
statements include the balance sheet and results of Rizal for the year 1999. As of December 31, 1998, the
investment in Rizal was accounted for by the purchase method of accounting and the accounts of Rizal are
included in the Company’s consolidated financial statements based upon Rizal’s November 30, 1998 amounts.