Cemex 2012 Annual Report Download - page 103

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Notes to the
consolidated
financial
statements
103
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20D) Non-controlling interest and perpetual debentures
Non-controlling interest
Non-controlling interest represents the share of non-controlling stockholders in the results and equity of consolidated subsidiaries.
As of December 31, 2012 and 2011, non-controlling interest in equity amounted to approximately $8,410 and $3,513,
respectively.
As mentioned in note 15B, on May 17, 2012, CEMEX acquired the non-controlling interest in Readymix, the Company’s subsidiary
in Ireland.
On November 15, 2012, CEMEX Latam Holdings, S.A. (“CEMEX Latam”), a wholly-owned subsidiary of CEMEX España, S.A.,
concluded its initial offering of 170,388,000 new common shares, at a price of 12,250 Colombian Pesos per common share. The
common shares offered by CEMEX Latam included (a) 148,164,000 new common shares offered in a public offering to investors
in Colombia and in a concurrent private placement to eligible investors outside of Colombia, and (b) an additional 22,224,000 new
common shares offered in such private placement that were subject to a put option granted to the initial purchasers during the
30-day period following closing of the offering. CEMEX Latam’s assets include substantially all of CEMEX’s cement and ready-mix
assets in Colombia, Panama, Costa Rica, Brazil, Guatemala and El Salvador. After giving effect to the offering, and the exercise
of the put option by the initial purchasers, CEMEX España, S.A., owns approximately 73.35% of CEMEX Latam’s outstanding
common shares, excluding shares held in treasury. CEMEX Latam’s common shares are listed on the Colombian Stock Exchange
(Bolsa de Valores de Colombia S.A.) under the ticker CLH. The net proceeds from the offering of approximately US$960, after
deducting commissions and offering expenses and after giving effect to the exercise of the put option by the initial purchasers,
were used by CEMEX to repay indebtedness under the Facilities Agreement and the Financing Agreement. During September and
October 2012, CEMEX entered into foreign exchange call options and forward contracts for notional amounts of US$200 and
US$510, respectively; to hedge the exposure to the exchange rate fluctuations between the Colombian peso to the U.S. dollar. At
settlement, changes in the fair value of these instruments generated a loss of approximately US$2 ($26).
Perpetual debentures
As of December 31, 2012 and 2011, the balances of the non-controlling interest included approximately US$473 ($6,078) and
US$938 ($13,089), respectively, representing the notional amount of perpetual debentures. The balance in 2012 and 2011
excludes the notional amount of perpetual debentures held by subsidiaries, acquired during 2012 and 2011 through a series
of exchange transaction of each series of its then outstanding perpetual debentures for new secured notes or other financial
instruments (note 16A). The exchange offers previously mentioned were contemporarily agreed by CEMEX and its perpetual
debentures’ holders, without any existing commitment.
Interest expense on the perpetual debentures, which is accrued based on the principal amount, was included within “Other equity
reserves” and represented expenses of approximately $453 in 2012, $1,010 in 2011 and $1,624 in 2010, excluding in all
periods the amount of interest accrued by perpetual debentures held by subsidiaries.
CEMEX’s perpetual debentures have no fixed maturity date and there are no contractual obligations for CEMEX to exchange any
series of its outstanding perpetual debentures for financial assets or financial liabilities. As a result, these debentures, issued
entirely by Special Purpose Vehicles (“SPVs”), qualify as equity instruments and are classified within non-controlling interest,
as they were issued by consolidated entities. In addition, subject to certain conditions, CEMEX has the unilateral right to defer
indefinitely the payment of interest due on the debentures. The classification of the debentures as equity instruments was made
under applicable IFRS. The different SPVs were established solely for purposes of issuing the perpetual debentures and were
included in CEMEX’s consolidated financial statements.