Cemex 2012 Annual Report Download - page 6

On the financial front, we continued to strengthen
our capital structure and to regain our financial flex-
ibility—both of which are critical to our company’s
future. During 2012, we successfully completed the
refinancing of our August 2009 Financing Agree-
ment with close to 93% participation. This deal, which
extended the final maturity of our Financing Agree-
ment debt from 2014 to 2017, was an important
milestone for us. It not only provided more time to
benefit from the recovery of our markets, but also
more opportunity to consolidate our transformation
efforts. Subsequently, we placed US$1.5 billion of
bonds, which demonstrated the strong support for
CEMEX in the global capital markets. We used the
proceeds from this offering to prepay principal out-
standing under our new Facilities Agreement.
In addition, we successfully placed 26.65% of the
stock of our CEMEX Latam Holdings subsidiary on
the Colombian Stock Exchange. Through this transac-
tion—from which we received approximately US$960
million to pay down debt—we enabled minority stock-
holders to share in the upside potential of a rapidly
growing region through an equity stake directly in
our operating subsidiary, which was a new approach
for CEMEX. I believe that this initiative was good for
all our shareholders since it unlocked untapped value,
broadened our investor base, and enhanced our finan-
cial flexibility.
Under our financial plan for 2012, we have substan-
tially prepaid all of our principal debt payments until
February 2014 and bolstered our liquidity. We have
also increased the average life of our debt to 5.0
years, from 3.8 years at the beginning of 2012, with
no significant change in annual interest expense.
As I have reported in the past, transforming CEMEX
is the cornerstone of our strategy to recover our track
record of industry leading, sustainable value creation.
As a result of our transformation efforts, for the year,
we produced an incremental recurring improvement in
our steady-state EBITDA of US$200 million on top of
the US$150 million we achieved in 2011, reaching a
run rate of US$400 million by the end of 2012.
However, CEMEX’s transformation is about much more
than improving our company’s cost structure. Our un-
derlying goal is to reengineer our corporate DNA. We
have been drilling deep into every aspect of our orga-
nization, seeking innovative solutions and collaborating
across functions and geographies, in order to use our
people and our assets more eciently and effectively.
One example of this new approach is our 10-year
strategic agreement with IBM to provide us with best-
in-class IT and back-oce business process services.
By partnering with one of the leaders of the global IT
industry, we are able to focus on our core business,
while responding more quickly to changing market
needs and serving our customers better. In addition,
we expect to generate savings of approximately US$1
billion during the life of the contract.
Furthermore, during 2012, we completed the global
integration of the most advanced enterprise platform
based on SAP. We achieved this deployment in record
time and cost across all of our worldwide operations.
This simpler, faster, and more flexible state-of-the-art
business platform makes our internal processes more
ecient, improves our customer service, and enhanc-
es our competitiveness.
CEMEX’s transformation
is about much more than
improving our company’s
cost structure. Our underlying
goal is to reengineer our
corporate DNA.
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