Cemex 2012 Annual Report Download - page 83

Notes to the
consolidated
financial
statements
83
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For 2013 and going forward, CEMEX believes that it will continue to comply with its covenants under its Facilities Agreement, as
it is expecting to benefit from cost savings programs implemented during 2012 and 2011, favorable market conditions in some
of its key markets and decreasing costs for key inputs such as energy. Furthermore, CEMEX has an asset disposal plan in place
which, as in prior years, is expected to support CEMEX’s efforts to reduce its overall debt.
CEMEX will classify all of its outstanding debt as current debt in its balance sheet if: 1) as of any relevant measurement date
on which CEMEX fails to comply with the financial ratios agreed upon pursuant to the Facilities Agreement; or 2) as of any date
prior to a subsequent measurement date on which CEMEX expects not to be in compliance with its financial ratios agreed upon
under the Facilities Agreement, in the absence of: a) amendments and/or waivers covering the next succeeding 12 months; b) high
probability that the violation will be cured during any agreed upon remediation period and be sustained for the next succeeding
12 months; and/or c) a signed refinancing agreement to refinance the relevant debt on a long-term basis. Moreover, concurrent
with the aforementioned classification of debt in the short-term, the noncompliance of CEMEX with the financial ratios agreed
upon pursuant to the Facilities Agreement or, in such event, the absence of a waiver of compliance or a negotiation thereof, after
certain procedures upon CEMEX’s lenders’ request, they would call for the acceleration of payments due under the Facilities
Agreement. That scenario will have a material adverse effect on CEMEX’s liquidity, capital resources and financial position.
16B) Other financial obligations
As of December 31, 2012 and 2011, other financial obligations in the consolidated balance sheet are detailed as follows:
2012 2011
Short-term Long-term Total Short-term Long-term Total
I. Convertible subordinated
notes due 2018 $ – 7,100 7,100 $ – 7,451 7,451
I. Convertible subordinated
notes due 2016 – 10,768 10,768 – 11,236 11,236
II. Convertible subordinated
notes due 2015 – 8,397 8,397 – 8,829 8,829
III. Convertible securities due 2019 152 1,561 1,713 131 1,703 1,834
IV. Liabilities secured with
accounts receivable 6,013 2,500 8,513 7,052 2,500 9,552
V. Capital leases 813 2,587 3,400 528 1,471 1,999
$ 6,978 32,913 39,891 $ 7,711 33,190 40,901
Financial instruments convertible into CEMEX’s CPOs contain components of liability and equity, which are recognized differently
depending upon whether the instrument is mandatorily convertible or is optionally convertible by election of the note holders
(note 2L).
I. Optional convertible subordinated notes due in 2016 and 2018
On March 15, 2011, CEMEX, S.A.B. de C.V. closed the offering of US$978 ($11,632) aggregate principal amount of 3.25%
convertible subordinated notes due in 2016 (the “2016 Notes”) and US$690 ($8,211) aggregate principal amount of 3.75%
convertible subordinated notes due in 2018 (the “2018 Notes”). The notes are subordinated to all of CEMEX’s liabilities and
commitments. The notes are convertible into a fixed number of CEMEX’s ADSs, at the holder’s election, at any time after June
30, 2011 and are subject to antidilution adjustments. As of December 31, 2012 and 2011, the conversion price per ADS was
US$10.4327 and US$10.85, respectively. A portion of the net proceeds from this transaction were used to fund the purchase
of capped call transactions (note 16D), which are generally expected to reduce the potential dilution cost to CEMEX, S.A.B. de
C.V. upon future conversion of the 2016 Notes and the 2018 Notes. The fair value of the conversion option as of the issuance
date amounted to approximately $3,959, which considering the functional currency of the issuer, was recognized as a derivative
instrument within “Other non-current liabilities” (note 16D). Changes in fair value of the conversion option generated a net loss of
approximately $1,094 (US$88) in 2012 and a net gain of approximately $167 (US$13) in 2011, recognized within other financial
(expense) income, net. After antidilution adjustments, the conversion rate as of December 31, 2012 and 2011 was 95.8525 ADS
and 92.1659 ADS, respectively, per each 1 thousand dollars principal amount of such notes.