Cemex 2012 Annual Report Download - page 140

Notes to the
financial
statements
140
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CEMEX, S.A.B. de C.V. 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 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.A.B. de C.V.’s liquidity, capital resources and
financial position.
10B) Other financial obligations
Other financial obligations in the balance sheet of CEMEX, S.A.B. de C.V. as of December 31, 2012 and 2011, are 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
$ 152 27,826 27,978 $ 131 29,219 29,350
The convertible financial instruments of CEMEX, S.A.B de C.V. contain liability and equity components, which are recognized
differently depending upon whether the instrument is mandatorily convertible, or is optionally convertible by choice of the note
holders.
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, 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 10D). Changes in fair value of the conversion option generated a loss of approximately
$1,094 (US$88) in 2012 and a gain of approximately $167 (US$13) in 2011, recognized within other financial 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.
II. Optional convertible subordinated notes due in 2015
On March 30, 2010, CEMEX, S.A.B. de C.V. issued US$715 ($8,837) aggregate principal amount of 4.875% Optional Convertible
Subordinated Notes due 2015 (the “2015 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, and are subject to antidilution adjustments.
As of December 31, 2012 and 2011, the conversion price per ADS was US$12.0886 and US$12.5721, respectively. In
connection with the offering, CEMEX, S.A.B. de C.V. entered into a capped call transaction expected to generally reduce the
potential dilution cost to CEMEX, S.A.B. de C.V. upon future conversion of the notes (note 10D). The fair value of the conversion
option as of the issuance date amounted to $1,232, which considering the functional currency of the issuer was recognized as
a derivative instrument within “Other non-current liabilities”. Changes in fair value of the conversion option generated a loss of
approximately $114 (US$9) in 2012 and a gain of approximately $39 (US$3) in 2011, recognized within other financial income,
net. After antidilution adjustments, the conversion rate as of December 31, 2012 and 2011 was 82.7227 ADS and 79.5411
ADS, respectively, per each 1 thousand dollars principal amount of such notes.