Cemex M&A/Other
Teleconference CEMEXCPO M

2009-08-17 16:18:13.713 GMT

Event Date: 08/17/2009

Company Name: Cemex

Event Description:Business
Update Call

Source: Cemex

For more event information
and transcripts, visit <a
href="bloomberg:EVTS%20%2FD%3AF%2D1712688%3CGO%3E">EVTS</a>

Business Update Call

MANAGEMENT DISCUSSION
SECTION

Operator:

Good day ladies and gentlemen and
welcome to CEMEX's, Refinancing Plan

Conference Call. My name is Glenn and
I'll be your coordinator for today.

I would now like to turn the
presentation over to your host for today's call,

Mr. Lorenzo Zambrano, Chairman and Chief
Executive Officer of CEMEX.  Please

proceed.

Lorenzo H. Zambrano, Chairman and Chief
Executive Officer:

Thanks. Good morning. I'm pleased to
announce - hello?  I'm pleased to

announce that we have reached an
agreement with our creditor banks and

private placement note holders to
refinance 15 billion in debt. The agreement

takes effect today.  The refinancing is an important
milestone in our

integrated strategy to rebuild our
balance sheet, reinforce our business

model and take advantage of the coming
recovery of the global economy.

Over the past year, we have been
implementing a recovery strategy based on

several key foundations including the
debt refinancing.  First, cost

reduction.  As you know we have taken 900 million
out of our cost base, not

only adjusting for the reduced level of
market activity but also improving

our operational efficiency. Around 60%
of these savings are structural, which

means they are sustainable in the long
term.

Second, capital expenditures from
payment. We have reduced maintenance and

expansion capital expenditures by $1.5
billion for a sustainable level of 650

million in 2009. By the agreement with
the banks, we will limit CapEx to 700

million in 2010 and 800 million by year
during 2011 to 2013.

Third, asset sales. We have agreed to
sell our Australian operations for the

equivalent of around $1.5 billion. We
are making good progress closing that

transaction. The progress we have made
in implementing our overall strategy

will allow us time to sell other
identified non-core assets once markets

recover.

Four, increased equity. We have called a
shareholders' meeting to be held on

September 4 to ask for approval for an
increase in our equity in order to

strengthen our balance sheet.  Assuming that our shareholders agree
with that

proposal, we will go to the market when
the time is right.

Of course our debt refinancing agreement
is an integral part of this

strategy. The revised maturity schedule
that results from the agreement will

shift near term maturities into the
future with final maturity during 2014.

As part of this agreement, required
amortization during 2009 to 2014 will be

covered by free cash flow, non-core
asset sales and other capital markets

operations.  I'm confident that the cumulative effect
of our efforts will

allow us to regain our financial
flexibility and eventually our

investment-grade capital structure.

The successful execution of most of the
key elements of our repositioning

strategy in the CEMEX is now emerging
from the biggest recession that has hit

our industry and our Company in 80
years, are finally seeing clear signs that

most of our markets are stabilizing as
well as a return to normal functioning

capital markets.  To some extent that reflects the impact
of government

stimulus spending which is finally being
translated into real project

spending. The good news for the future
is that most of the committed

anti-recession spending in our markets
is still in the pipeline. That

spending is likely to provide a
substantial catalyst to demand in the coming

month.

At the same time, prices in local
currency have been broadly stable in most

of our markets. Even in the U.S. where
the building materials market has

suffered the deepest and longest
decline, prices have only recently softened.

In general, I expect prices to remain
resilient as demand recovers. Taken

together, these trends tell us that the
worst of the global construction

downturn seems to be over. While I'm
reluctant to predict its exact shape or

speed of the recovery, I think it is
safe to say that our markets have

bottomed and are entering the recovery
part of the cycle.

CEMEX is well positioned to take full
advantage of the upturn. Our reduced

cost base, expected operating margin
improvement and disciplined operating

strategy mean that increasing revenues
will substantially flow to our bottom

line.

Now I want to share with you some of the
headline elements of our five-year

business plan that we've prepared to
support our integrated financial and

operating strategy and our negotiations
with the banks. As we look at our

markets, we expect the key demand
drivers to be the implementation of

government infrastructure programs in
our key markets, positive demographic

trends and pent-up housing demand and
underlying economic recovery,

particularly in the United States. I
want to emphasize that we are not

counting on a new boom. Our baseline
anticipates that cement volumes which

produce two-thirds of our EBITDA, will
not return to prior peak levels during

the next five years.

On a global consolidated basis, the
consequence of these factors is that we

expect a growth of top line sales at a
compound annual rate in the high

single-digits from 2009 to '13. We
expect to grow EBITDA at a low teens

annual rate. In large part because of
reduced CapEx spending we expect our

free cash flow available to date to debt
to increase at a more rapid rate

than EBITDA starting from a roughly 1.6
billion that we are likely to

generate this year.

This strong EBITDA of free cash flow
conversion will allow us to pay down

debt and help to rebuild our financial
strength. I believe we have built our

baseline plans on realistic assumptions.
We are not betting on a surge in

demand or prices, but we are betting on
our ability to execute our business

plan with the discipline and professionalism
that are CEMEX's hallmarks.

Want to make a final point about the
near-term future. Our immediate priority

is to strengthen our balance sheet,
which is the key to our long-term growth.

Thus, we will continue to implement our
cost reduction and right sizing

initiatives, maintain tight discipline
on our capital investments and use as

much of our free cash flow as possible
to reduce debt.

As a result, I'm confident that CEMEX
will emerge from this crisis stronger,

more focused and more efficient than
when we where hit by the U.S. housing

market. In large part that confidence
rests on my belief that CEMEX's

management and employees are among the
best in the industry as they're

demonstrating during the difficult times
through which we have passed.

Finally, I want to thank the financial
institutions with whom we have worked

closely over the past months to build a
refinancing agreement that is in

their interest as well as in the
interest of the rest of our CEMEX

stakeholders. Their professionalism and
commitment have helped us to get

where we are today.

Now, Hctor Medina will explain our
business plan and refinancing agreement

and then we will of course answer your
questions. Thanks.

Hctor Medina, Executive Vice President
of Finance and Legal:

Thank you, Lorenzo. We have worked
closely with our creditors over the past

months to develop the agreement we are
presenting to you today. I have

enormous respect for the
professionalism, commitment and dedication of the

teams that negotiated this refinancing.
I think we have produced an agreement

that is in the best interest of all
parties, including of course those of

CEMEX's stakeholders.

This morning I will focus on two issues.
First, the five-year business plan

that underpins the refinancing agreement
we have announced; and second, the

key terms and conditions of the
refinancing agreement itself.

As you know over the past several years
we experienced a sharp decline in

demand throughout our global network.
However we are now seeing signs that

the markets have bottomed and that we
are also seeing early indications of

recovery.  That said, I want to emphasize that we
built our five-year

business plan that covers 2009 to 2013
assuming that this recovery is real

but modest.

The U.S. market is key to our
recovery.  Our cement volumes pro
forma dropped

by almost 50% during - between 2006 and
2009, reflecting historic decline in

housing and other construction
sectors.  We expect the moderate
recovery that

seems to be starting at some parts of
the country to gradually gain strength,

although our assumptions are somewhat
more conservative than consensus

macroeconomic and industry forecasts.

Nevertheless, the contraction over the
past several years was so dramatic

that we expect cement demand in our U.S.
market to increase at an average

annual rate of around 11% over the next
five years, representing a 40%

increase by the end of the period. That
growth would represent fully half of

CEMEX's total expected cement growth -
cement demand growth between now and

2013. We expect similar growth in our
Ready Mix and aggregate business.

Without assuming increased real prices,
the consequence will be a substantial

recovery in the performance of our U.S.
operations.

With ongoing cost discipline, our
baseline expectation is for U.S. EBITDA to

recover to around $1.6 billion by 2015,
roughly the level we produced in 2007

pro forma with Rinker for the full year.

Mexico is currently our largest
market.  Proportionately, cement
volumes have

remained stable despite the deep
recession that has hit the rest of the

economy. This primarily reflects the
government's successful programs to

increase infrastructure spending. In
addition, once the recession passes we

expect housing growth to resume because
of the large pent-up demand from the

country's growing middle class.  In turn that will drive volume increases
in

our Ready Mix and other construction
material businesses.

With the stable prices, lower costs and
the contribution of our self-supplied

clean energy projects our baseline
expectation is for Mexican EBITDA

generation to increase by almost
one-third between 2009 and 2013.  In

contrast, we do not expect any
substantial recovery in the performance of our

Spanish operations. Demand volumes have
declined more than half since 2006

and are not expected to recover during
our baseline period.  Although we
will

continue to right size our operations,
we are not forecasting any increase in

EBITDA generation during the next five
years.

Reflecting the geographic
diversification of our portfolio, we anticipate

growth in cement and other product
demand market - in markets as diverse as

Poland, Columbia and the U.K.  Overall we expect EBITDA generation from
our

Europe, Middle East, Africa and Asia
region excluding Spain to increase at an

average annual compound growth rate of
more than 5%. For our South American

and Caribbean region, we expect EBITDA
growth of more than 7%. Taken

together, we expect to grow EBITDA at
low teens annual rate to 2013. In turn,

this will produce even stronger growth
in free cash flow and that provides

the basis of our refinancing.

As Mr. Zambrano said earlier, we believe
this business plan is based on

realistic assumptions and it has been
reviewed and accepted by our major

banks and their advisors. We are not
betting on a new boom, but we are

betting on CEMEX's ability to create
value in markets that we know well as

they gradually recover from the shock of
the global downturn. This is based

in part from the sharp adjustment in our
fixed cost base that we have

implemented during the recession.

Now I will turn to the details of the
refinancing agreement that rests on

this business plan. The agreement covers
$15 billion in debt extended to

CEMEX through a variety of bank
facilities as well as private placement

notes. More than 50 banks and 25 private
placement investors are

participating in the agreement. The
refinancing is structured to provide us

with flexibility to amortize existing
debt through increased cash flow as

well as asset sales, equity and debt
issuances and other initiatives. In

turn, we are undertaking important
obligations. We will make substantial debt

repayments in the coming years, provide
by several covenants and work to meet

key milestones.

Let me provide some context. CEMEX's
total financial obligations stand at

$22.3 billion, excluding the perpetual -
including the perpetuals. Thus, the

refinancing agreement excludes publicly
held securities and bank debt

primarily associated with our working
capital need at the operating level.

The agreement we have reached extends
the final maturities of $15 billion to

February 2014. We have committed
ourselves to repay approximately $2.9

billion by December 2010 and a
cumulative $5 billion by December 2011,

representing 19% and 33% of the covered
debt.

Prior to our refinancing agreement, we
were facing unsustainable amortization

requirements during 2009 to 2011. The
new debt maturity profile, which

excludes our perpetual obligations,
provides time and flexibility to

deleverage our balance sheet as our
markets, our performance and the

financial environment recover.

In addition, we will undertake capital
markets operations and non-core asset

sales beyond the sale of our Australian
operations as needed to meet the

balance of our repayment obligations
between now and 2011. This agreement is

a sign to allow us to undertake those
operations in an ordered way without

the pressure of immediate amortizations
and at a time when markets are likely

to have normalized.

The refinancing agreement includes the
following major terms and conditions.

Refinance obligations will carry a 450
basis points margin over LIBOR to bank

creditors and at a fixed rate of 8.91%
to private placement creditors that

represent $895 million of the total
refinancing package. Both rates subject

to adjustments and although the decline
in LIBOR means that the cost of

accounting - and although this -- the
decline in LIBOR means that the cost of

remanding remains manageable.

We are obligated to maintain certain
consolidated coverage and leverage

ratios starting in June 2010. We have
agreed to limit our total capital

expenditures including maintenance and
growth CapEx through 2013. We are

extending the share pledges required by refinancing
institutions to our

public securities that carries that
contractual right.  We are providing

additional growth guarantees on the
refinanced debt.  And we are subject
to

incremental costs if we have not issued
at least $1 billion in net proceeds

of additional equity by June 2010.

This agreement is based on CEMEX's
recognition that we need to reduce our

balance sheet leverage and debt levels
and our creditors' recognition that

time and flexibility are required for a
sustainable solution. It allows us to

be leveraged in an orderly fashion over
a decline time period and then to

refinance the remaining maturities. That
will improve the overall credit

quality of CEMEX's securities to the
benefit of all of our stakeholders.

Finally I have been asked to tell you
that any forward-looking statements we

make today are based on our current
knowledge of the market in which we

operate and could change in the future
due to a variety of factors beyond our

control.

Thank you. We have asked Rodrigo Trevio,
CEMEX's CFO to join us in answering

your questions which I hope will be
focused on the issues we have presented

today in order to ensure that we can
take as many questions as possible.

Operator?

Q&A

Operator:

Your first question comes from Jacob
Stanfield from JPMorgan. Please proceed.

<Q>: Hi, good morning. Thanks for
the call. I - in terms of the refinancing,

was any of your debt repaid with the new
facility or were - was there any

flow of funds or were all the facilities
just extended under these new terms?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No the -

100% of the facilities that included in
the - this agreement are being

refinanced. We think it's a show of the
confidence of the - of these

financial institutions and private
placement note holders. So it is all the

debt that is being refinanced.

<Q>: Right, but it was there any
flow of funds?  I mean was the new
facility

created and...

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No.

<Q>: The old agreements repaid?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No. That

is - 100% of the old debt was extended
in March.  It's being refinanced
under

this agreement.

<Q>: Okay, and then in terms of
the asset sales and capital market

transactions, do 100% of the proceeds
need to be used to repay the

rescheduled debt?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>:

Essentially yes. Although there is a
liquidity provision there.  We need
to -

the Company announced $650 million in a
liquidity facility. So as long as

this is there, all the proceeds from
asset sales or other initiatives will go

to prepayments.

<Q>: Okay. I guess my final
question is which subsidiaries pledged stock as

part of the refinancing?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Well, all

the subsidiaries under CEMEX Mexico, and
between CEMEX Mexico and CEMEX Spain

<Q>: Okay, great. Thank you very
much

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

The next comes from Dan McGoey from
Deutsche Bank. Please proceed.

<Q - Dan McGoey>: Good morning,
gentlemen. My question is regarding the, I

think it was mentioned semi-annual
amortizations, how much those are, when

they begin?  And then I think Hctor you mentioned a -
by June 2010, the

Company would need to raise $1 billion
in equity or face stepped up borrowing

cost. Can you outline in a little bit
more detail what are the - what would

be the increase in costs? And then
finally any additional fees associated -

commitment fees associated with closing
the refinancing?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: The

initial amortization is in December
2009, and it's for less than $500

million.  Then there is an additional amortization
in June 2010 which is

around $200 million, and then it goes
up. The amortization for December 2010

is more than $2 billion.  And so it goes. We'll get you of course
the details

of that. Those are the semi-annual
amortizations that are part of the

amortization schedule.

Now there is also a payment target in
terms of milestones that if not reached

then would step up the margin from 50 to
100 basis points depending on the

size of the difference between the total
cumulative amortizations and the

milestones.  The milestones operate in December 2010
and December 2011. I'll

get Rodrigo to talk to us to about those
details.

<A - Rodrigo Trevio>: Yeah, I
guess just going through the other part of your

question, Dan, regarding the increased
cost, we would say is if we were not

to place at least $1 billion in equity
proceeds by June 30, 2010. This would

be an incremental fee slightly in excess
of $100 million and a step up in the

spread of 75 basis points going forward.
So this would be the consequence of

not raising these funds to prepay the
maturities that are coming due in

December 2010 with the net proceeds from
the acquisitions.

<Q - Dan McGoey>: Okay,
great.  And then sorry, I think can
- if you can

detail a little bit more between the
difference, I think some of them sound

like they are hard amortizations that
must be paid and then I think Hctor was

just mentioning that that post 2011 if
payments are not made then you're

subject to increased fees, is that
correct?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes, the

target milestones are around $4.8
billion in December 2010. And if that's not

reached then there is a 50 to 100 basis
points step up depending on the

business we would be to that $4.8
billion milestone. And then the other

milestone is about $7.6 billion of total
amortization - of cumulative

amortizations by 2011, December
2011.  And there's another 50 to 100
basis

points step up depending on the business
to that. And then I think you asked

also about the closing fees. There is a
-- what we call the consent fee of

200 basis points which is payable now
essentially.

<A - Rodrigo Trevio>: Which we can
amortize over the life of the loans

increases caused by close to 60 basis
points.

<Q - Dan McGoey>: Okay. Great,
thank you. Congratulations on the closing.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you,

Dan.

Operator:

Your next question comes from Gordon Lee
from UBS. Please proceed.

<Q - Gordon Lee>: Yeah, hi.  Just a couple questions just to clarify
on the

requirement of issuing equity.   One, I just wanted to make -
confirm that

that's common equity, that any preferred
would not count towards that? And

the second question related to that is
would the issuance of a convertible

from the standpoint of the agreement
represent common equity as this

agreement stands? And then second
question is just whether you are able to

share with us what some of the covenants
are, the renewed covenants following

this agreement in terms of net debt to
equity or whatever ratios you chose?

Thank you.

<A - Rodrigo Trevio>: Yes, on the
first part of your question, the increased

costs would result starting in July 1,
2010 if we have failed by that date to

raise at least $1 billion in net
proceeds from an equity issuance. Any other

securities issuance, be it a
convertible, be it a preferred wouldn't qualify.

It would have to be net proceeds from
equity issuances by that date.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: In terms

of the covenants other than what was
already mentioned in terms of capital

expenditures and the case of the equity
that we need to issue, there is total

debt to EBITDA covenants and an interest
coverage ratio covenant. What this

agreement has focused more on the
reducing of the leverage of the Company and

less on that. There is a plenty of room
for the Company. These debt covenants

are in effect until June 2010.

And what I could tell you is that the
Company's objective to double debt to

EBITDA remains at the same level that we
had before. And so we want to reach

that level so as to be able to
facilitate a return to investment grade, and

that is 3.5 times total debt to EBITDA.
Now we - as I said, I mean the -

these covenants to start in June 2010
and have sufficient room for us to

orderly reduce our debt.

<Q - Gordon Lee>: Great, that's
clear. Thanks very much and congratulations.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Vanessa
Quinoa from Credit Suisse. Please

proceed.

<Q - Vanessa Quiroga>: Thank you.
My question is regarding on the operational

side.  When's the assumption that you are
making regarding the federal

highway program, the SAFETEA-LU renewal
in the U.S. for your forecasts? And

my other question would be regarding the
refinancing.  If you could provide

the new debt breakdown that you have in
terms of banks, how much is perpetual

and capital markets debt in peso and
dollars or any other currency that you

are having now? Thanks.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: On the

U.S. SAFETEA-LU renewal, well, we have
mentioned the fact that there is a

proposal by the Congress to renew
SAFETEA-LU for around 500 billion U.S.
But

we have built very conservative assumptions
into our estimates for the U.S.

recovery. And as we mentioned, these are
in fact lower than the consensus of

some agencies like the Portland Cement
Association and the consensus of the

industry. So we believe the - our
estimations for the SAFETEA-LU that are

built in the - in our recovery plan are
really modest. Rodrigo, could you

help us with the...

<A - Rodrigo Trevio>: Yeah, on the
debt breakdown, we recently published our

20-F filing documents and we recently
reported our second quarter results.

And the debt breakdown hasn't changed
and is fully disclosed there. So

regarding the mix of dollars, euros,
pesos, as well as bank versus public

market debt and perpetuals is more or
less the same.  That was recently

published.

<Q - Vanessa Quiroga>: Okay. Thank
you.

Operator:

The next question comes from Carlos
Peyrelongue from Merrill Lynch Mexico.

Please proceed.

<Q - Carlos Peyrelongue>: Thank
you.  Congratulations on the
refinancing. I

apologize if you already answered this
question, I had some problems with the

line. My question is can you tell us the
cost, the up front cost of the

refinancing of the debt, please?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: The margin

on the refinance debt as explained is
450 basis points over LIBOR for the

bank debts and a 8.91% yearly coupon for
the private placement note holders.

And there is a 2% - 200 basis points
consent fee.

<Q - Carlos Peyrelongue>: Okay. So
it's 200 basis points is the consent fee?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes.

<Q - Carlos Peyrelongue>:
Excellent.

<A - Rodrigo Trevio>: Maybe...

<Q - Carlos Peyrelongue>: Thank
you very much.

<A - Rodrigo Trevio>: Maybe this a
good opportunity to - also related to your

question Carlos, to provide further
details. The average cost of our debt for

2008 was approximately 4.9%. We estimate
that our prevailing market

conditions today and given the costs we
had for the first seven months and

adjusting for everything, fees that get
amortized and what have you, the

average cost of our debt for 2009 will
be about 5.0%. If you were to look

only at the debt that is being
refinanced and is subject to the mass override

agreement, the $15 billion of refinanced
debt, we estimate that the all-in

cost of this debt is approximately 6.0%
at current prevailing rates, which

were less than 6%, which includes of
course peso debt which is more

expensive. But as a result of the drop
in LIBOR rates and EURIBOR rates a lot

of the increased cost to the increased
margin are being offset by the lower

base rates.

<Q - Carlos Peyrelongue>: Understood.
Now for this year, are you including

already the 200 basis points for the
consent fee? No.

<A - Rodrigo Trevio>: Well, yes.
But remember that since we are financing

this through February 2014, you need to
amortize these fees during the life

of the loan.

<Q - Carlos Peyrelongue>: Right.
Sorry, so the amortization will be how you -

the 200 basis points, you will pay them
over - until 2014 equal payments?

<A - Rodrigo Trevio>: No, even
though you pay them upfront, the way...

<Q - Carlos Peyrelongue>: Okay.

<A - Rodrigo Trevio>: The
accounting works is you amortize them during the

life of the loans. So when you look at
the cost of debt, even though you do

have a cash outflow today, you need to
amortize the cost during the life of

the loans.

<Q - Carlos Peyrelongue>:
Understood, got you. Thank you.

<A - Rodrigo Trevio>: Thank you.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

Your next question comes from
Christopher Buck from Barclays Capital. Please

proceed.

<Q - Christopher Buck>: Good
morning. I'm just hoping for a few

clarifications on some of the new
covenants on this facility. First of all,

forgive me if I missed this, but did you
declare the actual leverage ratio

covenants?  I know you mentioned that you should
have plenty of room, but did

we actually get a number there?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No, we

didn't.  And as I said the focus is on debt
repayment and lowering the

exposure of financial institutions
rather than measuring the leverage and if

so that the fact that debt leverage
covenants start to measure until June

2010 and not immediately.

<Q - Christopher Buck>: Okay. And
how about in terms of some of your other

debt instruments outstanding, are there
any implications on the covenants,

the new package for those?  I know the C5 perpetual notes are
callable in

2011.  Is that something that you would be able
to do at that time under this

facility and any other impacts notable
for the 2014 euro notes in terms of

covenant?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No. The -

all the facilities that we have outside
this $15 billion refinancing

agreement remain the same, at the same
covenants, the same issues and have no

problems.

<Q - Christopher Buck>: Okay. So
in theory the current new facility that you

have arranged here would allow for a
payment on the call of the 2011

perpetual C5s?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Rodrigo.

<A - Rodrigo Trevio>: No, that is
still a long ways out for us. The - once

you see the full details of the
restrictions from the refinanced debt, you

will realize that the objective of all
the restrictions that we have covenant

to comply and abide by are designed to
maximize free cash flow and allow the

Company to apply that free cash flow to
prepaid debt and as soon as we can

recover our financial flexibility, our
investment grade capital structure,

and of course seek to refinance this
just recently refinanced debt on less

restrictive terms. But for that, we need
to recover our capital structure and

we need to prepay as much of the debt as
we can through all of the

initiatives and the increased free cash
flow that we expect to generate

during the next three to four years.

<Q - Christopher Buck>: Okay,
great. And final question just to clarify that

all of the equity of the subsidiaries at
Espaa and Mexico have been pledged

into the new facility?

<A - Rodrigo Trevio>: The shares
of CEMEX Espaa as well as the shares of

CEMEX Mexico and the sub-holding
companies in between have been used as

security for the refinanced debt as well
as for the publicly traded debt that

has a contractual right to that
security, it will also be shared pro-ratably

with them.

<Q - Christopher Buck>: Okay,
great. Thanks for that.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

.

Operator:

Your next question comes from Patricio
Rivera from IXE. Please proceed.

<Q - Patricio Rivera>: Hi, good
morning. Congratulations on this important

step for CEMEX. Just a couple of
questions please. What are the major

non-refinanced pre-existing debt
maturities that you have in the next couple

of years? And also on the operating
side, do you estimate a slow recovery

throughout 2013, or do you believe that
2010 will be a good year for CEMEX?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Sorry,

Patricio, the first part of the
question?

<Q - Patricio Rivera>: Yes, the
pre-existing non-refinanced debt maturities,

the capital markets debt etcetera, what
are the major maturities for these

debts in the next couple of years?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Well,

there are of course facilities that are
of local nature that were not

refinanced.  There are bank facilities that refer
essentially to working

capital that have maturities but are
expected to be refinanced and kept in

place. There are some fixed income
maturities short-term which are very, very

small, 172 million in 2009, 240 in 2010.
And so this is relatively small.  So

the maturities scheduled for CEMEX is
mainly the one that is being with - the

ones we have refinanced. And the second
part of the question was?

<Q - Patricio Rivera>: Yes, do you
expect a slow recovery throughout 2013? Or

do you expect a strong year in 2010 or
2011 to take place?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Well, it

happens in different regions, in
different places and the geography is like

the U.S. It's so diverse and large that
it's a bit difficult to pinpoint

statistics and that. But certainly as we
said, I mean for the U.S. market,

the recovery long term which is what
we're aiming at is different - from our

point of view a slower recovery than the
market is forecasting. And so we

think we are on the - in our baseline
projections on the conservative side of

it.

<Q - Patricio Rivera>: Okay.
Perfect. Thank you.

<A - Rodrigo Trevio>:
Nevertheless, I mean with the very strong operating

leverage that we have in the U.S. as
volumes do recover, we do benefit

considerably. And the U.S. is the
largest contributor to the low teens

compounded annual growth rate we're
expect - forecasting for EBITDA for the

period of '09 through '13 that was used
as the basis for the refinancing

agreement.

<Q - Patricio Rivera>: Okay.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

Your next question comes from Yaseen
Zahari. Please proceed. Please proceed.

Okay, your next question comes from
Diego Torres from ING. Please proceed.

<Q - Diego Torres>: Good morning,
I just have one question regarding the

dividends.  Does the financing agreement put a
restrictions in the dividend

payment?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes,

there's a restriction on cash dividend
payment.

<Q - Diego Torres>: Either cash or
stock dividends, I mean it would be any

kind of restrictions that's at the end,
the cash dividends will be restricted

until you'll - you pay down all the
refinancing debt or you cannot also issue

a new stock dividend?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: That's way

to the future, but what I can tell you
is that for the refinancing agreement,

cash dividends are not allowed.

<Q - Diego Torres>: Right. Cash
dividends are not allowed.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: That's

correct, that's it.

<Q - Diego Torres>: Yeah that's
it. Thank you.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator?

Operator:

And your next question comes from Jamie
Nicholson from Credit Suisse. Please

proceed.

<Q - Jamie Nicholson-Leener>:
Thanks again for the call. On your last call

you had mentioned expectations to close
Australia by September, October.
I'm

wondering if that gets delayed, if you
still to have the proceeds, I guess

cash on hand to meet your December '09
amortizations?  That's my first

question. And then also there are some
guarantees at some of your existing

Rinker debt or other debt that aren't
guaranteed by Australia. I'm just

wondering if those guarantees have moved
to CEMEX Espaa once these assets are

transferred, how will they be handled?
Thank you.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Well, we

still keep our estimation of the
completion of the Australia operations,

transaction for late September, early
October. And yes, of course the

proceeds of that would first go up to
the formation of these liquidity funds

and then to prepayment.

<Q - Jamie Nicholson-Leener>:
And....

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Go ahead.

<Q - Jamie Nicholson-Leener>: No,
and if it gets delayed, is there - do you

have proceeds available to meet these
amortizations in December? How will you

handle the December amortizations should
this transaction get delayed for

some reason?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yeah, well

there's - we don't see any problem in
that with free cash flow.  We
covered

that.  Remember first two amortizations
relatively small.

<Q - Jamie Nicholson-Leener>:
Okay. And then some of the guarantees that -

some of your existing debt has guarantees
from CEMEX Australia assets, what

will happen to those?  Will they be transferred to CEMEX Espaa?

<A - Rodrigo Trevio>: Yes, as the
assets are sold the guarantees are

relieved, of course we then receive the
net cash proceeds and apply those to

prepay existing debts.

<Q - Jamie Nicholson-Leener>: Then
my other question is in your refinancing

agreement, is there - were there any
restrictions on paying interest on your

perpetual bonds? Those coupons are
deferrable, I'm just wondering if any of

the banks have asked for you to
implement any deferral features on that?

Thanks.

<A - Rodrigo Trevio>: No. There is
no restriction on paying the coupons as

they come due if we do not defer them.

<Q - Jamie Nicholson-Leener>:
Okay. Thank you.

Operator:

Your next question comes from Mike Betts
from JPMorgan. Please proceed.

<Q - Mike Betts>: Yes.
Congratulations from me. I had two questions, one is

just clarification and then I guess
second one is more fundamental. The

clarification question Hctor, when
you're talking about - you gave two

numbers for December 2010, December
2011, I think it was 2.9 billion had to

be repaid by 2010 and five by 2011 but
then you gave numbers of 4.8 and 7.4.

Just as clarification, could you explain
to me as a non-credit expert what

the difference is between those two
numbers?

And then the second question, which I
guess is a bit more fundamental.  I

mean obviously here you're very much
exposed to, as you were before, the

vagaries of what happens to U.S.
LIBOR.  But I mean you're no longer
using

derivatives or anything.  I mean will you - what are the
intentions if

anything to take any steps to protect
yourself against any significant

increases in LIBOR rates?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Good.

Thank you, Mike. Well, the first part of
your question, the number, the lower

number refers to the mandatory
cumulative amortization that we need to make.

<Q - Mike Betts>: Okay.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: That is

2.9 billion by December 2010 and
cumulative five billion for December 2011.

The larger numbers are what we call the
milestones that if not achieved would

then step up the margin by 50 to 100
basis points depending on how we have

advanced in the cumulative
amortizations. So that if we have cumulative

amortizations of more than $4.8 billion
by December 2010 then there is no

step up.

<Q - Mike Betts>: Okay. That's
clear. Thank you.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: And for

the derivatives.

<A - Rodrigo Trevio>: Yes, on the
question of the mix of fixed versus

floating, currently what we have in
total if we include the perpetuals in the

mix is slightly less than 75% is
floating and the rest is fixed. Now, when we

look at the component of the debt that
is floating, the biggest weight is

accounted for by the margin which is
fixed as well as the amortization of the

fees, which is also fixed. And so when
you look at the actual exposure that

we have to floating LIBOR or EURIBOR, as
a percentage of the total interest

expense on an annualized basis we estimate
that we're exposed to

significantly less than 20% of our total
interest expense for the floating

rates.

And remember that our business cycle
does track the interest rate cycle. So

we tend to have lower volumes in many of
our markets when interest rates are

lowest and we tend to sell and see
growth in our volumes when interest rates

begin to rise. So we don't feel overly
exposed to the floating rate

environment when you look at our free
cash flow and how it is generated.
But

nevertheless we will explore the
different options for hedging. What I can

say at this point is that any hedging
strategy that would have a call on

liquidity through margin calls we're
likely going to avoid as we're trying to

use as much as we can of our free cash
flow to pay and prepay the debt that

we have so we can recover our capital
structure and our financial

flexibility.

Operator:

Your next question comes from Carlos
Hermosillo from Vector. Please proceed.

<Q - Carlos Hermosillo>: Yes,
morning. Just a follow up, could you repeat the

milestone you have to achieve in 2011 in
order to don't be punished with the

step up?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes, of

course, Carlos. It's $4.8 billion by
December 2010.

<Q - Carlos Hermosillo>: Okay.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: And 7.6 by

December 2011.

<Q - Carlos Hermosillo>:
Okay.  And those are the only two
milestone you

have?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes.

<Q - Carlos Hermosillo>: Okay.
Thank you very much.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

The next question comes from Anne Mill
from Deutsche Bank. Please proceed.

Anne Mill, please proceed, your line is
open. [Operator Instructions] Your

next question comes from Antonio Davila
from GBM. Please proceed.

<Q - Antonio Davila>: Hello,
thanks for the call. Just a follow up on your

hedging strategies with the derivatives.
Could you please tell us if you're

planning on using any sort of
derivatives for foreign exchange rate
risk in

order to convert part of these
maturities to pesos or some other currency?

<A - Rodrigo Trevio>: No.  We believe we have the currency mix that
we need

given our assets and cash flow
distribution, and we don't plan to use foreign

exchange derivatives to change the
nature of our debt. I don't know if you

have a follow-up question on that.

Operator:

Okay, your next question. And your last
question comes from Yaseen Zahari

from Exane BNP Paribas. Please proceed.

<Q>: Yes, good morning. I have got
two question.  My first question is
on the

U.S. business.  Your volumes declined much more than -
or significantly more

than the average because of your
exposure to California and Florida. Do you

think that your volume in 2010 are going
to rebound more strongly because

demand is very low?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Well,

certainly...

<Q>: That refer to...

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Yes, the

fact that place like Florida were hit
primarily by the housing sector.
And

while the housing sector is not
recovering that is going to take longer. But

it is the investment in infrastructure
that is really taking up the top in

our recovery scenario for the U.S.  And then of course as soon as the
housing

market really recovers, which is going
to take longer because of the

inventory workout process, then we will
see additional volumes in the states

like Florida. But again, I would stress
the long term function of our

business plan, which takes in the case
of the U.S. volume recovery in terms

of cement of around 11% a year upon the
average annual growth.

<Q>: I mean do you have a figure
in mind for 2010?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Sorry?

<Q>: Do you have a figure in mind
for 2010 in terms of demand growth for the

U.S.?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: We're not

disclosing the details of our business
plan except for the - what is the long

term assumption.

<Q>: Okay, I understand. And my
second question was on your debt repayments.

I think you gave us a debt repayment
until 2010.  And what are your debt

repayment thereafter in 2011, 2012 until
2014?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Rodrigo?

<A - Rodrigo Trevio>: Well, the
two most important dates as Hctor mentioned

is December 2010 and December 2011 with
the cumulative amortizations of the -

those two, 2.9 billion and 4.8 billion.
I would say that 2012 and '13, we

would expect to be able to satisfy with
our free cash flow generation during

those years. And as we - and yes, we
would have important maturities by

February 2014, that is the remainder of
the debt, which we would hope that by

then we have recovered our capital
structure targets and are able to

refinance that on much better terms well
before that date.

<Q>: Okay. And are you considering
further disposals?

<A - Rodrigo Trevio>: I'm sorry.
Can you repeat your question?

<Q>: Are you considering further
disposals?

<A - Rodrigo Trevio>: Further
asset disposals?

<Q>: Yes.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: That's

certainly part of the whole proposal of
this refinancing, that we use our

free cash flow primarily but also other
initiatives like asset disposals,

access to the capital markets and other
type of liability management to

reduce our debt, as much as we can, as
fast as we can, and that is precisely

why this maturity settlement was put in
and also the milestones. The idea is

to facilitate the orderly reduction of
our debt through all those

initiatives.

<Q>: Okay.  And is there any particular area that
you're working on?

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: No, that's

precisely what we need to work now on.

<Q>: Okay, I understand. Thank you
very much.

<A - Hctor Medina, Executive Vice
President of Finance and Legal>: Thank you.

Operator:

I would now like to turn the call over
to Hctor Medina for closing remarks.

Hctor Medina, Executive Vice President
of Finance and Legal:

Well, thank you very much. In closing,
we would like to thank you all for

your time and attention. We look forward
to your continued participation in

CEMEX. Please feel free to contact us
directly or visit our website at any

time. Thank you and good day.

Operator:

Thank you for your participation in
today's conference. This concludes the

presentation. You may now disconnect.
Good day.

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