Displaying items by tag: Spain

Spain: The management of cement producer Cementos Lemona, a subsidiary of Cementos Portland Valderrivas (CPV), has presented a job-cutting plan, which will affect 34 employees at its in plant in Viscaya in the Basque region of Spain. The move is part of CPV's viability plan to adjust production in the current depression in the Spanish construction industry. Employees at Cementos Lemona have met to discuss the plan.

The news this week that GSO Capital Partners has patched together a group of investors to recapitalise Giant Cement and its owner Cementos Portland Valderrivas (CPV) has been a long time coming.

Giant may be based in the US but CPV is Spanish. Here cement production fell by 28% year-on-year for the first half of 2012. For its 2012 forecast Oficemen, the country's domestic producers association, forecast in July that consumption will fall by 25% compared to 2011, to 15Mt/yr, representing a drop of 73% from a high of 56Mt/yr in 2007. Potentially the Spanish cement industry could regress to a per capita consumption of only 325kg/capita, figures not seen in the country for nearly 50 years! It has already hit a 48-year low.

In other words it is the perfect time for cash-rich foreign firms to pick up a bargain. Yet the question that should be asked, especially by anybody else thinking of investing in highly indebted European cement assets, is how do investors expect to make any return?

Simply waiting for the market to improve is one strategy for those who can afford it. According to the Global Cement Directory 2012, Spain has 38 cement plants with a capacity of 48Mt/yr. Of this the big players – Cemex, Holcim, Lafarge and CPV – comprise 28Mt/yr. Even if the smaller producers stopped producing cement overnight the big producers would still have the capacity to produce twice as much cement as is currently required.

However, the focus on the CPV subsidiary Giant Cement is telling. The owner of CPV, Fomento de Construcciones y Contratas SA (FCC), was originally reported as trying to sell Giant by March 2012. With the US market starting to pick up, Giant would make an attractive acquisition. FCC's last attempt to sell Giant was, however, delayed by CPV's debt.

With a Giant sale delivering some return to the GSO Capital Partners investors, followed up by further on-going debt repayment from CPV, the only loser would be the future development of the Spanish cement industry outside of that done by the multinationals. Heavily indebted European cement producers with profitable overseas assets must be looking very attractive indeed to international investment firms. The bargain hunt has begun.

Spain: Asset investor GSO Capital Partners has gathered a group to invest Euro345m in Giant Cement and its owner Cementos Portland Valderrivas. The troubled company, which is reportedly set to close three of its eight factories in Spain, will use the capital injection to refinance and pay down existing debt. In 2011 Cementos Portland recorded a loss of Euro337m, due primarily to cement consumption in Spain falling by 64% from its peak in 2007.

Due to the size of the transaction, GSO decided to bring a group of co-investors into the deal, the majority of which are limited partners in GSO's funds. The Blackstone Group's credit affiliate will invest primarily from its 'rescue' lending fund, GSO Capital Solutions Fund I, which collected more Euro2.6bn in 2010.

GSO is one of many private equity groups to focus on opportunities related to the ongoing economic chaos in Europe, as firms including Kohlberg Kravis Roberts, Apollo Global Management and Oaktree Capital Management have all been focusing on credit-related opportunities in the region.

"We expect Europe to be a happy hunting ground for cash-rich investors who have the skills, resources and patience to pan for gold in Europe's distressed loan portfolios and debt riddled corporates," commented Andrew Traynor and Anthony Smyth of law firm Walkers.

Spain: Spanish cement production fell by a further 60% year-on-year in the first half of 2012 according to Oficemen, the sector's national association. Oficemen noted that demand for cement in Spain has now dropped to a 48-year low, with levels as low as this not seen since 1964. The association previously announced that the country produced 6Mt of cement in the five months to 31 May 2012, but did not provide a total amount for the first half of 2012.

Consumption also fell, by 34.7%, year-on-year to 7.2Mt in the first six months of 2012. Oficemen expects demand to plunge by 25% to 15Mt for the full year. Accordingly, it is expected that exports from Spain will increase by 40% year-on-year to 6Mt in 2012.

These figures compare unfavourably with 2011's own poor figures and come as the Spanish economy continues to struggle with its Eurozone debt, protests at austerity measures and unemployment of 25%.

Spain: Spanish competition authority CNC has fined Cementos Portland Valderrivas Euro1.28m for submitting incomplete information. In May 2012 the CNC launched a probe into Cementos Portland over allegedly incorrect information about revenues, volume of products and corporate structure. Cementos Portland was obliged in January 2012 to pay a Euro5.72m fine for participating in a cartel fixing the prices of concrete.

Spain: Holcim has launched a restructuring plan that will cut 373 jobs in Spain, 35% of its staff in the country. The new organisation will retain 680 employees.

As part of a four stage plan Holcim will streamline its business operations under a single management, the company's corporate structure will be reduced with administrative functions centralised in Madrid, capacity of cement production will be reduced and further activities in other lines of construction materials will also be scaled down. Holcim further detailed that two kilns at its Yeles Plant in Toledo will be shuttered as will the entire Lorca Plant in Murcia.

The company has made the move as the Spanish domestic market faces its fifth year of recession, with cement consumption dropping from 56Mt/yr in 2007 to 20.2Mt/yr in 2011. In the first four months of 2012 the markets dropped 40% year-on-year.

Spain: The Spanish cement producer Cementos Portland Valderrivas (CPV) has announced that it expects to swing to profit in 2013 thanks to its 'Plan NewVal' launched recently. Plan NewVal 2012-2013 is focused on cost reduction and securing new sources of revenue.

CPV's new chairman and CEO, Juan Bejar, said that CPV's earnings before interest, tax, depreciation and amortisation (EBITDA) are now expected to reach Euro200m in 2013.

Speaking more widely, Bejar noted that cement consumption in Spain came to just 20.4Mt in 2011, down a massive 64% from the 2007 high. Worse is expected in 2012, when consumption is expected to fall another 20% to just 16Mt.

Spain/US: The head of Fomento de Construcciones y Contratas SA (FCC), Baldomero Falcones Jaquotot, has said that a planned sale of US-based Giant Cement Holding Inc. has been delayed while the Spanish construction giant deals with the debt refinancing of Cementos Portland Valderrivas (CPV). FCC owns nearly 70% of CPV, which in turn owns Giant. FCC had previously planned to sell Giant by the end of the first quarter of 2012. Falcones added there has been one bidder for the US cement unit. FCC spokesman Jose Manuel Velasco Guardado said CPV is keeping, 'all options open for Giant.'

FCC is currently focusing on CPV's efforts to renegotiate Euro1.5bn in gross debt. Around 46% of the debt is due to be repaid in 2012 and 48% is due in 2013. Portland is also crafting a new business plan that may include plant closures in Spain. Falcones said that CPV was in 'a good situation' as it discusses a new debt repayment timeline with its banks, while looking to 'increase its cash situation.'

With Spain's economy in poor shape, FCC is trying to increase the portion of its revenues originating from overseas to more than 65% in three years time from 52% in 2011. Falcones said FCC might be inclined to make overseas acquisitions sooner than later in order to take advantage of the Euro's relative strength and is also eyeing growth opportunities in Latin America, Asia, the Middle East and central and eastern Europe.

In Spain, FCC is owed more than Euro2bn from local and regional governments for past services rendered. Falcones said that he expects most of it to be paid in May and June 2012 after the central government set up a new credit line to help cash-strapped regions and municipalities to pay off their debts.

The Spanish government is benefiting from much improved financing conditions after local banks tapped the European Central Bank's Long-Term Refinancing Operations to purchase government debt.Falcones is confident that the full amount will be paid. "If I get Euro1.5-2.0bn, I will be very happy," he said. "It doesn't mean we won't get the rest. That will take more time."

Spain: Fomento de Construcciones y Contratas (FCC) closed 2011 with an attributable net profit of Euro108.2m, down 64.1% year-on-year. The slump was explained by the poor performance of FCC's cement producer Cementos Portland Valderrivas. Total sales went down by 1.3% to Euro11.76bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 8.3% to Euro1.25bn. Net debt stood at Euro6.28bn at the end of 2011, down 19% from a year earlier.

Spain: The Spanish cement producer Cementos Portland Valderrivas has announced that it will appoint Juan Bejar Ochoa as its executive chairman. Bejar will replace Dieter Kiefer, who will leave the company after four years at the helm. Juan Bejar joined the company recently in January 2012.

The changes in Cementos Portland's top management come at a tough moment for the firm given the slump in cement sales on the domestic market, as well as the problems at its production sites in Tunisia.