The owner of Loma Negra managed to renegotiate his debt and the way is paved for selling the cement plant

The Brazilian group InterCementowner in Argentina of Black Hillreached an agreement to restructure its multi-million dollar debts with creditor banks in his country. In this way, the ongoing negotiations with the also Brazilian National Steel Company (CSN) are being paved the sale of all assets of InterCement, which includes the Olavarría cement plant.

InterCement’s agreement to begin an out-of-court restructuring of its liabilities was closed on Monday, the company reported to the Sao Paulo stock exchange. At the same time, Loma Negra submitted the same communication to the Argentine National Securities Commission.

In that note, Loma Negra reported on the situation of its indirect controlling company, but clarified that the restructuring of those liabilities does not affect its operations: “It is important to highlight that Loma Negra is not part of the Extrajudicial Recovery, and therefore, does not imply any effect on the rights and obligations of the Company, nor are there contracts with clauses that accelerate payment terms or generate non-compliance.”

“We inform that, today, our indirect controlling shareholder, InterCement Participações SA (“InterCement”) reported that together with other companies of the group has submitted for approval an extrajudicial recovery plan in Brazil, with the approval of creditors who represent more than 1/3 of its debtin accordance with Brazilian law (the “Extrajudicial Recovery Plan”).”

“The Extrajudicial Recovery Plan is another stage of the strategy of capital structure readjustment InterCement’s already announced decision, which aims to implement a restructuring of its debt, preserve its business and seek a solution that maximizes value for its creditors and stakeholders,” he added.

“The occurrence of the Plan depends on the verification of certain conditions and events, including the holding of a contract for the purchase and sale of corporate interests, assets and operations from InterCement to a third-party investor, a transaction that It is still in the negotiation phase“, he added.

The request for approval that InterCement submitted to the Brazilian courts occurred a few months after the company obtained temporary protection from its creditors during a mediation process and negotiations for a potential sale to CSN, another of the major players in the Brazilian cement market.

According to local analysts, InterCement “has been affected by high interest rates in Brazil, its largest market, and efforts to divest from African assets have not been enough to calm fears about its capital structure, considered untenable by the Fitch Ratings agency.”

The group that owns Loma Negra is overwhelmed by its debt

InterCement is burdened by debt which amounts to around US$1.6 billionHalf of its liabilities are concentrated in three Brazilian banks: Bradesco, Itaú and Banco do BrasilThe attitude of these banks is key to the development of the negotiation, both consensual and judicial, as well as an upcoming sale to the CSN group.

In recent months, InterCement has not been able to meet all its payments in a timely manner, and for this reason, in mid-July, it adopted a series of measures to negotiate with its financial creditors and protect your assets until you complete your divestment strategy across all geographies, including Argentina.

Now, the agreement reached by InterCement with its creditors paves the way for moving forward with the discussion of the transfer of shares. The exclusivity period for negotiations that benefited Companhia Siderúrgica Nacional (CSN), from Brazil, It expired on August 12 and was not renewed..

Although negotiations with the Brazilian group remain active, the loss of exclusivity opened the door for other interested parties to make proposals.

Among the other candidates is the Argentine businessman Marcelo Mindlin, but his interest is only by the cement plant in OlavarríaOwner of the construction company Sacde, he has not given up his intentions to take over the former Fortabat company in order to vertically integrate all of his company’s operations.

But negotiations with CSN are moving slowly because not only is the purchase of Loma Negra being discussed there, but also the entire share package of InterCement, the holding company that controls Camargo Correa’s cement business in Brazil and Argentina.

The last renewal of the exclusivity period was at the end of July, the company indicated at the time in a communication to the Buenos Aires and Sao Paulo stock exchanges. But the same note clarified that “The term of validity will be automatically renewed until August 12, 2024 as long as the parties actively demonstrate their commitment”.

Although there was no official communication last time, Scope was able to confirm that the deadline expired on August 12 It was not extended due to lack of agreementBut he was also able to learn that the fact that the deadline has passed does not mean that negotiations with CSN will not continue.

For the time being, InterCement is now free to receive and evaluate offers from other interested parties. However, from the beginning it was made known at the central offices in Brazil that the preferred candidate was always CSN, since its offer was more comprehensive of all the holding company’s operations and did not only include the assets in Argentina.

Loma Negra presented good operating results in the first half of the year

In any case, the Brazilian cement company has maintained its decision to leave the country for some time now, regardless of the results of the Loma Negra operation in recent quarters. showed obvious improvements despite an adverse economic context.

The Olavarría cement company presented a few days ago the closing of results as of June 30, 2024. During that semester, it had net sales income of $233,057 million, with a year-on-year increase of 171.4%. There was also a notable increase in net profit, which climbed to $38,366 million, with a rise of 194.9% compared to the same period in 2023.

These numbers were recorded despite the negative impact in the cement offices due to the paralysis of public works that occurred since the assumption of the government of Javier Milei. And the company maintains positive expectations for the second half of the year:

“The cement industry It appears to have surpassed the low point in terms of shipments in Marchseeing since then a sequential recovery in the level of activity. The first achievements in economic terms of the Government’s stabilization plan, such as the abrupt fall in inflation, the fiscal surplus and the lowering of the reference rate are generating a context that makes it possible to glimpse a more marked recovery in demand for the second half of the year,” Loma Negra said in the report submitted to the National Securities Commission.