Cement boots

29 June 2009 By Rachel Sanderson

Bondholders claimed the Italian cement group s buyout of minorities in Ciments Français meant rates should rise on $500m of debt. Rather than risk a court fight, Italcementi called off the deal. That leaves creditors with the same rates and less chance of getting better ones.

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Italcementi, an Italian cement company, called off a buyout of the minority shares of its French subsidiary Ciments Français on June 27. Italcementi said it was unable to get some US bondholders to agree to a merger before a June 30 deadline set by regulators. Italcementi owns 82% of Ciments Français. The group's accounts are already fully consolidated.

The institutions wanted Italcementi to improve an already improved offer to renegotiate its debt before agreeing to a deal, according to sources. The 25 US institutional investors included AIG, Northwestern Mutual, Principal and Hancock. The funds were not immediately reachable for comment.

Two bond issues were in discussion. The first is $300 million worth of senior notes issued to US private investors in December 2006. The bonds comprised a first 12years tranche at a fixed rate of 5.8% for $150 million and a second 15years tranche at a fixed rate of 5.9% for $150 million.

The second is $200m in senior notes offered as a private placement in the US. The bonds comprise a first 10year tranche at a fixed rate of 5.63% for $180m and a second 12year tranche at a fixed rate of 5.73% for $20m.

JP Morgan, Calyon and Mediobanca were advisers to Italcementi.

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JP Morgan, Calyon and Mediobanca were advisers to Italcementi.

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