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Caribbean Cement borrows $3b to pay back USD debt

Published:Wednesday | December 12, 2018 | 12:00 AM
Caribbean Cement Company Limited at Rockfort, Kingston.

Caribbean Cement Company Limited and its mining subsidiary have acquired a five-year loan from National Commercial Bank Jamaica that will be used mainly to repay older debt.

The $3.096 billion loan proceeds will be distributed in the US dollar equivalent, to pay down debt denominated in US dollars, but repaid in Jamaican dollars at a rate of 7.45 per cent per annum.

Caribbean Cement also said some of the funds would be used for general corporate purposes. Its subsidiary, Jamaica Gypsum and Quarries Limited, which is a borrowing partner on the NCB revolving loan, is about to expand its gypsum and limestone operations at two sites. But it's unclear whether the funds are meant to back that project.

When asked for clarification the cement maker said obliquely that, "Jamaica Gypsum is mentioned because that company is part of Caribbean Cement Company."

The bank loan follows other borrowings by Caribbean Cement, whose ultimate parent Cemex of Mexico provided the funds for Caribbean Cement to reacquire its core assets from immediate parent Trinidad Cement Limited.

In April of this year, Caribbean Cement terminated its lease arrangement with Trinidad Cement and completed the acquisition of the Kiln 5 and Mill 5 assets at a cost of US$118 million, or $14.9 billion in local currency. The company said in recent filings that the funds for the acquisition came from cash on hand, and two loan facilities negotiated with Cemex Espana totalling US$82 million.

The buyback served to triple Caribbean Cement's assets in the past year from $7.7 billion to $23 billion, but it left the Rockfort, Kingston-based company servicing new debt of $11 billion.