January 30, 2018 / 7:06 AM / 24 days ago

Exclusive: Brazil's InterCement considers listing Europe, Africa ops - sources

SAO PAULO (Reuters) - InterCement Participações SA, Latin America’s largest cement maker, is considering listing its European and African operations to raise cash and reduce debt, two people with knowledge of the matter told Reuters.

InterCement, which has 40 mills in eight countries, plans to include in the listing its subsidiary Cimpor Cimentos de Portugal SA and mills in Cape Verde, Mozambique and South Africa, the sources said this month.

The transaction has been discussed with investment banks, but InterCement has not yet hired financial advisors, the sources added, asking for anonymity because talks are private.

Other alternatives, such as a swap of assets or sale of a stake, have been previously considered by controlling shareholder Camargo Correa SA, the sources added.

If InterCement proceeds, the unit could be listed in the second half of the year, one of the people said. A venue has not yet been chosen, but a high liquidity market such as London or Frankfurt would be the most probable, the person added.

“InterCement does not comment on market speculation,” the company said in response to a request for comment on this story.

Cars pass through a tunnel built by Camargo Correa, a privately-held Brazilian construction conglomerate, in Sao Paulo, Brazil January 30, 2018. REUTERS/Paulo Whitaker

Camargo Correa, a privately-held Brazilian construction conglomerate, held an initial public offering of InterCement’s Argentine unit Loma Negra Cia Industrial Argentina SA in November. It raised $954 million in the listing in Buenos Aires and New York, helping reduce InterCement’s debt. Loma has a current $2.9 billion market capitalization.

A possible second listing could help Camargo Correa deal with the effects of Brazil’s harshest recession in decades, years of heavy borrowing and a corruption probe that snared the group’s engineering unit.

Since signing a leniency agreement in 2015 with Brazilian prosecutors probing corruption, the conglomerate has raised around $3.5 billion from the sale of major assets, including controlling stakes in apparel company Alpargatas SA and power holding company CPFL Energia SA.

Proceeds from a new InterCement subsidiary listing would be used to further reduce InterCement debt and increase spending on Brazilian mills, aiming to improve their efficiency, the sources said.

To be sure, Loma Negra, whose sales rose 12 percent last year, is in a very different shape from InterCement units in stagnant or shrinking markets such as Europe or Brazil.

Brazilian cement sales fell 6.5 percent last year and have accumulated a 25 percent loss since 2015, according to industry data.

Many of the 20 cement makers in the country are operating at half of their capacity, the sources said.

Last year, InterCement delisted Cimpor from the Lisbon stock exchange, as Camargo Correa bought out the remaining minority shareholders. InterCement acquired control of the Portuguese company in 2012.

Reporting by Tatiana Bautzer, Editing by Rosalba O'Brien

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