S&P: Cemex, Votorantim unaffected

Standard & Poor's said Cemex SA de CV's (BBB-/Watch Negative/--) announcement that it has signed a letter of intent with Votorantim Cimentos Ltda. of Votorantim Group (foregin currency BB-/stable/--; local currency BBB-/stable/--) for the sale of certain Cemex assets in the Great Lakes region for $400 million will not affect the ratings on either Cemex or Votorantim.

Cemex's indication that proceeds will be used to either pay down debt or reduce the level of debt required for the acquisition is consistent with S&P's expectation that Cemex would destine its free operating cash flow generation and proceeds from asset sales to debt reduction in order to return to its stated capital structure of 2.7x net debt/EBITDA by year-end 2005 from a pro forma ratio of about 3.1x as of year-end 2004 and to reduce refinancing risk, particularly in 2005 and 2006.

S&P said the proposed transaction is consistent with Votorantim's plans to gradually increase geographic diversification for its cement business through acquisitions offshore.

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