Deadline Looms: InterCement’s $549 Million Debt Crisis and the Fight for Solvency

InterCement, a major player in South America’s cement industry, is racing against the clock.

By July 17, the company must manage a looming $549 million debt payment, or approximately R$3 billion ($550.35 million).

Without a finalized sale of its Brazilian and Argentinian operations to CSN, it might seek court protection to avoid default.

This marks a critical juncture; failing to secure a deal could lead to significant financial upheaval.

The company’s predicament is deepened by the lack of response from both InterCement Participações and CSN regarding the ongoing negotiations.

Meanwhile, bondholders, feeling marginalized, have taken legal steps to challenge the company’s financial maneuvers.

Their concerns focus on a 2020 deal where InterCement rolled over a R$4.7 billion ($862.39 million) debt, offering shares of its Argentinian subsidiary, Loma Negra, as collateral.

Allegations of illegalities in these guarantees, particularly involving the Brazilian bank Bradesco, have surfaced, intensifying the scrutiny.

In a move to stabilize its finances, CSN has proposed acquiring InterCement for R$10 billion ($1.83 billion), a package that includes absorbing debts owed to Bradesco.

This proposal hinges on a restructured debt profile and settling various outstanding liabilities before the negotiation window closes on July 12.

The financial stakes are high, with InterCement shouldering a total debt estimated between R$8 billion ($1.47 billion) and R$9 billion ($1.65 billion).

Legal Disputes and Financial Transparency

This is anchored by high-interest debentures to major banks. InterCement’s strategic importance in the region is underscored by its substantial market share and extensive operational network.

It includes 15 factories in Brazil and significant stakes in Argentina’s Loma Negra.

The company’s recent asset sales in Mozambique and South Africa were part of efforts to rectify its financial standing. Yet, these moves have also drawn legal attention from bondholders.

They demand transparency regarding the allocation of sales proceeds, suspecting preferential treatment towards certain creditors like Bradesco.

In addition, accusations of fraudulent practices and fiduciary breaches have surfaced.

Padis Mattar, the legal representative for the bondholders, contends that the 2020 security guarantees may be legally invalid.

This ongoing legal battle questions the integrity of past financial decisions. It also highlights the broader implications for investors and the stability of the regional cement industry.

In short, the outcome will shape InterCement’s ability to sustain operations and may set precedents for how large industrial players navigate financial distress.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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