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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
| Ordinary Participation Certificates ( Certificados de Participación Ordinarios |
☒ |
Accelerated filer | ☐ |
Non-accelerated filer |
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| Emerging growth company | ||||||||||
U.S. GAAP ☐ |
by the International Accounting Standards Board ☒ |
Other ☐ |
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| PART I | 5 | |||
| Item 1—Identity of Directors, Senior Management and Advisors |
5 | |||
| 5 | ||||
| 5 | ||||
| 48 | ||||
| 162 | ||||
| 261 | ||||
| 304 | ||||
| 306 | ||||
| 308 | ||||
| 310 | ||||
| Item 11—Quantitative and Qualitative Disclosures About Market Risk |
324 | |||
| Item 12—Description of Securities Other than Equity Securities |
324 | |||
| 324 | ||||
| 324 | ||||
| 324 | ||||
| PART II | 326 | |||
| 326 | ||||
| Item 14—Material Modifications to the Rights of Security Holders and Use of Proceeds |
326 | |||
| 326 | ||||
| 327 | ||||
| 327 | ||||
| 327 | ||||
| 329 | ||||
| Item 16D—Exemptions from the Listing Standards for Audit Committees |
330 | |||
| Item 16E—Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
330 | |||
| 330 | ||||
| 330 | ||||
| 335 | ||||
| Item 16I—Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
335 | |||
| 335 | ||||
| 335 | ||||
| PART III | II-1 | |||
| II-1 | ||||
| II-1 | ||||
| II-1 | ||||
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| INTRODUCTION | ||||
INTRODUCTION
Cemex, S.A.B. de C.V. is incorporated as a publicly traded variable stock corporation (sociedad anónima bursátil de capital variable) organized under the laws of the United Mexican States (“Mexico”). Except as the context otherwise may require, references in this annual report to “Cemex,” the “Company,” “we,” “us” or “our” refer to Cemex, S.A.B. de C.V. and its consolidated entities. See note 1 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
Presentation of Financial Information
The audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”).
The regulations of the U.S. Securities and Exchange Commission (the “SEC”) do not require foreign private issuers that prepare their financial statements based on IFRS (as issued by the IASB) to reconcile such financial statements to United States Generally Accepted Accounting Principles (“U.S. GAAP”).
Unless otherwise indicated, references in this annual report to “$” and “Dollars” are to United States Dollars, references to “€” are to Euros, references to “£,” “Pounds Sterling” and “Pounds” are to British Pounds, and references to “Ps,” “Mexican Pesos” and “Pesos” are to Mexican Pesos. References to “billion” mean one thousand million. References in this annual report to “CPOs” are to Cemex, S.A.B. de C.V.’s Ordinary Participation Certificates (Certificados de Participación Ordinarios), each CPO represents two Series A shares (as defined below) and one Series B share (as defined below) of Cemex, S.A.B. de C.V. References to “ADSs” are to American Depositary Shares of Cemex, S.A.B. de C.V. Each ADS represents 10 CPOs.
See notes 28.4, 17.1, and 17.2 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report for a detailed description of our debt and other financial obligations. Total debt plus other financial obligations differs from the calculation of debt under our main unsecured credit agreements, dated as of October 29, 2021 (as last amended on October 30, 2023 and as further amended and/or restated from time to time, the “Amended 2021 Credit Agreement”); dated as of December 20, 2021 (as last amended on December 6, 2023 and as further amended and/or restated from time to time, the “Mexican Peso Banorte Agreement”); and dated as of October 7, 2022 (as amended and/or restated from time to time, the “2022 EUR Credit Agreement,” and collectively with the Amended 2021 Credit Agreement and the Mexican Peso Banorte Agreement, the “Credit Agreements”). See “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Our Indebtedness” for more information. In our 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report, we refer to the Amended 2021 Credit Agreement as the 2023 Credit Agreement.
On June 5, 2023, we fully redeemed the 7.375% Dollar-denominated notes due 2027 (the “June 2027 Dollar Notes”). During 2023, the difference between the amount paid for such notes and the notional amount redeemed, net of transactional cost, generated a repurchase loss of $38 million, recognized in the income statement. During 2022, pursuant to tender offers and other market transactions, we partially repurchased different series of our notes for an aggregate notional amount of $1,172 million. The difference between the amount paid for such notes and the notional amount redeemed, net of transactional costs, generated a repurchase gain of $104 million, recognized in the income statement for the year ended December 31, 2022.
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Under IAS 32, Financial Instruments: Presentation (“IAS 32”), we concluded that our outstanding Subordinated Notes (as defined below) represent equity instruments and are classified within controlling interest stockholders’ equity. See note 21.2 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report for a detailed description of the Subordinated Notes.
We also refer in various places within this annual report to non-IFRS measures, including “Operating EBITDA.” “Operating EBITDA” equals operating earnings before other expenses, net, plus depreciation and amortization expenses, as more fully explained in “Item 5—Operating and Financial Review and Prospects—Results of Operations—Selected Consolidated Financial Information.” Additionally, we refer to “Operating EBITDA Margin,” which is calculated by dividing our “Operating EBITDA” by our revenues. The presentation of these non-IFRS measures is not meant to be considered in isolation or as a substitute for the 2023 audited consolidated financial results of Cemex, S.A.B. de C.V. prepared in accordance with IFRS as issued by the IASB.
We have approximated certain numbers in this annual report to their closest round numbers or a given number of decimal places. Due to rounding, figures shown as totals in tables may not be arithmetic aggregations of the figures preceding them.
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Certain Technical Terms
When used in this annual report, the terms set forth below mean the following:
| • | Additives refer to any material that is added to either cement/binders or concrete (primarily inorganic) to achieve a specific target. |
| • | Admixtures refer to any chemical product (primarily organic molecules) that is added or applied to (our core business products) cement/binders, concrete, or aggregates to achieve a targeted performance. |
| • | Aggregates are inert granular materials, such as stone, sand, and gravel, which are obtained from land-based sources (mainly mined from quarries) or by dredging marine deposits. They give ready-mix concrete its necessary volume and add to its overall strength. Under normal circumstances, one cubic meter of fresh concrete contains two tons of gravel and sand. |
| • | Portland Cement is a hydraulic binding agent that hardens even under water and which, when mixed with aggregates and water, produces ready-mix concrete. |
| • | Cement mill (also called “finish mill” in the United States) is a piece of equipment used to reduce the size of the materials needed for cement production, usually to microns size (1 micron is equal to 0.001 millimeters). Traditionally, cement mills have adopted the form of ball mills. Vertical roller mills, which are more effective in terms of energy consumption compared to ball mills, are being gradually introduced to our operations in the United States, Mexico, the United Kingdom, the United Arab Emirates, and other regions in which we operate. |
| • | Clinker is the main raw material used to produce portland cement and it is made by sintering limestone, clay, and iron oxide in a rotary kiln at around 1,450 degrees Celsius. One ton of clinker is used to make approximately 1.2 tons of gray portland cement. |
| • | CO2, or carbon dioxide, is a chemical compound with the chemical formula CO2. It is a greenhouse gas, which means it contributes to the warming of the Earth’s atmosphere by trapping heat that would otherwise escape into space. |
| • | CO2 emissions refer to the release of CO2 into the atmosphere as a result of our direct and indirect activities. These activities can include the burning of fossil fuels (such as coal, gas, and diesel), and emissions derived from the decarbonization of limestone (process emissions). |
| • | Fly ash is a combustion residue from coal-fired power plants with cementitious capabilities when mixed with Clinker and can be used as a supplementary cementitious material. |
| • | Gray Portland Cement, used for construction purposes, is a hydraulic binding agent with a traditional composition by weight of approximately 90% to 95% clinker and up to 5% of a minor component (usually calcium sulfate and limestone). Blended portland cement has lower clinker factor, usually below 90%, which results in lower CO2 emissions. Both traditional and blended portland cement, when mixed with sand, stone or other aggregates and water, produce ready-mix concrete. |
| • | Petroleum coke or pet coke is a by-product of the oil refining coking process that can be incorporated into the cement production process as fuel, in substitution of other primary fuels such as natural gas or coal. |
| • | Ready-mix concrete is a mixture of cement, aggregates, admixtures and water. |
| • | Ground Granulated Blast Furnace Slag is a by-product generated in blast furnaces in the iron ore purification process. When mixed with clinker, it exhibits cementitious properties and can be used as a supplementary cementitious material |
| • | Tons means metric tons. One metric ton equals 1.102 short tons. |
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| • | Urbanization Solutions is one of our four core businesses. It is a business that complements our value offering of products and solutions, looking to connect with the broader metropolis ecosystem, address urbanization challenges, and provide means to all stakeholders in the construction value chain to enable sustainable urbanization by focusing on four market segments: performance materials, circularity, industrialized construction, and related services. |
| • | White cement is a specialty portland cement used primarily for decorative purposes with the same or higher performance of gray portland cement. |
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| PART I | ||||
PART I
Item 1—IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
Item 2—OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
Item 3—KEY INFORMATION
Setting the Pace
In 2023, we had a strong operational and strategic performance. We delivered strong results, substantially improved our free cash flow generation, and managed to recover from the extraordinary inflationary pressures of the last few years. Our performance is a testament to the focus and commitment of our employees worldwide. We demonstrated the effectiveness of our global business strategy with positive financial results that allow us, for now, more flexibility going forward for accelerating our bolt-on growth strategy, initiating a shareholder return program in 2024 in the form of dividends and possible repurchases of Cemex, S.A.B. de C.V. shares, and further strengthening our capital structure.
For the year ended December 31, 2023, we had revenues of $17.4 billion, demonstrating a continued improvement against our revenues for the year ended December 31, 2022. Also, during 2023, we reduced our total debt plus other financial obligations by $661 million and increased interest expenses by $45 million, as compared to 2022. Our leverage ratio, as calculated under the Credit Agreements (as defined below), reduced by 0.78x to 2.06x. As of December 31, 2023, our total debt plus other financial obligations in our statement of financial position (which does not include $2,000 million aggregate principal amount of Subordinated Notes (as defined below)) decreased to $8,164 million (principal amount $8,210 million, excluding deferred issuance costs).
Of relevance during 2023:
| • | On March 14, 2023, Cemex, S.A.B. de C.V. issued $1,000 million of 9.125% subordinated notes with no fixed maturity (the “9.125% Subordinated Notes”). The 9.125% Subordinated Notes were issued under the GFF (as defined below). |
| • | On October 5, 2023, Cemex, S.A.B. de C.V. issued sustainability-linked long-term notes in the Mexican market (the “2023 CEBURES”) for an aggregate principal amount of Ps 6,000 million. The 2023 CEBURES consisted of two tranches: (1) the Long-Term Notes 1, for an amount of Ps 1,000 million with a 3-year tenor at a floating annual interest rate of TIIE 28 plus 0.45%, and (2) Long-Term Notes 2, for Ps 5,000 million with a 7-year tenor at a fixed annual interest rate of 11.48%. Cemex Corp., Cemex Concretos, COM and CIH (collectively, the “Refinancing Guarantors”), all of which are subsidiaries of Cemex, fully and unconditionally guarantee the performance of all obligations of Cemex, S.A.B. de C.V. under the 2023 CEBURES. The 2023 CEBURES were issued under the SLFF (as defined below). See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Reopening and Placement of 2023 CEBURES.” |
| • | On October 30, 2023, we successfully closed the refinancing of the Amended 2021 Credit Agreement, extending the maturity to 2028. Following the refinancing, the credit facility consists of a US$1.0 billion 5-year term loan amortizing in five equal semi-annual payments starting in October 2026 and a $2.0 billion 5-year committed revolving credit facility. The credit facility, denominated exclusively in US Dollars, maintains its |
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| PART I | ||||
| previous interest rate margin and financial covenants, consistent with an investment-grade capital structure, that allows a maximum leverage ratio of 3.75x throughout the life of the loan and a minimum interest coverage ratio of 2.75x. Cemex, S.A.B. de C.V.’s obligations thereunder are guaranteed by the Refinancing Guarantors. Debt under the Amended 2021 Credit Agreement was issued under the SLFF. |
| • | On December 6, 2023 we signed, and on December 13, 2023, we successfully closed, our refinancing of the Mexican Peso Banorte Agreement, extending the maturity to 2028. Following the refinancing, the credit facility consists of an Ps 6.0 billion 5-year amortizing term loan, which represents an increase of Ps 769 million from the original amount of the loan. The term loan, denominated in Mexican Pesos, has an interest rate margin dependent on leverage ratio slightly lower than that applicable prior to the refinancing. Other terms and conditions of the refinanced Mexican Peso Banorte Agreement are substantially similar to those of the Amended 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. Debt under the refinanced Mexican Peso Banorte Agreement was issued under the SLFF. |
Beyond exceptional financial results, we remain committed to health and safety and continue to have good results. In 2023, our employee Lost Time Injury (“LTI”) Frequency Rate was 0.6, with zero incidents across 96% of our global operations. We believe these results demonstrate our continuous improvement commitment is producing positive outcomes as we aim toward our Zero4Life goal.
In 2023, we also made progress in our decarbonization goals with a 4% decline in Scope 1 specific net CO2 emissions driven by an internal record alternative fuel substitution rate of 37% and a reduction in clinker factor to 72%. Since the launch of our “Future in Action” program in 2020, we have accelerated the pace of our decarbonization goals, reducing Scope 1 and Scope 2 specific emissions by 13% and 12%, respectively, a pace that, based on our estimates, previously would have taken us approximately 15 years to accomplish. Our targets are validated by the Science-Based Targets initiative (“SBTi”) for alignment under their 1.5°C scenario. We are committed to reducing the carbon footprint of our operations, and we are delivering on our 2030 commitments as we execute against our updated targets.
Building on our 2030 decarbonization targets that we revised in 2022, we also updated our Green Financing Framework (“GFF”) and our Sustainability-Linked Financing Framework (“SLFF”) to increase the amount of funding that is linked to our “Future in Action” program.
Our ability to use alternative fuels has been supported by our industry leadership in hydrogen injection technology. We continued our global rollout of this technology, which is now used in half of our cement plants. We made investments installing new hydrogen units and plan to continue scaling hydrogen use in our operations worldwide.
While we seek to lower our carbon footprint in our processes, we remain focused on creating demand for products and solutions with sustainable attributes. In September of 2023, we became the first company in our industry to provide validated environmental impact disclosure for all core products across our main markets globally. This transparency is an essential step in working alongside our clients as a sustainable construction partner to decarbonize the built environment.
Our Vertua products with sustainable attributes currently account for more than half of our total cement sales and slightly below half of total concrete sales, progressing significantly ahead of our 2025 sales goal of 50%. Vertua’s strong market adoption is contributing to sustainable construction and positioning us as a preferred partner dedicated to driving lasting change.
We believe that our global waste management business, Regenera, is key to a circular economy, leveraging our global expertise in using industrial waste and byproducts as substitutes with sustainable attributes in production
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processes. Reporting an extraordinary performance in 2023, we repurposed close to 28 million tons of waste and byproducts, which is about the same amount of waste collected across England during the year. By 2030, as of the date of December 31, 2023, we aim to increase this to 41 million tons with a focus on municipal and industrial waste; construction, demolition, and excavation waste; and other waste and industry byproducts.
We believe that to achieve carbon neutrality, it is essential to explore new technologies. Our portfolio of more than 220 projects as of year-end 2023, focused on research, innovation, and development of solutions, is designed to help us achieve our climate goals. Through Cemex Ventures, we continue to explore innovative solutions with investments in the construction value chain, as well as in companies with the objective of helping us accelerate reaching our decarbonization goals. Since its launch, Cemex Ventures has invested in 23 startups, developing a collaborative platform between entrepreneurs, universities, and private industry to address challenges in the construction environment and promote sustainable construction.
We continue to optimize water use and promote biodiversity preservation programs. Our quarries also have the potential to serve as catalysts for positive contributors to biodiversity and ecosystem preservation rather than just sites of extraction. We have planned to establish biodiversity baselines for all active quarries by 2025.
In 2023, we remained focused on empowering people, improving housing and infrastructure, building green spaces and resilient communities, and supporting local economies through skills development, entrepreneurship, and sustainability for a just transition. We are proud to rely heavily on local small and medium-sized enterprises, which make up approximately 60% of our global supplier network. In 2023, we continued setting the pace as part of the UN Global Compact’s Sustainable Supplier Impact Program where we co-led one of five pilot projects, and the only one with global outreach. Over 1,200 suppliers across five geographies participated in this five-module program, which enabled the development of sustainability strategies for over 100 construction industry suppliers. Our flagship social impact program Patrimonio Hoy turned 25 in 2023, setting the cornerstone for Cemex to build a better, more sustainable future. Patrimonio Hoy helps build resilient homes that improve living conditions for communities potentially affected by climate change and natural hazards. In recognition of its milestone, Patrimonio Hoy received a social transformation award from Corresponsables, a Spanish CSR B-Corp.
Cemex Go, our end-to-end digital platform, is also an important enabler of our transition to a lower-carbon industry by better organizing supply chains, transitioning to a paperless industry, and increasing overall efficiency in the construction sector. Cemex Go offers a digital customer experience to over 60,000 customers across 19 countries.
Furthermore, we continue to progress in our Working Smarter digital transformation initiative, through which Cemex is leveraging a combination of digital technologies, operative models and innovation from leading service suppliers in order to reshape its business management services.
We remain focused on the disciplined execution of our strategy with the expected goal of continuing to deliver sustainable growth. Our 2023 results should allow us to focus more on our bolt-on growth investment strategy, a progressive shareholder return policy, and further strengthening our capital structure. With global challenges such as climate and the construction of new supply chains, our industry is in a moment of significant transition. As the built environment evolves, we believe that Cemex is well-positioned to prosper.
CEMEX • 2023 20-F REPORT • 7
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| PART I | ||||
As required pursuant to the laws of Mexico, the following is a description of our debt securities listed in Mexico:
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INFORMATION ABOUT THE LONG-TERM NOTES (CERTIFICADOS BURSÁTILES A TASA VARIABLE)
(“Long-Term Notes 1”) ISSUED BY CEMEX, S.A.B. DE C.V.
AS OF DECEMBER 31, 2023
Amount of the Issuance: Ps 1,000,000,000.00 (one billion Pesos 00/100).
Name of the Issuer: Cemex, S.A.B. de C.V.
Ticker: “CEMEX 23L”
Issue Number under the Program: First Issuance.
Issue Date: October 5, 2023.
Maturity Date: October 1, 2026.
Term: 1,092 days.
Interest Rate and Interest Calculation Method: The annual gross interest rate will be calculated by adding 0.45 percentage points to the rate known as the Mexican Interbank Equilibrium Interest Rate at a 28-day term.
Interest Payment Frequency: Every 28-days starting November 2, 2023.
Place and Form of Payment of Principal and Interest: The principal and ordinary interest accrued will be paid by electronic transfer of funds to the address of S.D. Indeval Institución para el Depósito de Valores, S.A. de C.V. (“Indeval”), or, where appropriate, at the offices of Cemex, S.A.B. de C.V.
Redemption and Early Redemption: A single payment at their nominal value or, if applicable, at their Adjusted Nominal Value (as defined in the Long-Term Notes 1).
Guarantee: The Long-Term Notes 1 will be guaranteed, initially, by the following entities (the “Long-Term Notes 1 Guarantors”): Cemex Concretos, S.A. de C.V. (“Cemex Concretos”), Cemex Corp. (“Cemex Corp”), Cemex Operaciones México, S.A. de C.V. (“COM”), and Cemex Innovation Holding Ltd. (“CIH”), but are not secured. Cemex, S.A.B. de C.V. shall have the right to release or replace any Long-Term Notes Guarantor, or add new guarantors, provided that after such release, addition or replacement takes effect, the Minimum Endorsement (as defined in the Long-Term Notes 1) is satisfied.
Rating: Standard & Poor’s, S.A. de C.V. “mxAA” (payment capacity of Cemex, S.A.B. de C.V. to satisfy its financial commitments within the obligation is very strong compared to other issuers in the domestic market). Fitch México, S.A. de C.V. “AA(mex)” (very low risk level of default compared to other issuers or obligations in the same country).
Common Representative: CIBanco, S.A., Institución de Banca Múltiple (“Cibanco”).
Depositary: Indeval.
Tax Regime: The applicable withholding rate with respect to interest paid under the Long-Term Notes 1 is subject: (i) for individuals or legal entities residing in Mexico for tax purposes, to the provisions of Articles 54, 55, 135, and other applicable laws of the current Income Tax Law; and (ii) for individuals and legal entities resident abroad for tax purposes, the provisions of Articles 153, 166, and other applicable laws of the current Income Tax Law. The current tax regime may be amended throughout the term of the Issue.
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Cemex, S.A.B. de C.V.’s policy on making decisions regarding changes of control during the term of the issue: Not applicable.
Cemex, S.A.B. de C.V.’s policy on making decisions regarding corporate restructurings, including acquisitions, mergers and spin-offs during the term of the issue: Cemex, S.A.B. de C.V. and the Long-Term Notes 1 Guarantors cannot merge, unless: (i) the merged or acquiring company assumes the obligations of the Issuer or the Guarantor, as appropriate, under the Long-Term Notes 1, (ii) a Cause of Early Termination (as defined in the Long-Term Notes 1) does not occur under the Long-Term Notes 1 as a result of the merger or transfer, and (iii) the merged or acquiring company delivers to the Common Representative (as defined in the Long-Term Notes 1) a legal opinion stating that said merger or transfer complies with (i) and (ii) above.
Cemex, S.A.B. de C.V.’s policy on making decisions on the sale or creation of encumbrances on essential assets, specifying what such concept will include during the term of the issue: According to the provisions of the Long-Term Notes 1, Cemex, S.A.B. de C.V. shall not permit the constitution of any encumbrance on its assets, except (i) for Permitted Encumbrances (as defined in the Long-Term Notes 1), or (ii) where the Issuer’s obligations under the Long-Term Notes 1 are simultaneously guaranteed.
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INFORMATION ABOUT THE LONG-TERM NOTES (CERTIFICADOS BURSÁTILES A TASA FIJA)
(“Long-Term Notes 2”) ISSUED BY CEMEX, S.A.B. DE C.V.
AS OF DECEMBER 31, 2023
Amount of the Issuance: Ps 5,000,000,000.00 (five billion Pesos 00/100).
Name of the Issuer: Cemex, S.A.B. de C.V.
Ticker: “CEMEX 23-2L”
Issue Number under the Program: Second Issuance.
Issue Date: October 5, 2023.
Maturity Date: September 26, 2030.
Term: 2,548 days.
Interest Rate and Interest Calculation Method: Annual gross interest of 11.48%, which will remain fixed during the term of the Issue, except in the event that such rate is substituted by the Adjusted Gross Annual Interest Rate (as defined in the Long-Term Notes 2).
Interest Payment Frequency: Every 182 days starting April 4, 2024.
Place and Form of Payment of Principal and Interest: The principal and ordinary interest accrued will be paid by electronic transfer of funds to the address of Indeval, or, where appropriate, at the offices of Cemex, S.A.B. de C.V.
Redemption and Early Redemption: A single payment at their nominal value or, if applicable, at their Adjusted Nominal Value (as defined in the Long-Term Notes 2).
Guarantee: The Long-Term Notes will be guaranteed, initially, by Long-Term Notes 1 Guarantors, but are not secured. The Issuer shall have the right to release or replace any Long-Term Note 1 Guarantor, or add new guarantors, provided that after such release, addition or replacement takes effect, the Minimum Endorsement (as defined in the Long-Term Notes 2) is satisfied.
Rating: Standard & Poor’s, S.A. de C.V. “mxAA” (payment capacity of the Cemex, S.A.B. de C.V. to satisfy its financial commitments within the obligation is very strong compared to other issuers in the domestic market). Fitch México, S.A. de C.V. “AA(mex)” (very low risk level of default compared to other issuers or obligations in the same country).
Common Representative: Cibanco.
Depositary: Indeval.
Tax Regime: The applicable withholding rate with respect to interest paid under the Long-Term Notes 2 is subject: (i) for individuals or legal entities residing in Mexico for tax purposes, to the provisions of Articles 54, 55, 135, and other applicable laws of the current Income Tax Law; and (ii) for individuals and legal entities resident abroad for tax purposes, the provisions of Articles 153, 166, and other applicable laws of the current Income Tax Law. The current tax regime may be amended throughout the term of the Issue.
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Cemex, S.A.B. de C.V.’s policy on making decisions regarding changes of control during the term of the issue: Not applicable.
Cemex, S.A.B. de C.V.’s policy on making decisions regarding corporate restructurings, including acquisitions, mergers and spin-offs during the term of the issue: Cemex, S.A.B. de C.V. and the Long-Term Notes 1 Guarantors cannot merge, unless: (i) the merged or acquiring company assumes the obligations of Cemex, S.A.B. de C.V. or the Long-Term Notes 1 Guarantor, as appropriate, under the Long-Term Notes 2, (ii) a Cause of Early Termination (as defined in the Long-Term Notes 2) does not occur under the Long-Term Notes 2 as a result of the merger or transfer, and (iii) the merged or acquiring company delivers to the Common Representative (as defined in the Long-Term Notes 2) a legal opinion stating that said merger or transfer complies with (i) and (ii) above.
Cemex, S.A.B. de C.V.’s policy on making decisions on the sale or creation of encumbrances on essential assets, specifying what such concept will include during the term of the issue: According to the set forth on the Long-Term Notes 2, Cemex, S.A.B. de C.V. shall not permit the constitution of any encumbrance on its assets, except (i) for Permitted Encumbrances (as defined in the Long-Term Notes 2), or (ii) where the Issuer’s obligations under the Long-Term Notes 2 are simultaneously guaranteed.
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RISK FACTORS
We are subject to various risks mainly resulting from changing economic, environmental, political, industry, business, legal, regulatory, financial and climate conditions, as well as risks related to ongoing legal proceedings and investigations. The following risk factors are not the only risks we face, and any of the risk factors described below could significantly and adversely affect our business, liquidity, results of operations or financial condition, as well as, in certain instances, our reputation.
Risk Factor Summary
Risks Relating to Ownership of Our Securities
| • | Non-Mexicans may not hold Cemex, S.A.B. de C.V.’s Series A shares directly and must have them held in a trust at all times. |
| • | ADS holders may only indirectly vote the Series B shares represented by the CPOs deposited with the ADS depositary through the ADS depositary and are not entitled to vote the Series A shares represented by the CPOs deposited with the ADS depositary or to attend shareholders’ meetings. |
| • | Corporate rights may not be available to any person that acquires 2% or more of Cemex, S.A.B. de C.V.’s shares with voting rights without the previous approval of Cemex, S.A.B. de C.V.’s Board of Directors. |
| • | Preemptive rights generally available under Mexican law may be unavailable to ADS holders. |
| • | The protections afforded to shareholders in Mexico are different from those in other countries and may be more difficult to enforce. |
Risks Relating to Our Business and Operations
| • | Economic conditions globally, including the protracted period of high inflation and elevated interest rates, particularly in countries where we operate, have affected and may continue to adversely affect our business, financial condition, liquidity, and results of operations. |
| • | Political, social, and geopolitical events, changes in public policies and other risks in some of the countries where we operate, which are inherent to the operations of an international company, could have a material adverse effect on our business, financial condition, liquidity, and results of operations. |
| • | The escalation of a geopolitical conflict may have a material adverse effect on our business, financial condition, liquidity, and results of operation. |
| • | Potential political, economic, and military instability in Israel could adversely affect our operations. |
| • | Complications in relationships with local communities and different stakeholder perspectives could lead to social actions against our industry or company, including legal actions, on-the-ground protests, attacks on our assets or facilities, negative media campaigns, strikes, and social unrest. All these events could disrupt our operations, affect our capacity to serve our clients, damage our assets and/or reputation and may materially and adversely affect our business continuity, reputation, liquidity, and results of operations. |
| • | Labor activism and unrest, or failure to maintain satisfactory labor relations, could adversely affect our results of operations. |
| • | We are subject to restrictions and reputational risks resulting from non-controlling interests held by third parties in our consolidated subsidiaries. As of the date of this annual report, we control three publicly listed companies, where this risk is heightened. |
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| • | High energy and fuel costs have had and may continue to have a material adverse effect on our operating results. |
| • | We are increasingly dependent on information technology and our systems and infrastructure, as well as those provided by third-party service providers, face certain risks, including cyber-security risks. |
| • | The development and adoption of artificial intelligence, including generative artificial intelligence, and its use by us or use or misuse by third parties, may increase the financial and operational risks or create new financial or operational risks that we are not currently anticipating. |
| • | We may not be able to realize the expected benefits from our portfolio rebalancing or any divestments, acquisitions, or joint ventures, some of which may have a material impact on our business, financial condition, liquidity, and results of operations. Any failure to realize expected benefits from the bolt-on acquisitions of our business strategy heightens this risk. |
| • | We have adopted a sustainability strategy we consider to be ambitious. Our sustainability strategy includes achieving the targets of our “Future in Action” program and some of these targets are replicated as key performance indicators in our sustainability-linked financing arrangements. Failure to reach these goals may expose us to certain risks that could have a material adverse effect on our business, financial condition, liquidity, and results of operations. |
| • | A substantial amount of our total assets consists of intangible assets, including goodwill. We have recognized charges for goodwill impairment in the past, nevertheless no goodwill impairment was recognized in 2023, but if market or industry conditions deteriorate in the future, additional impairment charges may be recognized. |
| • | The failure of any bank in which we deposit our funds could have an adverse effect on our financial condition. |
| • | Activities in our business can be hazardous and can cause injury to people or damage to property in certain circumstances. |
| • | The introduction of or failure to introduce substitutes or alternative forms of cement, ready-mix concrete, or aggregates into the market and the development of or failure to develop new construction techniques and technologies could have a material adverse effect on our business, financial condition, liquidity, and results of operations and could have an impact in our sustainability targets. |
| • | We operate in highly competitive markets with numerous players employing different competitive strategies and if we do not compete effectively, our revenues, market share, and results of operations may be affected. |
| • | We may fail to secure certain materials required to run our business, or could secure them at higher prices, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations. |
| • | Our operations and ability to source products and materials can be affected by adverse weather conditions, hydrometeorological and geological hazards such as hurricanes, flash floods, earthquakes, and/or natural disasters, including climate change, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations. |
| • | We could be adversely affected by any significant or prolonged disruption to our production facilities. |
| • | Our insurance coverage may not cover all the risks to which we may be exposed or may cover them to an amount that may not be sufficient to satisfy our requirements. |
| • | Our success depends largely on the strategic vision and actions of Cemex, S.A.B. de C.V.’s Board of Directors and on key members of our executive management team and the availability of a specialized workforce. |
| • | Future pandemics and epidemics, such as the COVID-19 pandemic, could materially adversely affect our financial condition and results of operations. |
Risks Relating to Our Indebtedness and Certain Other Obligations
| • | The Credit Agreements, the indentures governing our outstanding 3.125% Euro-denominated notes due 2026 (the “March 2026 Euro Notes”), 5.450% Dollar denominated notes due 2029 (the “November 2029 Dollar Notes”), |
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| 5.200% Dollar denominated notes due 2030 (the “September 2030 Dollar Notes”), 3.875% Dollar denominated notes due 2031 (the “July 2031 Dollar Notes”), and the 2023 CEBURES (collectively, the “Notes”), and our other debt agreements and/or instruments contain several restrictions and covenants. Our failure to comply with such restrictions and covenants or any inability to capitalize on business opportunities or refinance our debt resulting from them could have a material adverse effect on our business and financial conditions. |
| • | We have a substantial amount of debt and other financial obligations. If we are unable to secure refinancing on favorable terms or at all, we may not be able to comply with our payment obligations upon their maturity. Our ability to comply with our principal maturities and financial covenants may depend on us implementing certain strategic initiatives, including, but not limited to, making asset sales, and there is no assurance that we will be able to implement any such initiatives or execute such sales, if needed, on terms favorable to us or at all. |
| • | We may not be able to generate sufficient cash to service our indebtedness or satisfy our short-term liquidity needs, and we may be forced to take other actions to do so, which may not be successful. |
| • | Cemex, S.A.B. de C.V.’s ability to repay debt and pay dividends is highly dependent on our subsidiaries’ ability to transfer income and dividends to us. As of the date of this annual report, we control three publicly listed companies, where this risk is heightened. |
| • | We have to service part of our debt and other financial obligations denominated in Dollars and Euros with revenues generated in Mexican Pesos or other currencies, as we do not generate sufficient revenue in Dollars and Euros from our operations to service all our debt and other financial obligations denominated in Dollars and Euros. This could adversely affect our ability to service our obligations in the event of a devaluation of the Mexican Peso, or any of the other currencies of the countries in which we operate, compared to the Dollar and Euro. In addition, our consolidated reported results and outstanding indebtedness are significantly affected by fluctuations in exchange rates between the Dollar (our reporting currency) vis-à-vis the Mexican Peso and other significant currencies within our operations. |
| • | Increases in liabilities related to our pension plans could adversely affect our results of operations. |
| • | Our use of derivative financial instruments could negatively affect our net income and liquidity, especially in volatile and uncertain markets. |
Risks Relating to Regulatory and Legal Matters
| • | We are subject to the laws and regulations of the countries where we operate and do business. Non-compliance with any material changes in such laws and regulations and/or any significant delays in assessing the impact and/or adapting to such changes in laws and regulations may have a material adverse effect on our business, financial condition, liquidity, and results of operations. |
| • | We or our third-party providers may fail to maintain, obtain, or renew, or may experience material delays in obtaining, requisite governmental or other approvals, licenses, and permits for the conduct of our or their business. |
| • | We are subject to litigation proceedings, including, but not limited to, government investigations relating to corruption, antitrust, and other proceedings that could harm our business and our reputation. |
| • | We are subject to anti-corruption, anti-bribery, anti-money laundering, antitrust, anti-boycott, economic sanctions, trade embargoes, export control and human rights laws and regulations in the countries in which we operate and do business, a considerable number of which countries are considered high and medium risk countries for purposes of corruption, money laundering and other matters. Any violation of any such laws or regulations could have a material adverse impact on our reputation, results of operations, and financial condition, as well as harm our reputation. |
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| • | Certain tax matters have had and may have a material adverse effect on our cash flow, financial condition, and net income, as well as on our reputation. |
| • | Our operations are subject to environmental laws and regulations, including new and proposed reporting requirements, that are or could become, as they become effective, increasingly stringent. |
| • | It may be difficult to enforce civil liabilities against us or the members of Cemex, S.A.B. de C.V.’s Board of Directors, our senior management, and controlling persons. |
Risks Relating to Ownership of Our Securities
Non-Mexicans may not hold Cemex, S.A.B. de C.V.’s Series A shares directly and must have them held in a trust at all times.
Any person acquiring shares, CPOs or ADSs of Cemex, S.A.B. de C.V. should be aware that non-Mexican investors and Mexican companies without a foreign investment-exclusion clause in their by-laws may not directly hold the Series A shares underlying Cemex, S.A.B. de C.V.’s CPOs or ADSs, but may hold them indirectly through Cemex, S.A.B. de C.V.’s CPO trust. Upon the early termination or expiration of the term of Cemex, S.A.B. de C.V.’s CPO trust on September 6, 2029, the Series A shares underlying the CPOs held by non-Mexican investors or by Mexican companies without a foreign investment-exclusion clause in their by-laws must be placed into a new trust similar to the current CPO trust. We cannot guarantee that a trust similar to the CPO trust will exist or that the relevant authorization for the transfer of Cemex, S.A.B. de C.V.’s Series A shares to such a trust will be obtained. In that event, such investors might be required to sell their Series A shares to a Mexican individual or corporation that has a foreign investment-exclusion clause in its by-laws, which could expose shareholders to a loss in the sale of the corresponding Series A shares and may cause the price of Cemex, S.A.B. de C.V.’s CPOs and ADSs to decrease.
ADS holders may only indirectly vote the Series B shares represented by the CPOs deposited with the ADS depositary through the ADS depositary and are not entitled to vote the Series A shares represented by the CPOs deposited with the ADS depositary or to attend shareholders’ meetings.
Any person acquiring ADSs should be aware of the terms of the ADSs, the corresponding deposit agreement pursuant to which the ADSs are issued (the “Deposit Agreement”), the CPO Trust (as defined in the Deposit Agreement) and Cemex, S.A.B. de C.V.’s by-laws. Under such terms, in relation to shareholders’ meetings of Cemex, S.A.B. de C.V., a holder of an ADS has the right to instruct the ADS depositary to exercise voting rights only with respect to Series B shares represented by the CPOs deposited with the depositary, but not with respect to the Series A shares represented by the CPOs deposited with the depositary. ADS holders will not be able to directly exercise their right to vote unless they withdraw the CPOs underlying their ADSs (and, in the case of non-Mexican holders, even if they do so, they may not vote the Series A shares represented by the CPOs) and may not receive voting materials in time to ensure that they are able to instruct the depositary to vote the CPOs underlying their ADSs or receive sufficient notice of a shareholders’ meeting of Cemex, S.A.B. de C.V. to permit them to withdraw their CPOs to allow them to cast their vote with respect to any specific matter. Holders of ADSs will not have the right to instruct the ADS depositary as to the exercise of voting rights in respect of Series A shares underlying CPOs held in the CPO Trust. Under the terms of the CPO Trust, Series A shares underlying CPOs held by non-Mexican nationals, including all Series A shares underlying CPOs represented by ADSs, will be voted by the Trustee (as defined in the Deposit Agreement), according to the majority of all Series A shares held by Mexican nationals and Series B shares voted at a shareholders meeting of Cemex, S.A.B. de C.V. In addition, the depositary and its agents may not be able to send out voting instructions on time or carry them out in the manner an ADS holder has instructed. As a result, ADS holders may not be able to exercise their right to vote and they may lack recourse if the CPOs underlying their ADSs are not
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voted as they requested. ADS holders will also not be permitted to vote the CPOs underlying the ADSs directly at a shareholders’ meeting of Cemex, S.A.B. de C.V. or to appoint a proxy to do so without withdrawing the CPOs. If the ADS depositary does not receive voting instructions from a holder of ADSs in a timely manner such holder will nevertheless be treated as having instructed the ADS depositary to give a proxy to a person Cemex, S.A.B. de C.V. designates, or at Cemex, S.A.B. de C.V.’s request, the corresponding CPO trust’s technical committee designates, to vote the Series B shares underlying the CPOs represented by the ADSs in his/her discretion. The ADS depositary or the custodian for the CPOs on deposit may represent the CPOs at any meeting of holders of CPOs of Cemex, S.A.B. de C.V. even if no voting instructions have been received. The CPO trustee may represent the Series A shares and the Series B shares represented by the CPOs at any meeting of holders of Series A shares or Series B shares of Cemex, S.A.B. de C.V. even if no voting instructions have been received. By so attending, the ADS depositary, the custodian or the CPO trustee, as applicable, may contribute to the establishment of a quorum at a meeting of holders of CPOs, Series A shares or Series B shares, as appropriate. In addition, even though every shareholder of Cemex, S.A.B. de C.V. is entitled to attend shareholders’ meetings pursuant to Cemex, S.A.B. de C.V.’s bylaws and Mexican law, ADS holders are generally not able to attend shareholders’ meetings because they are not the registered holders of the CPOs underlying the ADSs they hold; and, consequently, they are generally unable to satisfy the procedural requirements to attend a shareholders’ meeting pursuant to Cemex, S.A.B. de C.V.’s bylaws and the CPO Trust. Generally, as only registered holders of CPOs are able to satisfy the requirements to attend a shareholders’ meeting of Cemex, S.A.B. de C.V. pursuant to Cemex, S.A.B. de C.V.’s bylaws and the CPO Trust, only the ADS depositary (as the registered holder of the CPOs underlying ADSs) or the CPO trustee (at the direction of the ADS depositary) will be able to satisfy such requirements and attend shareholders’ meetings of Cemex, S.A.B. de C.V. to represent the CPOs underlying ADSs at a shareholders’ meeting of Cemex, S.A.B. de C.V.
Corporate rights may not be available to any person that acquires 2% or more of Cemex, S.A.B. de C.V.’s shares with voting rights without the previous approval of Cemex, S.A.B. de C.V.’s Board of Directors.
Cemex, S.A.B. de C.V.’s by-laws provide that its Board of Directors must authorize in advance any transfer of voting shares of its capital stock that would result in any person, or group acting in concert, becoming a holder of 2% or more of Cemex, S.A.B. de C.V.’s shares with voting rights. In the event this requirement is not met, the persons acquiring such shares will not be entitled to any corporate rights with respect to such shares, such shares will not be taken into account for purposes of determining a quorum for shareholders’ meetings, Cemex, S.A.B. de C.V. will not record such persons as holders of such shares in its share registry and the registry undertaken by Indeval (as defined below) shall not have any effect. See “Item 7—Major Shareholders and Related Party Transactions—Major Shareholders.”
Preemptive rights generally available under Mexican law may be unavailable to ADS holders.
ADS holders may be unable to exercise preemptive rights granted to Cemex, S.A.B. de C.V.’s shareholders, in which case ADS holders could be diluted following equity or equity-linked offerings. Under Mexican law, if Cemex, S.A.B. de C.V. issues new shares, Cemex, S.A.B. de C.V. would be generally required to grant preemptive rights to its shareholders, except in certain situations, including if such shares are issued in the context of a public offering or if such shares underlie convertible securities issued by Cemex, S.A.B. de C.V. However, ADS holders may not be able to exercise these preemptive rights to acquire new shares unless (i) Cemex, S.A.B. de C.V. files a registration statement with the SEC with respect to such shares or (ii) the offering of the shares qualifies for an exemption from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). We cannot assure you that Cemex, S.A.B. de C.V. would file a registration statement in the United States that would allow holders of ADSs to participate in any preemptive rights offering. Under Mexican law, preemptive rights cannot be waived in advance or be assigned or be represented by an instrument that is negotiable separately from the corresponding shares. As a result of applicable United States securities laws, holders of ADSs may be restricted in their ability to exercise preemptive
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rights as provided in the Deposit Agreement with the ADSs depositary, as amended. Shares subject to a preemptive rights offering, with respect to which preemptive rights have not been exercised, may be sold by Cemex, S.A.B. de C.V. to third parties on the terms and conditions previously approved by Cemex, S.A.B. de C.V.’s shareholders or its Board of Directors. See “Item 10—Additional Information—Articles of Association and By-laws.”
The protections afforded to shareholders in Mexico are different from those in other countries and may be more difficult to enforce.
Under Mexican law, the protections afforded to shareholders are different from those in the United States and countries in continental Europe. In particular, the legal framework and case law pertaining to directors’ duties and disputes between shareholders and us, the members of Cemex, S.A.B. de C.V.’s Board of Directors or our officers are less protective of shareholders under Mexican law than under U.S. and continental European law. Mexican law only permits shareholder derivative suits (i.e., suits for our benefit as opposed to the direct benefit of our shareholders) and there are procedural requirements for bringing shareholder derivative lawsuits, such as minimum holdings, which differ from those in effect in other jurisdictions. There is also a substantially less active plaintiffs’ bar dedicated to the enforcement of shareholders’ rights in Mexico than in the United States or Europe. As a result, in practice it may be more difficult for our shareholders to initiate an action against us or our directors or officers or obtain direct remedies than it would be for shareholders of a U.S. or European company.
Risks Relating to Our Business and Operations
Economic conditions globally, including the protracted period of high inflation and elevated interest rates, particularly in countries where we operate, have affected and may continue to adversely affect our business, financial condition, liquidity, and results of operations.
The economic conditions in some of the countries where we operate have had and may continue to have a material adverse effect on our business, financial condition, liquidity, and results of operations worldwide. Our results of operations are highly dependent on the results of our operating subsidiaries worldwide, including those in (i) the United States, (ii) Mexico, (iii) Europe, the Middle East, Africa, and Asia (“EMEAA”), and (iv) South America, Central America, and the Caribbean (“SCA&C”). See “Item 4—Information on the Company—Business Overview” for more information. Demand for our products, our production levels, and our general financial and operating results are highly dependent on overall economic conditions.
For a geographic breakdown of our external revenues for the year ended December 31, 2023, see “Item 4—Information on the Company—Geographic Breakdown of External Revenues by Reportable Segment for the Year Ended December 31, 2023.”
As of the date of this annual report, we believe that the main risk factors for the global economy and the countries where we operate include, but are not limited to: (i) persistently high inflation, which may result in an extended period of high real interest rates and overall restrictive financial conditions, a deterioration in the purchasing power of consumers, businesses, and other economic agents, lower economic growth, and higher odds of an economic recession; (ii) a more-pronounced-than-expected cyclical downturn, even in the absence of further inflationary pressures, reflecting among other potential triggers, delayed effects of restrictive monetary policies across countries; (iii) the possibility of widespread financial market distress and elevated volatility in relation to the prolonged period of high interest rates, among other possible causes; (iv) external, fiscal, debt, and other types of imbalances at the country level, including in the United States and Europe, which often have unfavorable economic and financial implications domestically and overseas; (v) the expansion or intensification of geopolitical conflicts, including but not limited to the war between Russia and Ukraine, and the current ongoing conflicts in the Middle East, including the
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possible fragmentation in international relations and the escalation of armed hostilities that may disrupt trade and economic activity; (vi) weather abnormalities and adverse climate shocks that may impair production, trade, and overall economic activity, as well as result in price fluctuations of energy and other production inputs; (vii) a worsening of China’s economic performance, which may put downward pressure on global trade, have negative spillovers on China’s economic partners and/or the global economy at large, and/or result in financial sector volatility; (viii) heightened domestic policy uncertainty in several economies, relating, among other potential factors, to the celebration of political elections, which are expected to take place in many of the countries in which we operate; (ix) social protests and generalized civil unrest deriving from popular perceptions of mishandling of geopolitical conflicts, climate-related issues, alleged social injustices, among other events of a global or regionwide reach; (x) an increase in the frequency, intensity, and overall destructiveness of cyberattacks involving critical infrastructure of a physical, social, digital, or other nature, which could disrupt governments, industries, communities, and individual businesses; (xi) factors that could afflict the performance of the financial sector, including inappropriate risk monitoring or improper regulation of financial entities and the rapid and unchecked growth of crypto assets.
In 2023, inflation decreased from its peak in 2022, reflecting the alleviation of input shortages, mitigated labor constraints, the stabilization of commodity prices, and the gradual tightening of monetary policies across countries, a process that generally began in 2022. Towards mid-2023, the slowdown in inflation prompted central banks to moderate the pace of interest rate hikes and eventually halt the process of monetary tightening.
In some cases, central banks even began to cut interest rates, particularly in emerging market countries. In this context, while the process of disinflation continues and on average inflation is expected to be lower in 2024 than in 2023, upside risks remain. Among the main factors that could result in renewed inflationary pressures are: (i) shocks to global goods logistics and supply chains, which could arise due to geopolitical, weather-related, and other types of events; (ii) energy and food market price surges, also triggered potentially by several distinct elements, such as the war between Russia and Ukraine, present conflicts in the Middle East or “El Niño” weather disruptions; (iii) general weakening of local currencies against the U.S. dollar, due to divergence in monetary policy paths or “flight to safety” episodes afflicting capital markets; and (iv) an early loosening of financial conditions in the context of still-high inflation, especially in an environment where labor markets in several countries remain tight and wage growth keeps on fueling demand-side pressures.
High inflation can deteriorate economic conditions in the countries where we operate and has caused and may continue to cause a rise in the costs of manufacturing our products, as well as an increase in related expenses, such as freight related expenses. Furthermore, thus there is no assurance that any of our operations, especially those that have historically not experienced inflationary pressures like in the United States and Europe, would be well-prepared to cope with inflationary pressures. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—High energy and fuel costs have had and may continue to have a material adverse effect on our operating results” for information on how energy and fuel costs affect the costs of manufacturing our products and related expenses.
Central banks, as they try to anchor inflation expectations, might have to keep interest rates high enough to maintain financial conditions restrictive, which would likely keep financing costs elevated and could hinder the supply of credit, and more generally impede a rebound in economic activity. The evolution of monetary policy in advanced economies such as the United States and Europe is especially relevant to our business, given their outsized weight in the global economy and our portfolios, but also because of potential spillovers that a downturn of economic activity in such countries could have in other geographies that are very relevant for our business, such as Mexico. Persistently restrictive levels of financing conditions could also trigger widespread financial market distress in both advanced and emerging economies, especially in cases where sovereigns and/or corporates are overleveraged, as is the case in some of the countries where we have operations. Tight conditions would also be very relevant for countries attempting
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to consolidate their public finances, such as those in the European Union, after a protracted period of government stimulus programs due to the effects of the COVID-19 pandemic, the war between Russia and Ukraine, and the significant inflation bout observed from 2021 to 2022. Persistently elevated interest rates could thus translate into high financing costs and disruptions in countries’ budgeting processes, resulting in an overall hindrance to economic growth and favorable business conditions.
Emerging markets and developing economies with significant foreign-currency denominated debt and financing needs could be particularly exposed and affected from the resulting effects of an environment of sustainedly high interest rates in advanced economies, as they could see capital outflows, exchange rate volatility, unfavorable shifts in investor sentiment and increasing borrowing costs, all of which could lead to adverse growth outcomes. Similarly, large-scale corporate debt defaults or restricting could reverberate widely. A substantial portion of our operations are located in developing countries, which tend to have relatively more volatile currencies and, in the past, have gone through episodes of capital outflows under such circumstances. In the event that one or more of these risks materialize, there could be material adverse effect on our business, financial condition, liquidity, and results of operations, particularly if exchange rate fluctuations result in lower revenues and/or more limited available resources in local currencies (through the impact of lower real demand, an increase in expenditures due to the weakening of the local currency, among others), which could in turn limit our ability to make necessary expenditures and investments, as well as curb our capacity to serve our debt and other obligations. See “Item 4—Information on the Company—Geographic Breakdown of External Revenues by Reportable Segment for the Year Ended December 31, 2023” and “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Our Indebtedness.”
Social unrest and generalized protests could also disrupt our business, particularly in the context of high inflation, high interest rates, low economic growth, and more generally in countries where macroeconomic, geopolitics, and political developments, including elections, have negatively impacted the countries in which these events occur.
Climate change, which has entailed more frequent and intense weather-related events, already has had visible impacts on countries, businesses, and households, with effects beyond the regions where disasters strike. Cross-border migration pressures, financial stresses (including among creditors and insurers in countries not directly impacted by a given event), and health care burdens may arise, with implications that persist long after the events occur. Weather-related events may pose further challenges to the capacity and ability of individual and collective economies to grow.
As of the date of this annual report, apart from the risks mentioned above, the Mexican economy faces other risks in the short term including, but not limited to: (i) a more-pronounced-than-expected economic downturn in the United States; (ii) issues related to the 2024 electoral process in the United States, including uncertainties around its final outcome, as well as the elected candidate’s views on United States-Mexico relations on trade, migration, security, and a number of other topics; (iii) deviations in the implementation of Mexico’s public budget as approved by the Mexican congress in November of 2023; (iv) any issues related to the 2024 electoral process in Mexico, including uncertainties around its final outcome and statements made by public authorities or any of the candidates that could result in potential changes in the country’s economic policies; (v) higher domestic uncertainty around economic policy and the rule of law arising from the announcement of changes to the existing legal and constitutional framework, potential modifications to prevalent government, administrative, political, industry, business, or social structures, or other such causes; (vi) changes in the public perception of Mexico’s capacity to welcome and retain investments, including those related to the ongoing process of supply chain relocation or “nearshoring”; (vii) sudden or large fluctuations in the value of Mexican peso vis-à-vis major currencies; and (viii) additional strains in the operation and/or finances of Petróleos Mexicanos (“PEMEX”), which could result in its need of further capital requirements that could in turn adversely impact the sovereign’s fiscal stance and debt ratings.
In general, demand for our products and services is strongly related to construction activity, as well as private and public infrastructure spending in the countries where we operate. Declines in the construction industry are usually
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correlated with deteriorations of general economic conditions. Countries grappling with observed or expected adverse economic effects may delay or cancel infrastructure, housing, commercial, and industrial projects, all of which would imply a reduction in demand for our products and services and hence a material adverse effect on our business, financial condition, liquidity, and results of operations could be adversely affected.
Political, social, and geopolitical events, changes in public policies and other risks in some of the countries where we operate, which are inherent to the operations of an international company, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
As of December 31, 2023, our operations were mostly in Mexico, the United States, certain countries in the EMEAA region and the SCA&C region (as described in “Item 4—Information on the Company—Business Overview”). For a geographic breakdown of our external revenues for the year ended December 31, 2023, see “Item 4—Information on the Company—Geographic Breakdown of External Revenues by Reportable Segment for the Year Ended December 31, 2023.”
We are exposed to the circumstances prevalent in the countries in which we market our products and services. Like other companies with international operations, political, economic, geopolitical, or social developments in the countries where we operate or elsewhere, such as elections, new governments, changes in public policy, economic circumstances, laws and/or regulations, trade policies, political agreements or disagreements, civil disturbances, and a rise in violence or the perception of violence, could have a material adverse effect in the countries where we operate or on the global financial markets, and in turn on our business, financial condition, liquidity, and results of operations.
Presidential, legislative, state, and/or local elections took place in 2023 in several of the countries where we operate, including Mexico, Colombia, Spain, Poland, Egypt, and Guatemala. In 2024, Mexico and the United States, two of our most important markets, will hold presidential elections, and there are general elections in some other markets, including Panama, Dominican Republic, Croatia, and the United Kingdom In addition, the EU Parliament will face elections to renew its members. Future snap elections cannot be discarded. A change in federal or national government and the political party in control of the legislature in any of these countries could result in changes to the countries’ economic, political, or social conditions, and in changes to laws, regulations, and public policies, which may contribute to economic uncertainty or adverse business conditions and could also materially impact our business, financial condition, liquidity, and results of operations. Similarly, if no political party wins a clear majority in the legislative bodies of these countries, legislative gridlock and political and economic uncertainty may continue or result.
In Mexico, 2024 will be marked by the presidential, state, and local elections as the country faces the biggest election in its history due to the number of posts that will be contested. During the current administration, several laws, policies, and regulations, as well as certain legislative proposals, have differed from those in effect in previous administrations and there is no certainty that such policies will be given continuity by any incoming administration. Additionally, emission caps per industrial sector in line with Mexico’s greenhouse gas emissions reduction targets are expected to come into effect in 2024. Furthermore, an increase of “green” taxes in states where we operate has come into effect or is expected. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters—Mexico” and “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Regulatory Matters and Legal Proceedings—Environmental Matters—Mexico” for a description of such changes in the laws and regulations governing the energy, electricity, and hydrocarbons sectors which have been enacted, have undergone or are undergoing constitutional challenges, as well as a description of “green” taxes and potential emission caps regulations in Mexico. We are not certain if any such laws and regulations undergoing constitutional challenges will prevail. These and any other policies, laws and regulations which are further adopted could result in a deterioration of investment sentiment, political and economic
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uncertainty, and increased costs for our business, which may in turn have a material adverse effect on our business, financial condition, liquidity, and results of operations.
In the United States, the 2023 off-year elections did not result in any changes to the controlling political party in the United States Congress. However, the 2024 U.S. presidential and legislative elections could result in changes to the controlling political party in the Executive Branch and/or Congress and, in turn, may result in potential changes to, and delays in, the U.S. federal government’s policy priorities and legislative endeavors. The new administration could impose regulations and/or taxes reaching further than those currently in effect. We are not certain if any such regulations and/or taxes will be imposed or not and, in the event they are imposed, whether any costs and expenses incurred to comply with such regulations and/or taxes would have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Our operations in Egypt and Israel have experienced disruption because of, among other things, political instability, civil unrest, terrorism, extremism, deterioration of general diplomatic relations, and changes in the geopolitical dynamics in the region. There can be no assurances that political turbulence in Israel, Egypt, Iran, Iraq, Syria, Libya, Yemen, and other countries in Africa, the Middle East, and Asia will abate in the future or that neighboring
countries (e.g., the United Arab Emirates (“UAE”)) will not be drawn further into conflict or experience instability. In addition, some of our operations are or may be subject to political risks, such as confiscation, expropriation, and/or nationalization, as for example was the case of our past operations in Venezuela and is currently the case in Egypt. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Other Legal Proceedings—Egypt Share Purchase Agreement.”
Further geopolitical challenges, such as the conflict between the United States and China, could cause important disruptions in the global economic, financial markets, and trade dynamics, which could impact the markets in which we operate and materially and adversely affect our business, financial condition, liquidity, and results of operations.
See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—The escalation of a geopolitical conflict may have a material adverse effect on our business, financial condition, liquidity, and results of operation” for information on how the war between Russia and Ukraine, the war in the Middle East involving Israel, and ongoing disputes in Asia may affect our business, financial condition, liquidity, and results of operations.
In Latin America, discontent with politicians, corruption, poverty, and inequality have been cause for numerous protests and general social unrest. Protests have sparked throughout the region in countries such as Colombia, Guatemala, Panama, among others. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Different stakeholder perspectives could lead to social actions against our industry or company including on-the-ground protests, attacks on our assets or facilities, negative media campaigns, strikes, and social unrest. All these events could disrupt our operations, affect our capacity to serve our clients, and damage our assets and/or reputation” for more information on how social protests may affect our operations. Furthermore, the region continues to be affected by Venezuela’s economic and political crisis, which has had a major impact on the regional economy and poses an important economic, social and security risk.
Social activism related to discontent with ruling governments and the economic and social conditions of the countries where we operate is another source of business disruption. Social protests and strikes risk, especially when they take longer than expected, could have a negative impact on our business continuity and capacity to serve our clients.
There have also been terrorist attacks and ongoing threats of future terrorist attacks in countries in which we operate. We cannot assure you that there will not be new attacks or threats that will cause any damage to our operating units and facilities or locations, or harm any of our employees, including members of Cemex, S.A.B. de C.V.’s Board of Directors or senior management, or lead to an economic contraction, financial markets volatility, or erection of
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material barriers to trade in any of our markets. An economic contraction in any of the markets where we operate could affect domestic demand for our products, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
As part of our risk governance approach, from time to time we evaluate the need to address the financial consequences of political or social risk through the purchase of insurance. As a result, we purchase certain types of political risk insurance policies for selected countries where we operate, and which are exposed to political turmoil, geopolitical issues or political uncertainty. These insurance policies are designed to offer some assistance to our financial flexibility to the extent that the specifics of a political incident could give rise to a financial liability. However, we cannot assure you that a given social or political event and possible changes in government policies will be covered by the political risk insurance policies we have in place, or that the amount of such insurance will be sufficient to offset the liability arising from any such events. Any such liability could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
These and other political, economic, social and geopolitical issues have the potential to impact the global economy, financial markets, and the overall stability of the countries and regions in which we operate and, in turn, could materially and adversely impact our business, financial condition, liquidity, and results of operations.
The escalation of a geopolitical conflict may have a material adverse effect on our business, financial condition, liquidity, and results of operation.
Global markets have experienced and are experiencing volatility and disruption due to geopolitical tensions, including Russia’s war with Ukraine, the war in the Middle East involving Israel, and ongoing disputes in Asia.
In February 2022, Russia launched a full-scale military invasion of Ukraine. Although the length and impact of the ongoing military conflict is unpredictable, the conflict in Ukraine has created and could lead to further market disruptions, including significant volatility in commodity prices, credit, and capital markets. After more than two years of conflict, hostilities continue to occur between Russia and Ukraine. As of the date of this annual report, comprehensive sanctions for Russian entities and officials have been enacted by the United States, the European Union (the “EU”), the United Kingdom, Switzerland, Japan, France, New Zealand, Australia, Canada, Germany and Poland, among others, mainly against Russia and Russian individuals and companies, including agreements to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication payment system. A peaceful resolution to this war is not expected to occur during 2024. Increased tensions could pose the risk of military action expanding to and/or mobilization by other countries in Europe.
Our operations in Egypt and Israel are exposed to the geopolitical tensions and conflicts in the Middle East, specifically the war involving Israel. Increased tensions in the Middle East could pose the risk of full military action, including beyond Israel and the Gaza Strip, which may disrupt our supply chain and operations or otherwise adversely affect our business, financial condition, liquidity, and results of operations. See “Item 3-Risk Factors-Risks Relating to Our Business and Operations-Potential political, economic and military instability in Israel could adversely affect our operations.”
In Asia, ongoing disputes between North and South Korea, as well as territorial disputes among several Southeast Asian countries and China in the South China Sea continue to be a cause for social, economic, and political uncertainty and instability in the region. A major outbreak of hostilities or political upheaval in China, Hong Kong, Taiwan, North Korea, South Korea, or any other Asian nation could adversely affect the global economy, which could have a material adverse effect on our business, financial condition, liquidity, or results of operations.
If these conflicts further escalate, they could continue having a negative impact on the geopolitics and economy of their regions, which in turn could materially adversely affect our operations, financial condition, liquidity, and results of
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operations. These conflicts could have further global economic consequences, including, but not limited to, the possibility of severely diminished liquidity and credit availability, declines in consumer confidence, scarcity in certain raw materials and products, declines in economic growth, increases in inflation rates, volatility on energy price and availability, and uncertainty about economic and political stability. Any of the foregoing consequences, including those we cannot yet predict, may have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Potential political, economic, and military instability in Israel could adversely affect our operations.
We have significant operations in Israel and Egypt. Accordingly, political, economic, and military conditions in Israel and the surrounding region may directly affect our operations in Israel and Egypt. In recent years, Israel has been involved in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of Southern Lebanon, and with Iranian-backed military forces in Syria. Some of these hostilities were accompanied by missile strikes from the Gaza Strip against civilian targets in various parts of Israel and negatively affected business conditions in Israel. The result of the 2024 U.S. presidential election may continue to change the dynamics in the Middle East as forces hostile to the existence of Israel seek to reverse the recent stability and commercial opportunities created by the Abraham Accords. For example, there have been increasing concerns related to a potential attack by Iran. The tension between Israel and Iran and/or these groups may escalate in the future and turn even more violent, which could affect the Israeli economy in general and us in particular. A deterioration in the political and security situation in Israel (for example, the significant instability with regards to changes promoted by the Israeli government in the judiciary branch) may have a negative effect on Israel’s economic situation and on our ability to conduct our business and operations in Israel and Egypt.
Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the value of direct damages that are caused by terrorist attacks or acts of war at market value before the attack or act of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damage incurred by us could have a material adverse effect on our business.
Further, in the past, Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our business, financial condition, liquidity, or results of operations. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business.
Complications in relationships with local communities and different stakeholder perspectives could lead to social actions against our industry or company, including legal actions, on-the-ground protests, attacks on our assets or facilities, negative media campaigns, strikes, and social unrest. All these events could disrupt our operations, affect our capacity to serve our clients, damage our assets and/or reputation and may materially and adversely affect our business continuity, reputation, liquidity, and results of operations.
Although we make significant efforts to maintain good long-term relationships with our stakeholders in the geographies where we operate, there can be no assurance that certain of our stakeholders will not have different, or at times conflicting, perceptions, interpretations, interests, or objectives from ours. We may also be negatively impacted by perceptions that our industry is more polluting than others and allegations relating to human rights in our industry.
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In the past, legal action has been taken against us for alleged violations of environmental laws. In 2018, a class action was filed against certain of our subsidiaries and affiliates in the Philippines in connection with a landslide that occurred in a community where one of our facilities is located. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters—Philippines Environmental Class Action” for more information on these legal proceedings. The risk of similar legal actions being taken against the Company in the future cannot be disregarded and we cannot guarantee that any such legal proceedings will be resolved in a manner favorable to us. An adverse resolution in any such legal proceedings could have a material adverse effect on our business, reputation, financial condition, liquidity, and results of operations.
On December 27, 2023, a group of activists attacked Cemex Deutschland’s Kreuzberg concrete plant. The attack damaged five mixer trucks, the mixing unit at the plant, the conveyor and one of the cement silos. Anarchist group Switch Off took responsibility for the attack. According to their statement, Cemex was targeted due the industry’s CO2 footprint, the Company’s involvement in the Berlin A100 motorway project, and its presence in Israel. In the past, assets of industry players have also been the target of invasions and attacks from activist groups, which have provoked negative economic and reputational consequences on the corresponding company and in our industry. Damage to our material assets and disruptions in our material operational facilities could have a material adverse effect on our business, reputation, financial condition, liquidity, and results of operations.
In several regions where we have operations, social protests sparking from opposition to the granting and renewal of certain government concessions, permits and licenses, including for the extraction of raw materials to mining and industrial companies, have caused delays and/or failure in obtaining such concessions, permits and licenses for the relevant companies. Government concessions, permits and licenses necessary for our operations must be periodically and frequently requested and/or renewed and similar opposition to the granting of government concessions, permits or licenses necessary for our operations may arise. As a result, we may suffer delays in securing such permits, concessions, and licenses or fail to secure them on favorable terms or at all. Failure to secure material permits, concessions, and licenses could have a material adverse effect on our business, reputation, financial condition, liquidity, and results of operations.
Stakeholders with different or conflicting perspectives could result in further social activism with negative impacts to us, such as legal actions, on-the-ground protests, attacks to our assets or facilities, delays in legal or administrative proceedings, strikes, negative media coverage, business disruption, requests for governments to revoke or deny our concessions, licenses, or other permits, among others. Any such events could have a material adverse effect on our business, reputation, financial condition, liquidity, and results of operations.
Labor activism and unrest, or failure to maintain satisfactory labor relations, could adversely affect our results of operations.
Labor activism and unrest may adversely affect our operations and thereby adversely affect our business, financial condition, liquidity, results of operations, and prospects. Although most of our significant operations have not been affected by any significant labor disputes in the past, we cannot assure you that we will not experience labor unrest, activism, disputes, or actions in the future, including as a result of labor laws and regulations that have recently been enacted or that could come into effect in the future, some of which may be significant and could adversely affect our business, financial condition, liquidity, results of operations, and prospects. For example, collective bargaining agreements covering all or part of our operations in Panama, and Barbados expired and were renewed in 2023 and covering all or part of our operations in Spain, Germany, France, Egypt, Colombia, and Jamaica will expire or could be opted out of in 2024 or shortly thereafter, and as a result, negotiations for their renewal have taken place and/or are expected to take place in 2024 or the following years. Collective bargaining agreements covering all or part of our operations in other countries may also expire in the following years and negotiations for their renewal may be
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necessary. Negotiations for the renewal of collective bargaining agreements covering all or part of our operations may or may not be successful. For a description of our most relevant collective bargaining agreements, see “Item 6—Directors, Senior Management, and Employees—Employees.”
We are subject to restrictions and reputational risks resulting from non-controlling interests held by third parties in our consolidated subsidiaries. As of the date of this annual report, we control three publicly listed companies, where this risk is heightened.
We conduct our business mostly through subsidiaries. In some cases, third-party shareholders hold non-controlling interests in these subsidiaries. Our most important subsidiaries in which third-party shareholders held non-controlling interests as of the date of this annual report are Cemex Holdings Philippines, Inc. (“CHP”), Trinidad Cement Limited (“TCL”) and Caribbean Cement Company Limited (“CCCL”), all of which are publicly listed companies. Various disadvantages may result from the participation of non-controlling shareholders whose interests may not be aligned with ours. Some of these disadvantages may, among other things, result in our inability to, or complicate our ability to, implement organizational efficiencies, divest or acquire assets, contribute capital to such publicly listed subsidiaries to achieve operational improvements, and transfer cash and assets from one subsidiary to another in order to allocate assets most effectively. In addition, we are also exposed to third-party shareholders initiating different actions or proceedings against us as controlling shareholders on corporate and corporate governance related matters, such as tender offer or divestment procedures, which could also harm our reputation and have an adverse effect on our business, liquidity, financial condition and results of operations.
High energy and fuel costs have had and may continue to have a material adverse effect on our operating results.
Energy and fuel costs represent an important part of our cost structure. The price and availability of energy and fuel are generally subject to market volatility and inflation, and have had, and may continue to have, an adverse impact on our costs and operating results. If third-party suppliers fail to provide to us the required amounts of energy or fuel under existing agreements, we may need to acquire energy or fuel at an increased cost from other suppliers to fulfill contractual commitments with third parties or for use in our operations. Governments in several countries in which we operate are working to reduce energy subsidies, introduce or tighten clean energy obligations or impose excise taxes and carbon emission caps, which could increase energy costs and have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Our commitment to transition to and increase the use of alternative energy sources and fuels may limit our flexibility to use energy sources and fuels that may be more cost-effective and require us to incur more in capital expenditures and investments than we currently have planned. However, if our efforts to increase our use of alternative fuels are unsuccessful, due to their limited availability, price volatility or otherwise, we would be required to use traditional fuels, which may be more expensive at any given time and increase our energy and fuel costs. Also, any such failure may cause us not to achieve the targets under our “Future in Action” climate action program and certain key performance indicators provided for in our sustainability-linked financing arrangements, which, among other adverse effects, would damage our reputation and give rise to an increase in our cost of capital. Any of this could have a material adverse effect on our business, financial condition, liquidity, and results of operations. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters—Mexico” and “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Regulatory Matters and Legal Proceedings—Environmental Matters—Mexico” for a description of certain changes in the laws and regulations governing the energy, electricity and hydrocarbons sectors which have been enacted, have undergone or are undergoing constitutional challenges or approval procedures, and which may result in increased costs for our business, which may in turn have a material adverse effect on our business, financial condition, liquidity, and results
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of operations. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Economic conditions globally, including the protracted period of high inflation and elevated interest rates, particularly in countries where we operate, have affected and may continue to adversely affect our business, financial condition, liquidity, and results of operations” for more information on the current inflationary environment.
We are increasingly dependent on information technology and our systems and infrastructure, as well as those provided by third-party service providers, face certain risks, including cyber-security risks.
We increasingly rely on a variety of information technology and cloud services, on a fully digital customer integration platform, such as Cemex Go, and on automated operating systems to manage and support our operations, as well as to offer our products to our customers. The proper functioning of this technology and these systems is critical to the efficient operation and management of our business, as well as for the sales generated by our business. Our systems and technologies may require modifications or upgrades as a result of technological changes, growth in our business and to enhance our business security. These changes may be costly and disruptive to our operations and could impose substantial demands on our systems and increase system outage time. Our systems and technology, as well as those provided by our third-party service providers, such as International Business Machines Corporation (“IBM”), Microsoft and HCL Technologies, among others, may be vulnerable to damage, disruption or intrusion caused by circumstances beyond our control, such as physical or electronic break-ins, catastrophic events, power outages,
natural disasters, computer system or network failures, security breaches, computer viruses and cyber-attacks, including malicious codes, worms, ransomware, phishing, denial of service attacks and unauthorized access. For example, our digital solutions to improve sales, customer experience, enhance our operations and increase our business efficiencies could be impeded by such damages, disruptions or intrusions. Furthermore, while we expect to further integrate digital technologies into our operations as part of our Working Smarter digital transformation initiative and believe this is likely to assist us in fulfilling our strategic priorities, these integration efforts and the engagement of additional technology service providers and systems in our operations as part of Working Smarter could increase our exposure to these risks. See “Item 4—Information on the Company—Our Strategic Priorities—Operational Improvements” for more information on Working Smarter and the related technologies, service providers and systems engaged as part of this digital transformation initiative. To try to minimize such risks, we safeguard our systems and electronic information through a set of cyber-security controls, processes, and a monitoring service to attend to potential breaches. In addition, we also have disaster recovery plans in case of incidents that could cause major disruptions to our business. However, these measures may not be sufficient or we may be unable to efficiently implement them when required, and our systems have in the past been subject to certain minor intrusions that did not result in a material breach or material impact to the Company, including distributed denial of service attacks, unauthorized access attempts, brute force attacks and phishing. Although, as of the date of this annual report, we are certified under and compliant with International Organization for Standardization (“ISO”) 27001:2022 standards for information security management systems to preserve the confidentiality, integrity and availability of data and also are certified on the Payment Card Industry security standard which provides an e-commerce mechanism for customers, and the majority of our cement plants received the ISO 27001:2022 certification, we cannot assure that we will always be able to retain or renew this certification or that our systems will not be subject to certain intrusions. In a global business environment that relies on complex digital networks, cybercriminals are often outpacing a company’s ability to prevent and manage cyberthreats. The digitalization of global supply chains creates new risks as they increasingly rely on technology and other third parties. Additionally, the integration of newly acquired assets and businesses to Cemex’s network may take time to implement and therefore the period between the acquisition and integration could pose a security risk to Cemex’s current infrastructure, business, and operation. The divestment of businesses could also pose a cybersecurity threat to Cemex’s business and operation, as third parties may be granted limited access to Cemex’s current technology infrastructure as part of transition agreements.
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During 2023, there was a global trend of an increase in security threats, including, but not limited to, phishing, smishing, and malware/ransomware campaigns, exploitation of video collaboration vulnerabilities, among other things. Furthermore, the increase in employees working from home increased cyber risk due to inadequate security configurations of domestic (home) networks and use of non-corporate devices. As of the date of this annual report, we have implemented additional cybersecurity technology and controls designed to reduce such risks and mitigate the impact of such risks, but these may also not be sufficient, and we cannot assure you that intrusions will not occur.
As of December 31, 2023, Cemex Go had more than 60,000 customers across the countries in which we do business, and through Cemex Go we receive approximately 60% of our main product orders which represent 67% of our total global sales. As the penetration and adoption of Cemex Go and our other digital platforms and systems progresses, the impact of any related incident or disruption is likely to increase. Any significant information leakages or theft of information, or any unlawful processing of personal data, could affect our compliance with data privacy laws and make us subject to regulatory action, including substantial fines and private litigation with potentially large costs, and could damage our relationship with our employees, customers, and suppliers, which could have a material adverse impact on our business, financial condition, liquidity, results of operations, and prospects.
Furthermore, in June 2023, our insurance program was renewed for 12 additional months. This program includes insurance coverage that, subject to its terms and conditions, is intended to address certain costs associated with cyber incidents, network failures, and data privacy-related concerns. Nevertheless, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or types of claims that may arise from an incident or the damage to our reputation or brands that may result from an incident. However, any significant disruption to our systems could have a material adverse effect on our business, financial condition, liquidity, and results of operations, and could also harm our reputation.
The development and adoption of artificial intelligence, including generative artificial intelligence, and its use by us or use or misuse by third parties, may increase the financial and operational risks or create new financial or operational risks that we are not currently anticipating.
AI technologies offer potential benefits in areas such as customer service personalization and process automation, and we expect to use AI and Generative AI to help deliver products and services and support critical functions. We also expect third parties on whom we rely on to do the same. While AI and Generative AI offer benefits to our business, the use of AI and Generative AI has become a concerning risk in the global landscape. AI and Generative AI may be misused by us or by such third parties, and that risk is increased by the relative newness of the technology, the speed at which it is being adopted, and the lack of laws, regulations or standards governing its use. For example, during 2023, there was a global trend of an increase in security threats, including, but not limited to, phishing, smishing, malware/ransomware campaigns, and exploitation of video collaboration vulnerabilities, among other things. Use of AI and Generative AI in connection with such activities can make them more successful and increase the risks associated with them. Such misuse could expose the Company to legal or regulatory risk, damage customer relationships, or cause reputational harm. Our competitors may also adopt AI or Generative AI more quickly or more effectively than we do, which could cause competitive harm. Because the Generative AI technology is so new, many of the potential risks of Generative AI are currently unknowable; however, specific risks relating to AI and Generative AI could include, among others: (i) Reputational Damage: These technologies are capable of creating convincing fake images, videos, and text that can be used to deceive people. Malicious actors could use AI to create deepfakes of the Company’s executives stating information that deviate from actual events or manipulate financial documents, leading to loss of customer trust and significant reputational damage. Moreover, the use of AI trained on inaccurate data sets could result in inaccurate or biased decisions; (ii) Fraudulent Activity: AI could be used to create forged documents or impersonate individuals to commit financial fraud, leading to financial losses and regulatory scrutiny; (iii) Misinformation and Disinformation: The ability to generate realistic and convincing synthetic media could be used
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to spread misinformation and disinformation, impacting public opinion and undermining trust in the financial system; (iv) Privacy Concerns: AI could be used to create synthetic identities or manipulate personal data, raising privacy concerns and potentially violating data protection regulations; and (v) Cybersecurity Threats: AI could be used to create sophisticated phishing attacks or bypass security measures, increasing the risk of cyberattacks and data breaches. If any of the foregoing were to occur, a material adverse effect on our business, financial condition, liquidity, results of operations, and reputation could materialize.
We may not be able to realize the expected benefits from our portfolio rebalancing or any divestments, acquisitions, or joint ventures, some of which may have a material impact on our business, financial condition, liquidity, and results of operations. Any failure to realize expected benefits from the bolt-on acquisitions of our business strategy heightens this risk.
Our ability to realize the expected benefits from any divestments, acquisitions, joint ventures, investments, or partnerships depends, in large part, on our ability to allocate funds and integrate acquired operations with our existing operations in a timely and effective manner or on our ability to impact financial results or operations of or properly manage, together with any partners, any joint venture business, partnership or other business where we hold an investment. These efforts may not be successful. Although we have disposed of assets in the past and may continue to do so to reduce our overall leverage and rebalance our portfolio, certain of our debt instruments restrict our ability to make certain investments or divest substantial assets. We may in the future acquire new operations or enter into joint ventures or investments and integrate such operations or assets into our existing operations, and some of such acquisitions, joint ventures, or investments may have a material impact on our business, financial condition, liquidity, and results of operations. We cannot assure you that we will be successful in executing divestments, in allocating funds from such divestments or in identifying or acquiring suitable assets in the future, or that the terms under which we may dispose of or acquire any assets or enter into joint ventures in the future would be favorable to us or that we will be able to find suitable buyers for our divestments or partners for our joint ventures at all.
We may also fail to achieve any anticipated cost savings from any divestment, acquisitions, joint ventures or investments. We have announced that the portfolio rebalancing efforts that are a part of our strategic priorities are expected to include a variety of bolt-on investments, divestments, and acquisitions, which include divestments and acquisitions in different geographies. For example, we sold our operations in Costa Rica and El Salvador and 65% of our stake in Neoris N.V. (“Neoris”) in 2022. In 2023, we acquired the assets of Atlantic Minerals Limited in Newfoundland, Canada to increase our aggregates reserves for the U.S. market, as well as Kiesel GmbH (“Kiesel”) (a German mortars and adhesives company), a 51% stake in SHTANG Recycle LTD (“SHTANG”) (a construction, demolition, and excavation waste recycling company in Israel), and certain aggregates and Urbanization Solutions operations in Spain. We expect to continue our portfolio rebalancing efforts in 2024. Failure to realize the expected benefits from these divestments and acquisitions, if at all made, would cause us to not achieve certain of our strategic goals and, in turn, our business, financial condition, liquidity, and results of operations could be materially and adversely affected.
We have adopted a sustainability strategy we consider to be ambitious. Our sustainability strategy includes achieving the targets of our “Future in Action” program and some of these targets are replicated as key performance indicators in our sustainability-linked financing arrangements. Failure to reach these goals may expose us to certain risks that could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Our sustainability strategy is underpinned by certain objectives that we are pursuing to achieve by 2030 and 2050, respectively. We may not be successful in reaching our sustainability goals. Failure to meet our sustainability goals exposes us to several risks, including: (i) financial risk: if our efforts to achieve our sustainability goals are
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unsuccessful or reduce our profitability, among other adverse effects, this could damage our operating results and give rise to an increase in our cost of capital; and (ii) reputational risk: our reputation, and business, could be negatively impacted if we fail, or are perceived to have failed, in timely meeting these sustainability targets, or fail to realize the anticipated benefits of planned investments and technology innovations related to sustainability. Such failure or perceived failure could adversely impact the demand for our products and subject us to liabilities and reputational risks that could in turn adversely affect our business, financial condition, and results of operations.
Achieving our sustainability goals could cause us to incur substantial expense and alter our operations , certain other capital or operational expenditures or product development processes. The incurrence of these financial obligations, expenditures and the making of these decisions may be non-optimal from a financial perspective, expensive, inconsistent with the expectations of investors and any longer-term benefits may not materialize within the time frame we expect or at all, which could harm our business, revenue, and financial results. We plan to continue investing in our sustainability strategy to develop and advance such projects through our capital expenditures to achieve our sustainability goals. We may continue to require external financing to pay our operating and general and administrative expenses, continue the advancement of our sustainability strategy, and fund our other projects. To the extent we rely on external financing, we may incur additional material financial obligations to repay the funds borrowed with interest to finance our sustainability strategy and may become subject to covenants and restrictions that restrict operating flexibility. Any of this, individually or in aggregate, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
A substantial amount of our total assets consists of intangible assets, including goodwill. We have recognized charges for goodwill impairment in the past, nevertheless no goodwill impairment was recognized in 2023, but if market or industry conditions deteriorate in the future, additional impairment charges may be recognized.
Our 2023 audited consolidated financial statements included elsewhere in this annual report, have been prepared in accordance with IFRS as issued by the IASB, under which goodwill is not amortized and is tested for impairment. Tests for impairment are carried out when indicators exist or at least once a year during the fourth quarter of each year and are performed by determining the value-in-use of its groups of cash-generating units (“CGUs”) to which goodwill balances have been allocated. The recoverable amount of CGUs consists of the higher of such groups of cash-generating units’ fair value, less cost to sell, and their corresponding value in use, represented by the discounted amount of estimated future cash flows expected to be generated by such groups of CGUs to which goodwill has been allocated. An impairment loss is recognized under IFRS if the recoverable amount is lower than the net book value of the groups of CGUs to which goodwill has been allocated within other expenses, net. We determine the discounted amount of estimated future cash flows over periods of five years. If the value in use of a group of CGUs to which goodwill has been allocated is lower than its corresponding carrying amount, we determine its corresponding fair value using methodologies generally accepted in the markets to determine the value of entities, such as multiples of Operating EBITDA and/or by reference to market transactions.
Impairment tests are significantly sensitive to, among other factors, the estimation of future prices of our products, in the development of operating expenses, local and international economic trends in the construction industry, the long-term growth expectations in the different markets, as well as the discount rates and the growth rates in perpetuity applied. For purposes of estimating future prices, we use, to the extent available, historical data plus the expected increase or decrease according to information issued by trusted external sources, such as national construction or cement producer chambers and/or in governmental economic expectations. Operating expenses are normally measured as a constant proportion of revenues, following experience. However, such operating expenses are also reviewed considering external information sources in respect of inputs that behave according to international prices, such as oil and gas. We use specific pre-tax discount rates for each group of CGUs to which goodwill is allocated,
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which are applied to pre-tax cash flows. The amounts of estimated undiscounted cash flows are significantly sensitive to the growth rates in perpetuity applied. The higher the growth rate in perpetuity applied, the higher the amount of undiscounted future cash flows by group of CGUs obtained. Moreover, the amounts of discounted future cash flows are significantly sensitive to the weighted average cost of capital (discount rate) applied. The higher the discount rate applied, the lower the amount of discounted estimated future cash flows by group of CGUs obtained.
We performed our annual goodwill impairment test during the fourth quarter of 2022 and 2023. For the year ended December 31, 2023, we did not determine any goodwill impairment losses considering the increase in the Company’s projected cash flows linked to the improved generation of Operating EBITDA in the majority of the countries in which we operate to which goodwill balances have been allocated and the positive outlook for the following years, partly offset by the general increase in the applicable discount rates in comparison to 2022, which on average increased 120 basis points or 1.2%. During 2022, we recognized a non-cash aggregate goodwill impairment charge of $365 million, of which $273 million related to our business in the United States and $92 million related to our business in Spain. In both cases, the related book value of the operating segment exceeded the corresponding value-in-use. The impairment losses in 2022 are mainly related to the significant increase in the discount rates in comparison to 2021 and the resulting significant decrease in our projected cash flows in these segments considering the global high inflationary environment, which increased the risk-free rates, and the material increase in the funding cost observed in the industry during the period. See notes 7, 16.1, and 16.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. Considering the important role that economic factors play in testing goodwill for impairment, we cannot assure that any downturn in the economies where we operate will not necessitate further impairment tests and a possible downward readjustment of our goodwill for impairment under IFRS. Such an impairment test could result in impairment charges which could be material to our financial statements, which could have a material adverse effect on our financial condition.
The failure of any bank in which we deposit our funds could have an adverse effect on our financial condition.
We currently have cash and cash equivalents deposited in several financial institutions significantly in excess of federally insured levels. If any of the financial institutions in which we have deposited funds ultimately fails, we may lose our deposits over $250,000 at such financial institutions in the United States, or over different amounts in other countries in which we have bank accounts, and/or we may be required to move our accounts to another financial institution, which could cause operational difficulties, such as delays in making payments to our partners and employees, which could have an adverse effect on our business and financial condition.
Activities in our business can be hazardous and can cause injury to people or damage to property in certain circumstances.
Most of our production facilities and units, as well as mineral extraction locations, require individuals to work with chemicals, equipment and other materials that have the potential to cause fatalities, harm and injury when used without due care. An accident or injury that occurs at our facilities could result in disruptions to our business and operations and could have legal and regulatory, as well as reputational, consequences. As a result, we may be required to compensate such individuals or incur other costs and liabilities, any and all of which could have a material adverse impact on our reputation, business, financial condition, liquidity, results of operations, and prospects.
Additionally, cement production raises a number of health and safety issues. As is the case with other companies in our industry, some of our aggregate products contain varying amounts of crystalline silica. Also, some of our construction and material processing operations release, as dust, crystalline silica that is in the materials being handled. Prolonged inhalation of very small-sized particles of crystalline silica has allegedly been associated with
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respiratory disease (including silicosis). Additionally, prolonged exposure to chemicals, such as those employed occasionally during the elaboration of some of our products, has also been associated with various health issues. As part of our annual due diligence, we work with our stakeholders to verify that certain health and safety protocols are in place with regards to the management of silica and its health effects, as well as in relation to other substances and products. Nonetheless, any health issues related to cement and aggregates production or construction and material processing can result in claims related to exposure to these products or substances, which could have a material adverse impact on our reputation, business, financial condition, liquidity, results of operations, and prospects.
Other health and safety issues related to our business include: burns arising from contact with hot cement kiln dust or dust on preheater systems; airborne hazards related to our aggregates mining activities; noise, including from chutes and hoppers, milling plants, exhaust fans, and blowers; the potential for dioxin formation if chlorine-containing alternative fuels are introduced into kilns; plant cleaning and maintenance activities involving working at elevated heights or in confined or other awkward locations, and the storage and handling of coal, pet coke, and certain alternative fuels, which, in their finely ground state, can pose a risk of fire or explosion; and health hazards associated with operating ready-mix concrete trucks. We may also be exposed to liability resulting from injuries or fatalities involving third-party service providers, such as drivers for our suppliers when delivering products or services to us. While we actively seek to minimize the risk posed by these issues, personal injury claims may be made, and substantial damages awarded, against us, which could have a material adverse impact on our reputation, business, financial condition, liquidity, and results of operations. Additionally, we may also be required to change our operational practices, involving material capital expenditure.
The introduction of or failure to introduce substitutes or alternative forms of cement, ready-mix concrete, or aggregates into the market and the development of or failure to develop new construction techniques and technologies could have a material adverse effect on our business, financial condition, liquidity, and results of operations and could have an impact in our sustainability targets.
Materials such as plastic, aluminum, ceramics, glass, wood, and steel can be used in construction as a substitute for cement, ready-mix concrete, or aggregates. In addition, other construction techniques, such as the use of dry wall, and the integration of new technologies in the construction industry, such as 3-D printing, mini-mills, and mobile plants, and changes in housing preferences could adversely impact the demand and price for our cement, ready-mix concrete, and/or aggregates. Furthermore, research aimed at developing new construction techniques and modern materials and digitalizing the construction industry may introduce new products and technologies in the future that could reduce the demand for and prices of our products. Our efforts to introduce new products or products with non-traditional compositions (such as our Vertua portfolio of products with sustainable attributes such as lower carbon, energy efficiency, water conservation, use of recycle materials, and design optimization) or to develop and market new construction techniques and technologies (such as those that are part of our Urbanization Solutions) are not only aimed at increasing our operating results, but are also relevant to achieve the targets of our “Future in Action” program and certain key performance indicators provided for in our sustainability-linked financing arrangements. Therefore, if our efforts to introduce these products and construction techniques and technologies are unsuccessful or unprofitable, among other adverse effects, this would damage our operating results and reputation and give rise to an increase in our cost of capital. Any of this, individually or in the aggregate, could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
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We operate in highly competitive markets with numerous players employing different competitive strategies and if we do not compete effectively, our revenues, market share, and results of operations may be affected.
The markets in which we operate are highly competitive and are served by a variety of established companies with recognized brand names, as well as new market entrants and increasing imports. Companies in these markets compete based on a variety of factors, often employing aggressive pricing strategies to gain market share. For example, in the relatively consolidated cement and ready-mix concrete industries, our business strategy is based on quality, client segmentation, value proposition, and superior customer experience. In the more fragmented market for aggregates, our business strategy is based on capacity, price for our products, and our customer centric culture. In certain areas of the markets In which we compete, some of our competitors may be more established, benefit from greater brand recognition or have greater manufacturing and distribution channels and other resources than we do or offer a better customer experience than we do. In addition, if our competitors were to combine, they may be able to compete more effectively with us, and they may also dispose of assets, which could lead to new market entrants, increasing competition in our markets. In the last year, mergers and acquisitions transactions played an important role in the markets where we operate. For example, in 2023, Heidelberg Materials acquired the SEFA Group, Inc, the largest fly ash recycling company in the United States, with a presence in 13 states. Heidelberg Materials has stated that this acquisition is aimed at strengthening its cementitious footprint in the country, considering the industry’s increasing demand for low CO2 products. Additionally, Summit Materials acquired the operations in the United States of Cementos Argos, enhancing its footprint in the southeast of the country. We have substantial operations in the United States and have announced a substantial part of our growth efforts will focus on the United States, and it is unclear how competitive dynamics will change in this region or other regions of the United States following this transaction. In Spain, a country in which we have operations, Holcim acquired Elite Cementos. The extent of the impact this transaction will have in the region or other regions in Spain is uncertain. In Mexico, Holcim acquired INDAR, a leading hardware wholesaler in the country with over 10,000 products and over 80 brands. This transaction expands Holcim’s presence and increases competition with our Urbanization Solutions business in this market. In addition, if any of our major competitors divest assets in different parts of the world, this may lead to increased competition in the markets in which we operate. It is unclear how competitors that could potentially acquire those assets will compete in the markets in which we operate. Some may use strategies based on imports and pricing that could be damaging to our industry’s profitability and, as a consequence, our results of operations. In addition, asset optimization by buyers of the disposed assets could result in an operational cost advantage. As a result, if we are not able to compete effectively, we may lose market share, potentially substantially, in the countries in which we operate, and our revenues could decline or grow at a slower rate and our business and results of operations would be harmed, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
We may fail to secure certain materials required to run our business, or could secure them at higher prices, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
We increasingly use in most of our business certain by-products of industrial processes produced by third parties, such as pet coke, fly ash, slag and synthetic gypsum, among others, as well as natural resources such as water. While we are not dependent on any particular suppliers, we try to secure the supply of the required materials, products or resources through long-term renewable contracts and framework agreements, which allow us to better manage supplies. In 2023, droughts and a lighter rain season in Panama contributed to the decrease in the daily transit capacity of the Panama Canal, effectively impacting worldwide operations. Although Cemex was not particularly affected by the decrease in transit capacity, continued droughts may have an impact on the transport of materials required to run our business, including in transport by our suppliers. Short-term contracts are entered into in certain countries where we operate. Should existing suppliers cease operations or reduce or eliminate production of
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these by-products, or should for any reason any suppliers not be able to deliver to us the contractual quantities, or should laws and/or regulations in any region or country limit the access to these materials, products, reserves or resources, sourcing costs for these materials could increase significantly or require us to find alternative sources for these materials, which could have a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects. In particular, scarcity and quality of natural resources (such as water and aggregates reserves) in some of the countries where we operate could have a material adverse effect on our operations, costs and results of operations.
Failure to secure materials required to run our business may also arise from our or our supplier’s delay or failure in maintaining, obtaining or renewing governmental or other approvals, concessions, licenses and permits for the conduct of business, which may in turn have a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects. See “Item 3—Key Information—Risk Factors—Risks Relating to Regulatory and Legal Matters—We or our third-party providers may fail to maintain, obtain, or renew, or may experience material delays in obtaining, requisite governmental or other approvals, licenses, and permits for the conduct of our business” for a description of circumstances which may cause such delays or failures.
Our operations and ability to source products and materials can be affected by adverse weather conditions, hydrometeorological and geological hazards such as hurricanes, flash floods, earthquakes, and/or natural disasters, including climate change, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Construction activity, and thus demand for our products, decreases substantially during periods of cold weather, when it snows or when heavy or sustained rainfalls occur, or generally, in any rainy and snowy weather. Consequently, demand for our products is significantly lower during the winter or raining and snowing seasons in the countries in which we operate and do business. Generally, winter weather in our European and North American operations significantly reduces our first quarter sales volumes, and to a lesser extent our fourth quarter sales volumes. Sales volumes in these and similar markets generally increase during the second and third quarters because of normally better weather conditions. However, high levels of rainfall and/or snow can also adversely affect our operations during these periods, as well as our access to products and materials used in our operations. Natural disasters throughout 2023, such as the flash floods in the Dominican Republic, severe droughts in North America, and Hurricane Otis in Mexico, have had, and in the future could have, a negative impact on our sales volumes, which could also have a material adverse effect on our results of operations. Our operations in Florida and Texas, the Caribbean and certain parts of the Gulf of Mexico are particularly exposed to hurricanes and similar weather events. For the years ended December 31, 2023, 2022, and 2021, the Company’s other expenses, net, in the statement of income, include expenses and losses associated with severe weather conditions of $3 million, $1 million, and $5 million, respectively, mainly related to winter storms in the United States in 2023, Hurricane Ian in 2022 and storms in Texas in 2021. These events generated incremental costs related to power and gas consumption costs and additional parts replacement, but these costs could be materially higher in case the frequency and severity of any weather event increases, in particular as a result of climate change. Additionally, such events may lead to: (i) the destruction of or damage to our facilities and infrastructure, leading to operational disruptions; (ii) damages or evacuations affecting our workforce and communities, leading to staffing shortages and production stoppages; (iii) disruptions in supply chains and transportation networks, potentially causing delays or shortages of critical materials and services; (iv) increased costs for materials and services due to scarcity and emergency response measures; (v) significant damage to transportation infrastructure, such as roads and ports, hindering the movement of goods and personnel; (vi) decreased consumer spending, negatively impacting demand for our products and services; (vii) a slowdown in economic activity, particularly in sectors like construction, which are vital for our business; (viii) challenges in accessing financing due to increased market volatility and risk aversion; (ix) potential liquidity issues if operational cash flow is disrupted and access to credit becomes more constrained; (x) difficulties in refinancing debt under
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favorable terms, if at all, due to market disruptions; and (xi) challenges in meeting or renegotiating the terms of financial obligations, including covenants in credit agreements. The duration and severity of the impacts of these natural disasters are even more unpredictable and could have prolonged adverse effects on our operations and financial condition, especially if such events become more frequent or severe due to climate change.
In general, decreases in sales volumes because of weather events or natural disasters are usually counterbalanced by the increase in the demand for our products during the reconstruction phase, unless any of our operating units or facilities are impacted by the natural disaster, or if our access to our sources of raw materials and the general supply chain is also affected. Such adverse weather conditions and natural disasters can have a material adverse effect on our business, financial condition, liquidity, and results of operations if they occur with unusual intensity, during abnormal periods, or last longer than usual in our major markets, or if they cause scarcity and increases in the cost of the products we need to run our business, especially during peak construction periods.
We could be adversely affected by any significant or prolonged disruption to our production facilities.
Any prolonged and/or significant disruption to our production facilities, whether due to repair, maintenance or servicing, governmental or administrative actions, regulatory issues, civil unrest, industrial accidents, unavailability or excessively high cost of raw materials such as energy to the point of making it inefficient to run our production facilities, mechanical equipment failure, human error, natural disaster, cyber-attack to our systems, public health threat or otherwise, could disrupt and adversely affect our operations. Additionally, any major or sustained disruptions in the supply of utilities such as water, gas or electricity or any fire, flood, earthquake, hurricane, volcanic eruption, landslide, blizzard or other natural calamities or communal unrest or acts of terrorism may disrupt our operations or damage our production facilities or inventories and could have a material adverse effect on our business, financial condition, liquidity, and results of operations. We typically shut down our facilities to undertake maintenance and repair work at scheduled intervals. Although we schedule shutdowns such that not all our facilities are shut down at the same time, the unexpected shutdown or closure of any facility or the unexpected prolongation for unforeseen reasons of any scheduled shutdown or temporary closure, may nevertheless materially affect our business, financial condition, liquidity, and results of operations from one period to another.
Our insurance coverage may not cover all the risks to which we may be exposed or may cover them to an amount that may not be sufficient to satisfy our requirements.
Among others, we face the risks of fatalities and injury of our employees and contractors, loss and damage to our products, property and machinery due to, among other things, public health threats, fire, theft and natural disasters such as floods, and also face risks related to cybersecurity-and politically-related matters. Such events may cause a disruption to, or cessation of, our operations and business. Our insurance coverage may not be sufficient to cover all of our potential losses and liabilities. In addition, our insurance coverage may not cover all the risks to which we may be exposed, such as all risks related to pandemics and/or epidemics (such as COVID-19), cybersecurity incidents, and political risk. If our losses exceed our insurance coverage, or if we are not covered by the insurance policies we have taken up, we may be liable to cover any shortfall or losses. Our insurance premiums may also increase substantially because of such claims. Such circumstances could have a material adverse effect on our business, liquidity, financial condition, and results of operations.
Our success depends largely on the strategic vision and actions of Cemex, S.A.B. de C.V.’s Board of Directors and on key members of our executive management team and the availability of a specialized workforce.
Our success depends largely on the strategic vision and actions of Cemex, S.A.B. de C.V.’s Board of Directors and on key members of our executive management team. The loss of some or all of Cemex, S.A.B. de C.V.’s directors or our senior
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management could have a material adverse effect on our business, financial condition, liquidity, and results of operations, as well as on our reputation. Although Cemex, S.A.B. de C.V.’s shareholders have appointed new members of the Board of Directors, including to replace outgoing board members, we cannot assure you that this will continue to occur nor that the current structure and composition of Cemex, S.A.B. de C.V.’s Board of Directors will be maintained, in particular within the framework of any corporate government enhancements that Cemex, S.A.B. de C.V. may implement.
The execution of our business strategy also depends on our ongoing ability to attract and retain highly skilled employees. For a variety of reasons, particularly due to the competitive environment and the limited availability of skilled labor, we may not be successful in attracting and retaining the personnel we require. In addition, the availability of trained and skilled transportation operators and drivers is at times lacking in certain countries in which we operate, including, but not limited to, in the United States. Consequently, the manufacturing and distribution of our products may be adversely affected if we are unable to hire or train persons to perform such tasks. If we are unable to hire, train and retain qualified employees at a reasonable cost, we may be unable to successfully operate our business or capitalize on growth opportunities and, as a result, our business, financial condition, liquidity, and results of operations could be materially and adversely affected.
Future pandemics and epidemics, such as the COVID-19 pandemic, could materially adversely affect our financial condition and results of operations.
Any future pandemics and epidemics may cause governments and health authorities around the world to implement measures attempting to contain and mitigate its spread and effects, including measures similar, but not limited to, those implemented during the COVID-19 pandemic. Measures previously implemented in connection with past pandemics and epidemics have resulted and/or may result in: (i) restrictions on, or suspended access to, or shutdown, or suspension or the halt of, our facilities, including our cement plants and grinding mills; (ii) staffing shortages, production slowdowns, or stoppages and disruptions in our delivery systems; (iii) disruptions or delays in our supply chains, including shortages of materials, products, and services on which we and our businesses depend; (iv) reduced availability of land and sea transport, including labor shortages, logistics constraints, and increased border controls or closures; (v) increased cost of materials, products, and services on which we and our businesses depend; (vi) reduced investor confidence and consumer spending in the regions where we operate and globally; (vii) a slowdown in economic activity, including in the construction industry, and a decrease in demand for our products and services and industry demand generally; (viii) constraints on the availability of financing, if available at all, including on access to credit lines and working capital facilities; (ix) inability to satisfy liquidity needs if our operating cash flow and funds received under receivables and inventory financing facilities decrease or if we are not able to obtain borrowings under credit facilities, proceeds of debt and equity offerings, and/or proceeds from asset sales; (x) our inability to refinance our indebtedness on desired terms, if at all; or (xi) our inability to comply with, or receive waivers with respect to, restrictions and covenants under the agreements governing our indebtedness and financial obligations, including, but not limited to, maintenance covenants under our Credit Agreements. As to the effects and duration of the previous COVID-19 pandemic, there could still be significant adverse effects in the future mainly in connection with: (i) impairment of long-lived assets including goodwill; (ii) foreign exchange losses related to our obligations denominated in foreign currency; (iii) increases in estimated credit losses on trade accounts receivable; and (iv) further disruption in supply chains.
Risks Relating to Our Indebtedness and Certain Other Obligations
The Credit Agreements, the indentures governing our outstanding 3.125% Euro-denominated notes due 2026 (the “March 2026 Euro Notes”), 5.450% Dollar denominated notes due 2029 (the “November 2029 Dollar Notes”), 5.200% Dollar denominated notes due 2030 (the “September 2030 Dollar Notes”), 3.875% Dollar denominated notes due 2031 (the “July 2031 Dollar Notes”),
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and the 2023 CEBURES (collectively, the “Notes”), and our other debt agreements and/or instruments contain several restrictions and covenants. Our failure to comply with such restrictions and covenants or any inability to capitalize on business opportunities or refinance our debt resulting from them could have a material adverse effect on our business and financial conditions.
Each Credit Agreement requires us to comply with financial ratios and tests, including (i) a minimum Consolidated Coverage Ratio of Consolidated EBITDA to Consolidated Interest Expense and (ii) a maximum Consolidated Leverage Ratio of Consolidated Net Debt to Consolidated EBITDA, in each case, as described in each Credit Agreement. The calculation and formulation of Consolidated EBITDA, Consolidated Interest Expense, Consolidated Net Debt, Consolidated Coverage Ratio and Consolidated Leverage Ratio are defined and set out in each Credit Agreement and may differ from the calculation and/or formulation of analogous terms in this annual report. For the purpose of the aforementioned financial ratios, EBITDA represents Operating EBITDA. Our ability to comply with these ratios may be affected by our results of operations, economic conditions and volatility in foreign exchange rates, by overall conditions in the financial and capital markets and the construction sector, and by any monetary penalties or fines we may have to pay as a result of any administrative or legal proceedings to which we may be exposed to. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings” for more information. Additionally, each Credit Agreement requires us to comply with certain covenants and restrictions consistent with an investment grade capital structure. As of December 31, 2023, there were $2,728 million, €400 million and Ps 6,000 million aggregate principal amount of then-outstanding Notes under the indentures governing such Notes. The indentures governing our Notes impose operating and financial restrictions on us, which are more stringent than those imposed by the Credit Agreements. These restrictions limit our ability, among other things, to: (i) incur debt, including restrictions on incurring debt at our subsidiaries, which are not parties to the indentures governing the Notes; (ii) pay dividends on stock; (iii) redeem stock or redeem subordinated debt; (iv) make investments; (v) guarantee indebtedness; and (vi) create or assume liens.
Most of the covenants and restrictions in the Credit Agreements and the indentures governing our Notes are subject to a number of exceptions and qualifications. Nevertheless, they still limit our ability to conduct business at our discretion and may, among other effects, potentially impede or restrict refinancing plans with respect to our debt limit, as well as our ability to seize opportunities for our business, particularly if we are unable to incur financing or make investments to take advantage of such opportunities. In addition, in connection with new potential financings or amendments to existing agreements while our debt rating remains below investment grade, as defined in such applicable agreement, our financial and operational flexibility may be further reduced as a result of more restrictive covenants, requirements for security and other terms that are often imposed on entities regarded as sub-investment. The breach of any of these covenants could result in a default under the Credit Agreements and/or the indentures governing our outstanding Notes, as well as certain other existing debt obligations, as a result of cross-default provisions contained in the instruments governing such debt obligations. In the event of a default under any of the Credit Agreements and/or the indentures governing our outstanding Notes, lenders under the applicable Credit Agreement and holders of our outstanding Notes could seek to declare all amounts outstanding under such Credit Agreement and such Notes, together with accrued and unpaid interest, if any, to be immediately due and payable. If the indebtedness under the Credit Agreements, our outstanding Notes, or certain other existing debt obligations were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full such accelerated indebtedness or our other indebtedness. We cannot guarantee that we will be able to comply with the covenants and limitations contained in the Credit Agreements, in the indentures governing our Notes or other agreements which constitute financial indebtedness in excess of $50 million (or, in the case of the Amended 2021 Credit Agreement, $100 million) in which any non-compliance would trigger a cross-default. Our failure to comply with such covenants and limitations could result in an event of default, which could materially and adversely affect our business, financial condition, liquidity, and results of operations.
We have historically, when needed, sought and obtained waivers and amendments to several of our debt instruments relating to a number of financial ratios, restrictions and covenants. Our ability to comply with these could be affected
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by global economic conditions, foreign exchange rates and the financial and capital markets, among other factors. We may need to seek waivers or amendments to debt agreements or debt instruments in the future. However, we cannot assure you that any such waivers or amendments will be obtained. If we are unable to comply with the provisions of our debt agreements or debt instruments, and are unable to obtain a waiver or amendment, the indebtedness outstanding under such debt agreements and/or instruments could be accelerated. Acceleration of these debt agreements and/or instruments would have a material adverse effect on our business, liquidity or financial condition.
We have a substantial amount of debt and other financial obligations. If we are unable to secure refinancing on favorable terms or at all, we may not be able to comply with our payment obligations upon their maturity. Our ability to comply with our principal maturities and financial covenants may depend on us implementing certain strategic initiatives, including, but not limited to, making asset sales, and there is no assurance that we will be able to implement any such initiatives or execute such sales, if needed, on terms favorable to us or at all.
As of December 31, 2023, our total debt plus other financial obligations was $8,164 million (principal amount $8,210 million, excluding deferred issuance costs). Of such total debt plus other financial obligations, $975 million (principal amount $975 million) is scheduled to mature during 2024; $956 million (principal amount $959 million) is scheduled to mature during 2025; $974 million (principal amount $980 million) is scheduled to mature during 2026; $689 million (principal amount $699 million) is scheduled to mature during 2027; and $4,570 million (principal amount $4,597 million) is scheduled to mature after 2027. If we are unable to comply with, or refinance or extend, maturities under certain of our indebtedness, substantially all of our debt could be accelerated. Acceleration of our debt would have a material adverse effect on our business, financial condition, liquidity, and results of operations. As a result of the potential failure to achieve the targets under our strategic initiatives, the restrictions under the Credit Agreements, the indentures that govern our outstanding Notes, and other debt instruments, any volatility in the credit and capital markets and uncertain market conditions, we may not be able to generate enough cash or, if needed to repay our indebtedness, raise debt, equity and/or equity-linked capital on favorable terms or at all. These circumstances could also prevent us from securing extensions from relevant creditors and undertaking alternative actions to refinance, such as the completion of asset sales on terms that are economically attractive or at all, and could significantly limit the availability of funds to potential acquiring parties, or could affect our ability to invest in our “Future in Action” program. If we fail to secure funds to repay our indebtedness in these or any other manners and our cash flow or capital resources prove inadequate, we could face liquidity problems and may not be able to comply with financial covenants and payment obligations under our indebtedness, which would have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Also, there can be no assurance that we will be able to implement our business strategy and initiatives and improve our results and revenues, which could affect our ability to refinance and/or comply with our payment obligations under our debt agreements and instruments.
We may not be able to generate sufficient cash to service our indebtedness or satisfy our short-term liquidity needs, and we may be forced to take other actions to do so, which may not be successful.
Historically, we have addressed our liquidity needs, including funds required to make scheduled principal and interest payments, refinance debt, and fund working capital and planned capital expenditures, mostly with operating cash flow, borrowings under credit facilities and receivables and inventory financing facilities, proceeds of debt and equity offerings and proceeds from asset sales. As of December 31, 2023, we had $678 million funded under our securitization programs in Mexico, the United States, France and the United Kingdom. We cannot assure you that, going forward, we will be able to roll over or renew these programs or generate sufficient cash to service our
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indebtedness or satisfy our short-term liquidity needs through the means we have historically used. This could adversely affect our liquidity and force us to take other actions to service our indebtedness or satisfy our short-term liquidity needs, which may be unsuccessful.
Specifically, we have periodically resorted and may continue to resort to the capital markets to raise debt, equity and equity-linked capital as our principal alternative to the means to obtain liquidity described in the paragraph above. A wide variety of factors may have adverse effects on our operating results and negatively affect our credit rating and the market value of Cemex, S.A.B. de C.V.’s CPOs and ADSs, or that of our publicly listed subsidiaries, CHP, TCL and CCCL. In such event, securities issued by us could be deemed undesirable in the capital markets, which could make traditional sources of capital unavailable to us on reasonable terms or at all. If the global economic environment deteriorates and our operating results worsen, if we are unable to complete divestitures and/or debt or equity offerings on favorable terms or at all and/or our cash flow or capital resources prove inadequate, we could face liquidity problems and may not be able to comply with our principal payments under our indebtedness or refinance our indebtedness.
Cemex, S.A.B. de C.V.’s ability to repay debt and pay dividends is highly dependent on our subsidiaries’ ability to transfer income and dividends to us. As of the date of this annual report, we control three publicly listed companies, where this risk is heightened.
Aside from its operations in Mexico, Cemex, S.A.B. de C.V. is a holding company that owns the stock of its direct subsidiaries and is the beneficial owner of the equity interests of its indirect subsidiaries and has holdings of cash and marketable securities. In general, Cemex, S.A.B. de C.V.’s ability to repay debt and pay dividends, as well as to make other payments, depends on the continued transfer to it of dividends and other income and funds from its subsidiaries. The ability of Cemex, S.A.B. de C.V.’s subsidiaries to pay dividends and make other transfers to Cemex, S.A.B. de C.V. is subject to various regulatory, contractual and legal constraints of the countries in which we operate, as well as our continued compliance with terms under our debt agreements and instruments under which certain covenants have been partially suspended.
The ability of Cemex, S.A.B. de C.V.’s subsidiaries to pay dividends and make loans and other transfers to it is generally subject to various regulatory, legal, and economic limitations. Depending on the jurisdiction of organization of the relevant subsidiary, limitations may include solvency and legal reserve requirements, dividend payment restrictions based on interim financial results or minimum net worth, and withholding taxes on loan interest payments. For example, (i) pursuant to applicable Mexican law, dividends from our Mexican subsidiaries are limited to the total profits of each such subsidiary (as reflected in each subsidiary’s year-end financial statements), after deducting a legally required reserve (equal to one fifth of such subsidiary’s capital) and any losses incurred by such subsidiary in previous fiscal years and require the approval of its stockholders; (ii) pursuant to applicable Spanish law, our Spanish subsidiaries may only distribute dividends if, as a result of the distribution, the net worth value of such subsidiary will not be less than such subsidiary’s share capital during the applicable fiscal year and the amount of such subsidiary’s available reserves is at least equal to the amount of the research and development expenses recorded in by such subsidiary on its balance sheet. As a result, each Spanish subsidiary must reserve 10% of its profits in a given year, until reaching at least 20% of the company’s share capital, and any surplus may then be distributed as dividends; and (iii) pursuant to applicable French law, dividends from our French subsidiaries are limited to the net profits of each such subsidiary (as reflected in each subsidiary’s year-end financial statements), after deducting a legally required reserve (equal to 10% of such subsidiary’s share capital), and require the approval of its stockholders.
Also, any decision to have any of Cemex, S.A.B. de C.V.’s indirect subsidiaries that are not wholly-owned by us, such as CHP, TCL, or CCCL, all three of which are publicly listed, declare and pay dividends or make loans or other transfers to us is subject to any rights that non-controlling shareholders may have in the corresponding subsidiary.
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Additional or more restrictive limitations on our subsidiaries could adversely affect Cemex, S.A.B. de C.V.’s ability to service its debt, meet other cash obligations, and pay dividends to its shareholders.
Cemex, S.A.B. de C.V. may also be subject to exchange controls on remittances by its subsidiaries from time to time in a number of jurisdictions. In addition, Cemex, S.A.B. de C.V.’s ability to receive funds from its subsidiaries may be restricted by the debt instruments and other contractual obligations of these entities. The jurisdictions of organization of Cemex, S.A.B. de C.V.’s current or future subsidiaries may impose additional and more restrictive regulatory, legal, and/or economic limitations. In addition, Cemex, S.A.B. de C.V.’s subsidiaries may not be able to generate sufficient income to pay dividends or make loans or other transfers to it in the future, or may not have access to Dollars in their respective countries, which, as of the date of this annual report, is Cemex, S.A.B. de C.V.’s preferred currency.
We have to service part of our debt and other financial obligations denominated in Dollars and Euros with revenues generated in Mexican Pesos or other currencies, as we do not generate sufficient revenue in Dollars and Euros from our operations to service all our debt and other financial obligations denominated in Dollars and Euros. This could adversely affect our ability to service our obligations in the event of a devaluation of the Mexican Peso, or any of the other currencies of the countries in which we operate, compared to the Dollar and Euro. In addition, our consolidated reported results and outstanding indebtedness are significantly affected by fluctuations in exchange rates between the Dollar (our reporting currency) vis-à-vis the Mexican Peso and other significant currencies within our operations.
A substantial portion of our total debt plus other financial obligations is denominated in Dollars and Euros. As of December 31, 2023, our debt plus other financial obligations denominated in Dollars and Euros represented 70% and 15% of our total debt plus other financial obligations, respectively. Our Dollar-denominated and Euro-denominated debt must be serviced with funds generated to some extent by our direct and indirect subsidiaries’ operations outside the United States and Europe. Although we have substantial operations in the United States and Europe, we continue to rely to some extent on our non-U.S. assets and non-European assets to generate revenues to service our Dollar-denominated and Euro-denominated debt. Consequently, we have to use revenues generated in Mexican Pesos or other currencies to service our Dollar-denominated and Euro-denominated obligations. See “Item 5—Operating and Financial Review and Prospects—Quantitative and Qualitative Market Disclosure—Interest Rate Risk, Foreign Currency Risk and Equity Risk—Foreign Currency Risk.” A devaluation of the Mexican Peso, Pound Sterling, Colombian Peso, Philippine Peso or any of the other currencies of the countries in which we operate, compared to the Dollar and Euro, could adversely affect our ability to service our Dollar-denominated and Euro-denominated debt. In 2023, our operations in Mexico, the United Kingdom, France, Germany, Poland, Spain, the Philippines, Israel, the Rest of EMEAA (as defined below) segment, Colombia, Caribbean TCL (as defined below), the Dominican Republic and the Rest of SCA&C (as defined below) segment, which are our main non-Dollar denominated operations, together generated 66% of our total external revenues in Dollar terms (28%, 6%, 5%, 3%, 3%, 2%, 2%, 5%, 3%, 3%, 2%, 2%, and 2%, respectively). In 2023, 31% of our external revenues in Dollar terms were generated from our operations in the United States.
During 2023, the Mexican Peso appreciated 13% against the Dollar, the Euro appreciated 3% against the Dollar and the Pound Sterling appreciated 5% against the Dollar. Currency hedges that we may be a party to or may enter into in the future may not be effective in covering all our currency-related risks. Our consolidated reported results for any period and our outstanding indebtedness as of any date are significantly affected by fluctuations in exchange rates between the Dollar and other currencies, as those fluctuations influence the amount of our non-Dollar indebtedness when translated into Dollars and also result in foreign exchange gains and losses as well as gains and losses on derivative contracts, including those entered into to hedge our exchange rate exposure. For a description of these
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impacts, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Our use of derivative financial instruments could negatively affect our net income and liquidity, especially in volatile and uncertain markets.”
Increases in liabilities related to our pension plans could adversely affect our results of operations.
We have obligations under defined benefit pension and other benefit plans in certain countries in which we operate, mainly in North America and Europe. Our actual funding obligations will depend on benefit plan changes, government regulations and other factors, including changes in longevity and mortality statistics.
It is difficult to predict pension liabilities and funding requirements due to the large number of variables and assumptions involved, which are difficult to foresee because they change continuously as demographics evolve. We have a net projected liability recognized in our statement of financial position as of December 31, 2023 of $735 million. The future cash funding requirements for our defined benefit pension plans and other post-employment benefit plans could significantly differ from the amounts estimated as of December 31, 2023. If so, these funding requirements, as well as our possible inability to properly fund, and/or provide sufficient guarantees for, such pension plans if we are unable to deliver the cash or equivalent funding requirements, could have a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects. See note 19 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report for a detailed description of our pension obligations.
Our use of derivative financial instruments could negatively affect our net income and liquidity, especially in volatile and uncertain markets.
We have used and continue to use, derivative financial instruments, mainly to manage the risk profile associated with interest rates and currency exposure of our debt, to reduce the volatility of our financing costs, to hedge the costs of fuel and other commodities, which may include emission allowances, and to hedge our net assets in certain currencies. However, we cannot assure you that our use of such instruments will allow us to achieve these objectives due to the inherent risks in any derivatives transaction or the risk that we will not continue to have access to such instruments at reasonable costs, or at all.
As of December 31, 2023, our derivative financial instruments consisted of Dollar/Mexican Peso foreign exchange forward and option contracts, both designated as a net investment hedge of Cemex’s net investment in Mexican Pesos. It also included interest rate swap instruments related to bank loans, Dollar/Mexican Peso call spread option contracts negotiated to maintain the value in Dollars over revenues generated in Mexican Pesos, Dollar/Mexican Peso cross-currency swap contracts, as well as fuel price derivatives, which had an impact on our financial position. Changes in the fair value of our derivative financial instruments, not specifically designated as hedges, are reflected in our statement of income, which could introduce volatility in our controlling interest net income and other related ratios. As of December 31, 2022 and 2023, the aggregate notional amount under our outstanding derivative financial instruments was $2,491 million ($837 million of net investment hedge, $1,018 million of interest rate swaps, $500 million of foreign exchange options and $136 million of fuel price derivatives) and $2,593 million ($976 million of net investment hedge, $750 million of interest rate swaps, $335 million of cross currency swaps, $232 million of fuel price derivatives and $300 million of foreign exchange options), respectively, with a mark-to-market valuation representing net assets of $32 million as of December 31, 2022 and net liabilities of $26 million as of December 31, 2023. See note 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report for a detailed description of our derivative financial instruments. As of December 31, 2023, Cemex’s risk of cash margin calls with respect to our existing financial derivatives is not material. However, if we enter into new derivative financial instruments, we may incur net losses and be subject to margin calls which may reduce the funds
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available to us for our operations or other capital needs. In addition, as with any derivative position, we assume the creditworthiness risk of the counterparty, including the risk that the counterparty may not honor its obligations to us. In addition, entering into new derivative financial instruments incurs costs, and we cannot assure you that any new derivative financial instrument that we enter into will be done so at reasonable costs or will be available to us at all.
Risks Relating to Regulatory and Legal Matters
We are subject to the laws and regulations of the countries where we operate and do business. Non-compliance with any material changes in such laws and regulations and/or any significant delays in assessing the impact and/or adapting to such changes in laws and regulations may have a material adverse effect on our business, financial condition, liquidity, and results of operations.
Our operations are subject to the laws and regulations of the countries where we operate and do business, and such laws and regulations, and/or governmental interpretations of such laws and regulations, may change. Because Cemex, S.A.B. de C.V. is organized under Mexican laws, and because of the considerable size of our operations in the United States, and the fact that the ADSs trade on the New York Stock Exchange (the “NYSE”), we have to comply with the laws and regulations, and/or governmental interpretations of such laws and regulations, of Mexico and, for certain matters, of the United States, whether or not we operate and do business through a subsidiary located in Mexico or the United States. Also, because of the size of our operations in EU countries and in the U.K., we, or most of our subsidiaries in the EU and in the U.K., are also required to comply with certain EU and U.K. legislation and the laws and regulations of EU member states and of the U.K.
Any change in such laws and regulations, and/or governmental interpretations of such laws and regulations, may have a material adverse effect on our business, financial condition, liquidity, and results of operations. Furthermore, changes in laws and regulations, and/or governmental interpretations of such laws and regulations, may require us to devote a significant amount of time and resources to assess and, if required, to adjust our operations to any such changes, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations. In addition, any significant delays in assessing the impact and/or, if required, in adapting to changes in laws and regulations and/or governmental interpretations of such laws and regulations may also have a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects. For more information, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Economic conditions globally, including the protracted period of high inflation and elevated interest rates, particularly in countries where we operate, have affected and may continue to adversely affect our business, financial condition, liquidity, and results of operations,” “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Political, social, and geopolitical events, changes in public policies, and other risks in some of the countries where we operate, which are inherent to the operations of an international company, could have a material adverse effect on our business, financial condition, liquidity, and results of operations,” “Item 3—Key Information—Risk Factors—Risks Relating to Regulatory and Legal Matters—Our operations are subject to environmental laws and regulations, including new and proposed reporting requirements, that are or could become increasingly stringent,” and “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings.”
We or our third-party providers may fail to maintain, obtain, or renew, or may experience material delays in obtaining, requisite governmental or other approvals, licenses, and permits for the conduct of our or their business.
We and our third-party providers of goods and services, as applicable, require various approvals, licenses, permits, concessions and certificates in the conduct of our business. We cannot assure you that we, or our third-party providers of goods and services, will not encounter significant problems in obtaining new or renewing existing
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approvals, licenses, permits, concessions and certificates required in the conduct of our business, or that we, or our third-party providers of good and services, will continue to satisfy the current or new conditions to such approvals, licenses, permits, concessions and certificates that we currently have or may be granted in the future. There may also be delays on the part of regulatory and administrative bodies in reviewing our applications and granting approvals or renewals, which have become increasingly common since the COVID-19 pandemic due to closures and/or reduced operations of public offices which have not resumed activity at the same pace as before the COVID-19 pandemic. The implementation of new laws and regulations on environmental-related matters, or the entry of new local, state or federal authorities and/or governments in the countries in which we operate or in the countries from which our third-party providers of goods and services source their deliverables to us, may create stricter requirements to comply with or different interpretations of applicable laws and regulations of that of outgoing authorities and/or governments. This could delay our ability to obtain or renew the related approvals, licenses, permits, concessions and certificates, or could result in us not being able to obtain them at all. If previously obtained approvals, licenses, permits and certificates are revoked and/or if we, or our third-party providers of goods and services, fail to obtain and/or maintain and/or renew the necessary approvals, licenses, permits, concessions and certificates required for the conduct of our business, we may be required to incur substantial costs or temporarily suspend or alter the operation of one or more of our operating units, production facilities, mineral extraction locations or of any relevant component of them, which could affect the general production of these units, facilities or locations, which in turn could have a material adverse effect on our business, financial condition, liquidity, results of operations, and prospects.
See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Complications in relationships with local communities and different stakeholder perspectives could lead to social actions against our industry or company, including legal actions, on-the-ground protests, attacks on our assets or facilities, negative media campaigns, strikes and social unrest. All these events could disrupt our operations, affect our capacity to serve our clients, damage our assets and/or reputation and may materially and adversely affect our business continuity, reputation, liquidity, and results of operations” for a description of certain additional circumstances which may cause delays or failures in obtaining and/or maintaining necessary approvals, licenses, permits, concessions, and certificates required for the conduct of our business.
We are subject to litigation proceedings, including, but not limited to, government investigations relating to corruption, antitrust, and other proceedings, that could harm our business and our reputation.
From time to time, we are and may become involved in litigation, investigations and other legal or administrative proceedings relating to claims arising from our operations, either in the normal course of business or not, or arising from violations or alleged violations of laws, regulations or acts. As described in, but not limited to, “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings,” as of December 31, 2023, we were subject to a number of significant legal proceedings, including, but not limited to, an SEC investigation concerning a new cement plant being built by Cemex Colombia S.A. (“Cemex Colombia”) in the Municipality of Maceo in the department of Antioquia, Colombia (the “Maceo Plant”), as well as an investigation from the United States Department of Justice (the “DOJ”) mainly relating to our operations in Colombia and other jurisdictions, and are exposed to investigations in Colombia against former employees, and also to antitrust investigations in countries in which we operate or do business. Investigations and litigation, and in general any legal or administrative proceedings, are subject to inherent uncertainties and unfavorable rulings may occur. We cannot assure you that these or any of our other regulatory matters and legal proceedings, including any that may arise in the future, will not harm our reputation or materially affect our ability to conduct our business in the manner that we expect or otherwise materially adversely affect us should an unfavorable ruling occur, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
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We are subject to human rights, anti-corruption, anti-bribery, anti-money laundering, antitrust, anti-boycott, economic sanctions, trade embargoes, export control and laws and regulations in the countries in which we operate and do business, a considerable number of which countries are considered high and medium risk countries for purposes of corruption, money laundering and other matters. Any violation of any such laws or regulations could have a material adverse impact on our reputation, results of operations, and financial condition, as well as harm our reputation.
We are subject to anti-corruption, anti-bribery, anti-money laundering, antitrust, human rights and other international laws and regulations and are required to comply with the applicable laws and regulations of the countries in which we operate, some of which countries, including Mexico, Jamaica, Trinidad and Tobago, Guyana, Barbados, Colombia, Panama, Egypt, the Philippines, the Dominican Republic, Guatemala, Nicaragua, Croatia, Peru, and Haiti, are considered medium and high-risk countries with regards to corruption and money laundering related matters. In addition, we are subject to regulations on international trade that restrict dealings with certain sanctioned countries, individuals, and entities, including regulations administered by the United States, the United Kingdom, the EU, and the United Nations Security Council, as well as other international organizations and governments, including export control regulations, economic sanctions, and trade embargoes. Given the large number of contracts that we are a party to around the world, the geographic distribution of our operations and the great variety of actors that we interact with in the course of business, we are subject to the risk that our affiliates, employees, directors, officers, partners, agents and service providers may misappropriate our assets, manipulate our assets or information, make improper payments, or engage in corruption, bribery, money laundering, or other illegal activity; and, as a consequence, we may be held liable for such misconduct, even if we do not engage in or authorize such activities.
Although we have implemented policies and procedures, which include training certain groups of our employees, seeking compliance with anticorruption and other applicable laws and regulations, there can be no assurance that our internal policies, controls and procedures will be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by our affiliates, employees, directors, officers, partners, agents and service providers or that any such persons will not take actions in violation of our policies and procedures. If we fail to fully comply with applicable laws and regulations, the relevant government authorities of the countries where we operate have the power and authority to investigate us and impose fines, penalties, and remedies, which could cause us to lose clients, suppliers, and access to debt and capital markets, or cause criminal or civil penalties against key members of our senior management. Any violations by us, or the third parties we transact with, of anti-bribery, anti-corruption, anti-money laundering, antitrust, anti-boycott, economic sanctions, trade embargoes, export control laws or human rights or regulations could have a material adverse effect on our business, liquidity, reputation, results of operations, and financial condition. For further information regarding our ongoing proceedings with respect to anti-corruption laws, see “Item 3—Key Information—Risk Factors—Risks Relating to Regulatory and Legal Matters—We are subject to litigation proceedings, including, but not limited to, government investigations relating to corruption, antitrust and other proceedings, that could harm our business and our reputation” and “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings.”
Certain tax matters have had and may have a material adverse effect on our cash flow, financial condition, and net income, as well as on our reputation.
We are subject to certain tax matters, mainly in Spain and Colombia, the latter in aggregate, that, if adversely resolved, may have a material adverse effect on our operating results, liquidity, and financial position, as well as on our reputation. Even though they have not been adversely resolved definitively, we expect to pay fines in relation to certain of such tax matters in Spain in the first half of 2024. See note 20.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report, “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Tax Matters—Colombia,” and “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Tax Matters—Spain” for a detailed description of the legal proceedings regarding these Colombian and Spanish tax matters.
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Our operations are subject to environmental laws and regulations, including new and proposed reporting requirements, that are or could become increasingly stringent.
Our operations are subject to a broad range of environmental laws and regulations in each of the jurisdictions in which we operate. Such laws and regulations impose stringent environmental protection standards, which in recent years have become, and in the future are expected to continue becoming, progressively stricter regarding, among other things, air emissions (including greenhouse gas emissions), land use, biodiversity, use of alternative fuels, water availability, wastewater discharges, the use and handling of hazardous waste or materials, waste management
practices, the remediation of hazardous substances in the environment at properties currently or formerly owned or operated by us or at third-party location where hazardous substances generated by us have migrated or been released into the environment , and climate-related and sustainability disclosures. These laws and regulations expose us to the risk of substantial environmental costs and liabilities, including taxes, increased investment in control equipment and technology, fines, and other sanctions, payment of compensation to third parties, remediation costs, business disruption, and reputational damage. They also require increasing amounts of information about our sustainability practices to be disclosed, including in respect of greenhouse gas emissions and climate change. Moreover, the enactment of stricter laws and regulations, stricter interpretation of existing laws or regulations, or new enforcement initiatives may impose new risks or costs on us or result in the need for additional investments, which could result in a material decline in our profitability. Such may be the case, for example, if Executive Order 14008, Tackling the Climate Crisis at Home and Abroad, signed by U.S. President Joe Biden on January 27, 2021, or climate-related funding and programs at the federal, state or local level, result in new regulatory or legislative initiatives relating to climate change, new interpretations of existing regulatory criteria that are stricter than those currently being applied, or preferential treatment regarding pricing, contracting, the granting of operational permits, or other economic benefits for entities which may have environmental standards that are stricter than ours or may be deemed to have less environmental impact.
In late 2010, the United States Environmental Protection Agency (“EPA”) issued the final Portland Cement National Emission Standard for Hazardous Air Pollutants (“Portland Cement NESHAP”) under the federal Clean Air Act (“CAA”). This rule required portland cement plants to limit emissions of mercury, total hydrocarbons, hydrochloric acid, and particulate matter by September 2013. The rule was challenged in federal court, and in December 2011, the D.C. Circuit Court of Appeals remanded the Portland Cement NESHAP to EPA and directed the agency to recompute the standards. In February 2013, EPA issued a revised final Portland Cement NESHAP rule that relaxed emissions limits for particulate matter and moved the compliance deadline to September 2015.
While we expect to continue to meet all emissions standards imposed by the Portland Cement NESHAP, the rule will continue to impose operating costs at each Cemex plant in the United States, and we could incur penalties if we fail to comply.
In February 2013, EPA issued revised final emissions standards under the CAA for commercial and industrial solid waste incinerators (the “CISWI rule”). If a material being used in a cement kiln as an alternative fuel is classified as a solid waste, the plant must comply with the CISWI rule. The CISWI rule covers nine pollutants and imposes potentially more stringent emissions limits on certain pollutants that also are regulated under the Portland Cement NESHAP. EPA received petitions to reconsider certain provisions of the CISWI rule. EPA granted reconsideration on four specific issues and finalized the reconsideration of the CISWI rule in June 2016. The CISWI rule was also challenged by both industrial and environmental groups in federal court. In July 2016, the D.C. Circuit issued a ruling upholding most of the rule and remanding several portions to EPA for further consideration. EPA has not issued a revised final rule after remand, but the portions of the rule upheld on appeal are final and in effect. The final CISWI rule established a compliance date of February 2018, which was not impacted by the appeal. As of December 31, 2023, none of our kilns at Cemex plants in the United States have been determined to be CISWI kilns; but, if they are determined to be CISWI kilns due to the use of certain alternative fuels, to the extent we were unable to meet the applicable emissions standards, the CISWI rule could have a material impact on our business operations.
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Under certain environmental laws and regulations, liability associated with investigation or remediation of hazardous substances can arise at a broad range of properties, including sites currently or formerly owned or operated by Cemex, as well as facilities at which any hazardous substances or wastes generated by us were sent for treatment, storage or disposal, or any areas affected while any hazardous substances or wastes were being transported. Such laws and regulations may apply without regard to fault, causation or knowledge of contamination. We occasionally evaluate various alternatives with respect to our facilities, including possible dispositions or closures. Investigations undertaken in connection with these activities (or ongoing operational or construction activities) may lead to hazardous substance releases or discoveries of historical contamination that must be remediated, and closures of facilities may trigger compliance requirements that are not applicable to operating facilities. While compliance with these laws and regulations has not materially adversely affected our operations in the past, we cannot assure you that these requirements will not change, and that compliance will not adversely affect our operations in the future. Furthermore, we cannot assure you that existing or future circumstances or developments with respect to the impact of our operations will not require us to make significant remediation or restoration expenditures, which could have a material adverse effect on our business, financial condition, liquidity, and results of operations.
The cement manufacturing process requires the combustion of large amounts of fuel and creates CO2 as a by-product of the calcination process. Therefore, efforts to address climate change through federal, state, regional, EU and international laws and regulations requiring reductions in emissions of CO2 and other greenhouse gases (“GHGs”) can create economic risks and uncertainties for our business. Such risks could include the cost of purchasing allowances or credits to meet GHG emission caps; the cost of paying higher energy costs or new CO2-related taxes; the cost of installing equipment, adopting new technologies or employing non-clinker cementitious materials and other processes to reduce emissions to comply with GHG limits or technological standards; higher production costs resulting directly or indirectly from the imposition of legislative or regulatory controls; and decreased profits or losses arising from decreased demand for our goods. To the extent that financial markets view climate change and GHG emissions as a financial risk or that certain laws and regulations limit our access to the financial markets or financial products due to environmental considerations, this could have a material adverse effect on our cost of and access to capital.
Given the uncertain nature of the actual or potential statutory and regulatory requirements for GHG emissions at the federal, state, regional, EU, and international levels, we cannot predict the impact on our operations or financial condition or make a reasonable estimate of the potential costs to us that may result from such requirements. However, the impact of any such requirements, whether individually or cumulatively, could have a material economic impact on our operations in the United States, Europe, Mexico, United Kingdom and in other jurisdictions where we operate. In particular, rules and regulations adopted in connection with the United States’ Nationally Determined Contributions (as defined below) under the Paris Agreement, emission reduction goals set by individual states, any new international treaty aiming to reduce the emission of greenhouse gases, the EU’s implementation of certain measures in order to achieve its 2030 climate target of at least 55% reduction of net emissions of GHG as compared to 1990, the expected start of an emissions trading system in Mexico in late 2024 and the United Kingdom’s implementation of the UK ETS (as defined below) could result in a material adverse effect on our financial performance. For more information on certain laws and regulations addressing climate change that we are, or could become, subject to, and the impacts to our operations arising therefrom, see “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters.”
A number of jurisdictions are considering or have implemented equivalents to the EU CBAM (as defined later) to ensure that industries subject to carbon regulation remain cost competitive. It is not clear to what extent Carbon Border Adjustment Mechanisms (“CBAM”) will mitigate or create economic distortions between different jurisdictions. The introduction of or modification of CBAMs and their interaction with emissions mitigation regimes such as emissions trading schemes may result in significant additional costs.
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Statistics reveal an increasing number of proceedings against CO2 emitters by private individuals and civil society organizations. We cannot rule out the possibility that we will also face legal action of this kind. The risks arising from such climate-related claims could be high, but cannot be estimated in more detail at present, given the wide variety of potential claims and the evolving legal landscape in this area.
If materialized, any inability to meet our emissions reduction and other sustainability commitments could have a significant impact on our reputation in light of shifting reporting requirements, and increased public scrutiny. It is also possible that organizations such as ours misreport CO2 emissions or sustainability information, or are found to have targets or to have made claims which are not ambitious enough, or which are deemed to be incomplete, vague, ambiguous, or insufficiently documented on a scientific basis. This might give rise to litigation or regulatory action or reduce our attractiveness to investors.
As part of our insurance-risk governance approach, from time to time we evaluate the need to address the financial consequences of any environmental releases or other incidents in connection with our operations through the purchase of insurance. As a result, we do arrange certain types of environmental impairment insurance policies for both site-specific, as well as multi-site locations. These insurance policies are designed to offer some assistance to our financial flexibility to the extent that an environmental incident could give rise to liabilities. However, we cannot assure you that a given environmental incident will be covered by the environmental insurance we have in place, or that the amount of such insurance will be sufficient to offset the liability arising from the incident. Any such liability may be deemed to be material to us and could have a material adverse effect on our business, financial condition, liquidity, results of operations, and reputation.
It may be difficult to enforce civil liabilities against us or the members of Cemex, S.A.B. de C.V.’s Board of Directors, our senior management, and controlling persons.
Cemex, S.A.B. de C.V. is a publicly traded variable stock corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico. Most of the members of Cemex, S.A.B. de C.V.’s Board of Directors and of our senior management reside in Mexico, and all or a significant portion of the assets of those persons may be, and a substantial part of our assets are, located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon such persons or to enforce against them or against us in U.S. courts judgments predicated upon the civil liability provisions of the federal securities laws of the United States. We have been advised by our General Counsel, Roger Saldaña Madero, that there is doubt as to the enforceability in Mexico, either in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated on the U.S. federal securities laws.
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Item 4 — INFORMATION ON THE COMPANY
Unless otherwise indicated, references in this annual report to our sales and assets, including percentages, for a country or region are calculated before eliminations resulting from consolidation, and thus include intercompany balances between countries and regions. These intercompany balances are eliminated when calculated on a consolidated basis.
Business Overview
Cemex, S.A.B. de C.V. is a publicly traded variable stock corporation (sociedad anónima bursátil de capital variable) organized under the laws of Mexico, with its principal executive offices located at Avenida Ricardo Margáin Zozaya #325, Colonia Valle del Campestre, San Pedro Garza García, Nuevo León, 66265, Mexico. Cemex, S.A.B. de C.V.’s main phone number is +52 81 8888-8888.
Our website is located at www.cemex.com. The information on our website is not, and is not intended to be, part of this annual report and is not incorporated into this annual report by reference.
Cemex, S.A.B. de C.V. started doing business in 1906 and was registered with the Mercantile Section of the Public Registry of Property and Commerce in Monterrey, Nuevo León, Mexico, on June 11, 1920, which as of the date of this annual report is for an indefinite period. Beginning April 2006, Cemex, S.A.B. de C.V.’s full legal and commercial name is Cemex, Sociedad Anónima Bursátil de Capital Variable.
Cemex, S.A.B. de C.V. is an operating and a holding company engaged, directly or indirectly, through its operating subsidiaries, primarily in the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates, clinker, other construction materials and Urbanization Solutions throughout the world. We also provide related services and reliable construction-related services to customers and communities and maintain business relationships in more than 50 countries throughout the world.
We are one of the largest cement companies in the world, based on annual installed cement production capacity. As of December 31, 2023, we had 89.7 million tons of annual installed cement production capacity and our cement sales volumes in 2023 were 59.6 million tons. We estimate we are one of the largest ready-mix concrete and aggregates companies in the world with annual sales volumes of 47.1 million cubic meters and 138.8 million tons, respectively, in each case, based on our annual sales volumes in 2023. In 2023, we traded approximately 12 million tons of cementitious and non-cementitious materials in more than 50 countries, including approximately 9 million tons of cement and clinker and approximately 3 million tons of cementitious and other materials.
We operate in different parts of the world, with operations in Mexico, the United States, the EMEAA region and the SCA&C region. We had total assets of $28,433 million as of December 31, 2023, and an equity market capitalization of $11,764 million as of April 24, 2024.
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As of December 31, 2023, our cement production facilities were located in Mexico, the United States, the United Kingdom, Germany, Spain, Poland, the Czech Republic, Croatia, Egypt, the Philippines, the UAE, Colombia, Panama, Nicaragua (leased), Guatemala, the Dominican Republic, Puerto Rico, Trinidad and Tobago, Jamaica and Barbados. As of December 31, 2023, our assets (after eliminations), cement and grinding plants, and installed capacity were as set forth below on an unconsolidated basis by region. Installed capacity, which refers to theoretical annual production capacity, represents gray portland cement and white cement grinding capacity, and includes installed capacity of cement and grinding plants that have been temporarily closed. Installed capacity may vary due to product mix changes in our production facilities.
| As of December 31, 2023 | ||||||||||||
| Consolidated assets (in millions of Dollars) |
Number of Cement and Grinding Plants |
Installed Cement Grinding Capacity (in millions of tons per annum) |
||||||||||
| Mexico |
$ | 5,381 | 15 | 28.2 | ||||||||
| United States(1) |
12,998 | 10 | 14.1 | |||||||||
| EMEAA |
22 | 34.2 | ||||||||||
| United Kingdom(2) |
1,490 | 3 | 3.6 | |||||||||
| France |
963 | — | — | |||||||||
| Germany |
509 | 2 | 3.1 | |||||||||
| Poland |
415 | 3 | 3.5 | |||||||||
| Spain(3) |
666 | 6 | 7.7 | |||||||||
| Philippines |
795 | 2 | 5.7 | |||||||||
| Israel |
808 | — | — | |||||||||
| Rest of EMEAA(4) |
863 | 6 | 10.6 | |||||||||
| SCA&C |
13 | 13.2 | ||||||||||
| Colombia |
1,007 | 4 | 4.1 | |||||||||
| Panama |
292 | 1 | 1.2 | |||||||||
| Caribbean TCL(5) |
478 | 3 | 2.9 | |||||||||
| Dominican Republic |
233 | 1 | 2.4 | |||||||||
| Rest of SCA&C(6) |
280 | 4 | 2.6 | |||||||||
| Reportable Segments |
27,178 | 60 | 89.7 | |||||||||
| Other activities |
1,206 | — | — | |||||||||
| Assets held for sale |
49 | — | — | |||||||||
| Total Consolidated |
$ | 28,433 | 60 | 89.7 | ||||||||
“—” Not applicable
The above table excludes our proportional interest in the installed capacity of companies in which we hold a non-controlling interest and reflects our organizational structure as of December 31, 2023.
| (1) | “Number of cement and grinding plants” and “installed cement grinding capacity” include two cement plants that are temporarily inactive with an aggregate annual installed grinding capacity of 2.0 million tons of cement. |
| (2) | “Number of cement and grinding plants” and “installed cement grinding capacity” include one cement plant that is temporarily inactive with an annual installed capacity of 1.0 million tons of cement. |
| (3) | “Number of cement and grinding plants” and “installed cement grinding capacity” include two cement plants that are temporarily inactive with an annual installed grinding capacity of 1.4 million tons of cement. |
| (4) | “Rest of EMEAA” refers mainly to our operations in the Czech Republic, Croatia, Egypt, and the UAE. |
| (5) | “Caribbean TCL” refers to TCL’s operations mainly in Trinidad and Tobago, Jamaica, Barbados, and Guyana. |
| (6) | “Rest of SCA&C” refers mainly to our operations in Peru, Puerto Rico, Nicaragua, Jamaica, the Caribbean, and Guatemala, excluding the operations of TCL. |
Beginning in the late 1980s, we embarked on a major geographic expansion program intended to diversify our cash flows and enter into markets whose economic cycles within the cement industry operate largely independently from Mexico and which, at the time, we believed offered long-term growth potential. We have also built an extensive
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network of marine and land-based distribution centers and terminals that give us marketing access around the world. As part of our strategy, we have undertaken and are undertaking actions designed to streamline and reposition our portfolio with the goal of achieving a higher profitable growth. As such, we expect to rebalance our portfolio by focusing on the markets that we believe offer long-term growth potential and retaining those assets that we believe are best suited to grow, offering us long-term profitability. While these actions are being undertaken, we could continue to complement our strategy with organic, bolt-on investments, on a stand-alone basis or with other partners, using a metropolis-centric approach leveraging our related businesses and digital strategy. The following are our most significant acquisitions, divestitures and reconfigurations that we have announced or closed since 2021 through 2023:
| • | In January 2021, one of our subsidiaries in Israel acquired two ready-mix concrete plants from Kinneret and Beton-He’Emek for an amount in shekels equivalent to $6 million. After the conclusion of the purchase price allocation to the fair values of the assets acquired and liabilities assumed of this business, we determined goodwill of $5 million. |
| • | On February 16, 2021, we acquired the ready-mix assets of Beck Readymix Concrete Co. LTD., including three ready-mix concrete plants and one portable plant to service the San Antonio, Texas metropolitan area and surrounding areas. |
| • | On March 31, 2021, we sold 24 concrete plants and one aggregates quarry in France to the Holcim Group (“Holcim”) for an amount in Euros equivalent to $44 million. These assets were located in the Rhône-Alpes region in the Southeast of France, east of our operations in Lyon. The operations related to these assets for the three-month period ended March 31, 2021 are presented in our statements of income, net of income tax, as part of the single line item “Discontinued operations.” |
| • | On April 12, 2021, we signed, and then successfully closed, an agreement to acquire from Eqiom Granulats two aggregates quarries and one rail-enabled platform in the North Paris Metropolitan area. |
| • | On July 9, 2021, we concluded the sale agreed in March 2019 of our white cement business, except for Mexico and the U.S., to Çimsa Çimento Sanayi Ve Ticaret A.S. for a total consideration of $155 million. Assets sold included our Buñol cement plant in Spain and white cement customer list. Our operations of these assets in Spain for the period from January 1, 2021 to July 9, 2021 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2021 a loss on sale of $67 million net of the proportional allocation of goodwill of $41 million. |
| • | On October 4, 2021, we signed, and then successfully closed, an agreement to acquire from HeidelbergCement AG (“Heidelberg”) a limestone quarry with a waste management operation near the Madrid metropolitan area and three concrete plants in the Balearic Islands. |
| • | On December 10, 2021, through a subsidiary in Mexico, we acquired Broquers Ambiental, a sustainable waste management company, for a total consideration of $13 million. Broquers Ambiental assets included a plant for solid waste treatment for its use as alternate fuel. During 2022, considering the valuation of the fair values of the assets acquired and liabilities assumed, we determined goodwill of $4 million. |
| • | On July 11, 2022, through a subsidiary in Germany, we completed the acquisition of a 53% stake in the German aggregates company ProStein GmbH & Co. KG (“ProStein”) for a total consideration of $21 million. The investment expanded our aggregates business in the region and we estimate that it increased the life of the aggregates’ reserves for our operations in Central Europe for at least the next 25 years as of 2022. The majority stake in ProStein’s assets added a full range of fine and hard aggregates to our aggregates portfolio. In addition to supplying the greater Berlin area, the additional capacity can supply several urban centers in Poland and the Czech Republic. ProStein’s assets included six active hardstone plants and six construction |
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| demolition and excavation waste (“CDEW”) recovery sites. During 2023, based on the valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill. |
| • | On August 31, 2022, we announced that we, through certain of our subsidiaries, successfully concluded the sale agreed in December 2021 of our operations in Costa Rica and El Salvador to affiliates of Cementos Progreso Holdings, S.L. (“Progreso”) for a total consideration of $325 million, related to our aggregate controlling interest. The divested assets consisted of one fully integrated cement plant, one grinding station, seven ready-mix plants, one aggregate quarry, as well as one distribution center in Costa Rica and one distribution center in El Salvador. Our operations of these assets in Costa Rica and El Salvador for the year ended December 31, 2021 and for the period from January 1, 2022 to August 31, 2022 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2022 a gain on sale of $240 million, which includes the reclassification of foreign currency translation effects accrued in equity until the disposal date. |
| • | On October 25, 2022, we created a partnership with Advent International (“Advent”). As part of the partnership, we sold to Advent a 65% stake in Neoris N.V. (“Neoris”) for a total consideration of $119 million. While surrendering control to Advent, we retain a 35% stake and remain as a key strategic partner and customer of Neoris. Our retained 35% stake in Neoris was remeasured at fair value at the date of loss of control and was subsequently accounted for under the equity method and presented in the line item “Investments in associates and joint ventures.” Neoris’ results for the year ended December 31, 2021 and for the period from January 1 to October 25, 2022 are reported in the statements of income, net of income tax, in the single line item “Discontinued operations,” including a gain on sale of $117 million in 2022, net of the reclassification of foreign currency translation effects accrued in equity until the date of loss of control. |
| • | On January 25, 2023, in Manila, Philippines, Cemex Asian South East Corporation (“CASEC”), an indirect subsidiary of Cemex, filed a Tender Offer Report on Form 19-1 with the Securities and Exchange Commission of the Philippines and the Philippine Stock Exchange, pursuant to Rule 19 of the Securities Regulation Code of the Philippines, in connection with its intention to conduct a voluntary tender offer (the “CHP Tender Offer”) to acquire a minimum of 1 and a maximum of 1,614,000,000 common shares of CHP. The tender offer period commenced on February 16, 2023 and lasted for a period of 20 business days, ending on March 16, 2023. Payment of the net proceeds of the validly tendered shares took place on March 30, 2023. As part of the CHP Tender Offer, CASEC acquired 1,614,000,000 common shares of CHP, resulting in CASEC owning 89.86% of the outstanding common shares of CHP. In the CHP Tender Offer, CASEC paid 1.30 Philippine Pesos per share, an equivalent of 2,098.20 million Philippine Pesos ($37.88 million as of December 31, 2023, based on an exchange rate of 55.37 Philippine Pesos to $1.00) for all the acquired shares. |
| • | On January 30, 2023, through a subsidiary, we acquired a 51% stake in SHTANG, a CDEW recycling company, for a price of $13 million. SHTANG has been awarded a 13-year license to build and operate the CDEW recycling facility. We expect this facility to be capable of processing 600,000 tons of waste annually. The CDEW production is expected to be used as raw materials for aggregate production. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we determined a goodwill of $3 million. |
| • | On February 3, 2023, the Colombian Financial Superintendency (Superintendencia Financiera de Colombia) authorized Cemex España, S.A. (“Cemex España”) to commence a public delisting tender offer (the “Delisting CLH Offer”) to acquire a minimum of one ordinary share and a maximum of 26,281,913 ordinary shares of CLH. The period to tender CLH shares under the Delisting CLH Offer concluded on February 28, 2023, with the final results of the Delisting CLH Offer being confirmed on March 3, 2023. As a result of the Delisting CLH Offer, we acquired 23,232,946 ordinary shares of CLH, increasing our interest to 99.46% of CLH (excluding shares owned by CLH) and delisted CLH’s shares from the Colombian Stock Exchange (Bolsa de Valores de Colombia). The registry of CLH’s shares in the National Registry of Securities and Issuers (Registro Nacional |
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| de Valores y Emisores) was canceled thereafter. The total consideration that we paid as a result of the acquisition of the validly tendered shares amounted to 4,735 Colombian Pesos per share, totaling 110,007,999,310 Colombian Pesos ($28.78 million as of December 31, 2023, based on an exchange rate of 3,822.05 Colombian Pesos to $1.00). |
| • | On May 11, 2023, through a subsidiary, we completed the purchase of the assets of Atlantic Minerals Limited in Newfoundland, Canada, consisting mainly of an aggregates quarry and maritime port operations for a price of $75 million. With this investment, we secured a new long-term aggregates reserve for our operations in Florida and the east coast of the United States, as well as a source for chemical-grade stone. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill. |
| • | On May 18, 2023, through a subsidiary, we acquired a mortar plant near Madrid, Spain expected to be part of our Urbanization Solutions business for an immaterial amount. This plant is expected to reach 100,000 metric tons of production at full capacity. |
| • | On August 30, 2023, through a subsidiary, we acquired two quarries near Madrid, Spain for an immaterial amount. We expect this acquisition to strengthen our limestone reserves. |
| • | On November 1, 2023, through a subsidiary in Germany, for a total consideration of $13 million we completed the acquisition of Kiesel, a mortars and adhesives company in the construction industry based in Germany that serves the German, French, Polish, and Czech markets, consisting of a production facility and five distribution locations. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we determined goodwill of $5 million. |
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Geographic Breakdown of External Revenues by Reportable Segment for the Year Ended December 31, 2023
The following chart indicates the geographic breakdown of our external revenues by reportable segment, for the year ended December 31, 2023:
Breakdown of External Revenues by Line of Business for the Year Ended December 31, 2023
The following chart indicates the breakdown of our external revenues by line of business for the year ended December 31, 2023:
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Our Businesses
We strive to provide superior building solutions in the markets we serve. To this end, we tailor our products and services to suit customers’ specific needs, from home construction, improvement, and renovation to infrastructure, commercial, industrial, agricultural, and marine/hydraulic applications.
Cement
Cement is a binding agent, which, when mixed with sand, stone or other aggregates and water, produces either ready-mix concrete or mortar. Whether in bags or in bulk, we provide our customers with high-quality branded cement products and services. We use our professional knowledge and experience to develop customized products designed to satisfy our clients’ specific requirements and that also foster sustainable construction. In many of the countries where we have cement operations, a large proportion of cement sold is a bagged, branded product. We often deliver the product to a large number of distribution outlets such that our bagged, branded cement is available to the end users at a point of sale in close proximity to where the product will be used. We seek to develop brand identity and recognition in our bagged product.
We manufacture cement through a closely controlled chemical process, which begins with the mining and crushing of limestone and clay, and, in some instances, other raw materials. The clay and limestone are then pre-homogenized, a process which consists of combining different types of clay and limestone. The mix is typically dried, then fed into a grinder which grinds the various materials in preparation for the kiln. The raw materials are calcined, or processed, at a very high temperature in a kiln, to produce clinker. Clinker is the intermediate product used in the manufacture of cement. For limestone, clay and gypsum, requirements are based on chemical composition that, depending on the other materials available, matches the quality demanded by the production process. For cement limestone, clay and gypsum, we run chemical tests to prepare the mining plan of the quarry, to confirm material quality and reduce variations in the mineral content. We consider that limestone and clay quality of our cement raw materials quarries are adequate for the cement production process.
There are two primary processes used to manufacture cement: the dry process and the wet process. The dry process is more fuel efficient. As of December 31, 2023, 48 of our 50 operative cement production plants used the dry process and two used the wet process. Our operative production plants that use the wet process are in Nicaragua (leased) and Trinidad and Tobago. In the wet process, the raw materials are mixed with water to form slurry, which is fed into a kiln. Fuel costs are greater in the wet process than in the dry process because the water that is added to the raw materials to form slurry must be evaporated during the clinker manufacturing process. In the dry process, the addition of water and the formation of slurry are eliminated, and clinker is formed by calcining the dry raw materials. In the most modern application of this dry process technology, the raw materials are first blended in a homogenizing silo and processed through a pre-heater tower that utilizes exhaust heat generated by the kiln to pre-calcine the raw materials before they are calcined to produce clinker.
Clinker and gypsum are fed in pre-established proportions into a cement grinding mill where they are ground into an extremely fine powder to produce finished cement. We primarily cover our gypsum needs from third parties; however, we also operate gypsum quarries in the United States, Spain, the Dominican Republic and Egypt. Our main types of cement include the following:
Gray Portland Cement. Our gray portland cement is a high-quality, cost-effective building material, mainly composed of clinker, that meets applicable chemical and physical requirements and is widely used in all construction segments: residential, commercial, industrial, and public infrastructure.
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White Cement. We manufacture this type of cement with limestone, low iron content kaolin clay, and gypsum. Customers use our white portland cement in architectural works requiring great brightness and artistic finishes, to create mosaics and artificial granite, and for sculptural casts and other applications where white prevails.
Masonry or Mortar. Masonry or mortar is a portland cement that we mix with finely ground inert matter (limestone). Our customers use this type of cement for multiple purposes, including concrete blocks, templates, road surfaces, finishes, and brick work.
Oil-well Cement. Our oil-well cement is a specially designed variety of hydraulic cement produced with gray portland clinker. It usually forges slowly and is manageable at high temperatures and pressures. Produced in classes from A to H and J, our oil-well cement is applicable for different depth, chemical aggression, or pressure levels.
Blended Cement. Blended hydraulic cements are produced by inter-grinding or blending portland cement and supplementary cementitious materials such as ground granulated blast furnace slag, fly ash, silica fume, calcined clay, hydrated limestone, and other pozzolans. The use of blended cements in ready-mix concrete reduces mixing water and bleeding, improves workability and finishing, inhibits sulfate attack and the alkali-aggregate reaction, and reduces the heat of hydration. Cemex offers an array of blended cements which have a lower CO2 footprint resulting from their lower clinker content due to the addition of supplementary cementitious materials. The use of blended cements reinforces our dedication to sustainable practices and furthers our objective of offering an increasing range of products with sustainable attributes.
Ready-Mix Concrete
Ready-mix concrete is a combination of cement, fine and coarse aggregates, admixtures (which control properties of the concrete including plasticity, pumpability, freeze-thaw resistance, strength and setting time), and water. We tailor our ready-mix concrete to fit our clients’ specific needs. By changing the proportion of water, aggregates, and cement in the mix, we modify our concrete’s resistance, manageability, and finish. We also use additives to customize our concrete consistent with the transportation time from our plant to the project, weather conditions at the construction site, and the project’s specifications. From our water-resistant to our self-compacting concrete, we produce a great variety of specially designed concrete to meet the many challenges of modern construction.
We develop solutions based on our thorough knowledge and application of ready-mix concrete technology. Leveraging years of experience, a global pool of knowledge, and state-of-the-art expertise about the different ready-mix concrete constituents and their interaction, we offer our customers tailor-designed concrete. Cemex ready-mix concrete technologists are able to modify the properties of concrete through the use of innovative chemical admixtures, combined with the proper proportions of the various concrete constituents. For example, depending on the type of application and jobsite requirements, we can design ready-mix concrete that is more fluid, stronger, develops strength faster, and also retains workability longer. Through the development of chemical admixtures solutions, our researchers design special concretes that fulfill the construction industry’s increasingly demanding performance requirements. Cemex offers a special ready-mix concrete portfolio, comprised of such products as ultra-rapid hardening concrete, crack-resistant/low shrinkage concrete, self-consolidating concrete, architectural concrete, pervious concrete, antibacterial concrete and a number of others.
We continuously work to improve the properties of ready-mix concrete that make it a key component of construction with sustainable attributes: durability, resistance to aggressive environments, light reflection, and capacity to store energy, among others. We also constantly work to develop innovative solutions that advance the sustainable attributes of structures made with ready-mix concrete. This way, our customers can design buildings with sustainable attributes that can take advantage of the benefits of concrete in a wide range of applications. We offer engineered concrete for harbors and bridges with a special design of high-performance concrete that combines durability and low
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maintenance with resistance to aggressive environments, and for industrial applications which consists of concrete with high acid resistance which is robust and durable for such uses as cooling towers. We also offer concrete for building and housing used for structures such as self-compacting concrete that improves the strength and durability of building structures, while reducing energy use and noise due to concrete vibration, and envelope concrete such as structural lightweight concrete or insulating concrete forms which offer insulation solutions to improve energy efficiency in buildings, and concrete for building design that takes advantage of concrete’s capacity to store energy-its thermal mass-minimizing temperature fluctuations in a building over the course of the day, reducing the need for additional heating and cooling. We also offer ready-mix concrete for water and wastewater management and for roads and pavements.
The types of ready-mix concrete we offer our clients include, but are not limited to:
Standard Ready-Mix Concrete. Standard ready-mix concrete is the most common form of concrete. It is prepared for delivery at a concrete plant instead of mixed on the construction site.
Architectural and Decorative Concrete. This type of ready-mix concrete can provide a structural function, as well as an aesthetic or decorative finish. It can offer smooth or rough surfaces or textures, as well as a variety or range of colors.
Rapid-Setting Concrete. Designed to enhance early strength development, this type of ready-mix concrete allows fast formwork removal, accelerated construction sequencing, and rapid repair for such jobs as roads and airport runways. Typically used in low temperature (5-10°C) concreting during winter, this type of ready-mix concrete can also be used in buildings, railways, and precast applications. In addition to saving time, this type of ready-mix concrete technology offers improved durability and acid resistance.
Fiber-Reinforced Concrete. Ready-mix concrete designed with micro or macro fibers that can be used either for structural applications, where the fibers can potentially substitute for steel rebar reinforcement, or for reducing shrinkage, primarily early age shrinkage. Macro fibers can significantly increase the ductility of concrete, making it highly resistant to crack formation and propagation.
Fluid-Fill Concrete. Fluid mortar or ready-mix concrete simplifies the process of laying pipe and cable by surrounding the pipe or cable with a tightly packed shell that provides protection from the elements, prevents settling, and enables crews to work quickly.
Roller-Compacted Concrete. Compacted in place and cured, roller-compacted concrete is a zero-slump ready-mix concrete with the abrasion resistance to withstand high velocity water, making it the material of choice for spillways and other infrastructure subject to high flow conditions. It represents a competitive solution in terms of cost and durability when compared to asphalt.
Self-Consolidating Concrete. Self-consolidating concrete has very high flow; therefore, it is self-leveling, eliminating the need for vibration. Due to the superplasticizers used, chemical admixtures that impart very high flow, self-consolidating concrete exhibits very high compaction as a result of its low air content. Consequently, self-consolidating concrete can have very high strengths, exceeding 50 megapascals.
Pervious Concrete. Because of its unique design mix, pervious concrete is a highly porous material that allows water, particularly rainwater, to filter through, reduces flooding and heat concentration by up to 4°C, and helps to prevent skidding on wet roads. This ready-mix concrete is ideally used in parking lots, footpaths, and swimming pool border applications.
Antibacterial Concrete. This type of ready-mix concrete helps to control bacteria growth and is used to help maintain clean environments in structures such as hospitals, laboratories, and farms.
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Aggregates
We are one of the world’s largest suppliers of aggregates: primarily the crushed stone, sand, and gravel, used in virtually all forms of construction. Our customers use our aggregates for a wide array of applications: as a key component in the construction and maintenance of highways, walkways, parking lots, airport runways, and railways; for drainage, water filtration, purification, and erosion control; as fill material; for sand traps on golf courses, beaches, playing field surfaces, horse racing tracks, and related applications; and to build bridges, homes, and schools.
Aggregates are obtained from land-based sources such as sand and gravel pits and rock quarries or by dredging marine deposits.
Hard Rock Production. Rock quarries usually operate for at least 30 years and are developed in distinct benches or steps. A controlled explosion is normally used to release the rock from the working face. It is then transported by truck or conveyor to a crusher to go through a series of crushing and screening stages to produce a range of final sizes to suit customers’ needs. Dry stone is delivered by road, rail or water from the quarry.
Sand and Gravel Production. Sand and gravel quarries are much shallower than rock quarries and are usually worked and restored in progressive phases. Water can either be pumped out of the quarries allowing them to be worked dry or they can be operated as lakes with extraction below water. A conveyor draws the raw material into the processing plant where it is washed to remove unwanted clay and to separate sand. Sand separated during processing is dewatered and stockpiled. Gravel then passes over a series of screens that sieve the material into different sizes. Processing separates the gravel into stockpiles in a range of sizes for delivery.
Marine Aggregate Production. A significant proportion of the demand for aggregates is satisfied from rivers, lakes, and seabeds. Marine resources are increasingly important to the sustainable growth of the building materials industry. Marine aggregates also play an important role in replenishing beaches and protecting coastlines from erosion. At sea, satellite navigation is used to position a vessel precisely within its licensed dredging area. Vessels trail a pipe along the seabed and use powerful suction pumps to draw sand and gravel into the cargo hold. Dredged material is discharged at wharves, where it is processed, screened and washed for delivery.
Aggregates are an indispensable ingredient in ready-mix concrete, asphalt, and mortar. Accounting for 60% to 75% of ready-mix concrete’s volume, aggregates strongly influence concrete’s freshly mixed and hardened properties. Aggregates not only increase concrete’s strength, but also can make the mix more compact, enabling applications such as weatherproofing and heat retention. They can further contribute to concrete’s aesthetic qualities. For example, sand gives surface treatments their brightness.
The types of aggregates we offer our clients include, but are not limited to:
Crushed Stone and Manufactured Sand. These products are obtained by mining rock and breaking it down to a preferred size. In the case of manufactured sand, the product is obtained by crushing rock to the selected shape or texture, ensuring product and project specifications are met. Sources of crushed stone can be igneous, sedimentary, or metamorphic.
Gravel. Gravel deposits are produced through a natural process of weathering and erosion. It can be used for roads, for concrete manufacturing, or for decorative purposes.
Sand: Sand occurs naturally and is composed of fine rock material and mineral particles. Its composition is variable depending on the source. It can be used for roads, concrete manufacturing, or sanitation.
Recycled Concrete. Recycled concrete is created by breaking, removing, and crushing existing concrete to a preferred size. It is commonly used as a base layer for other construction materials because it compacts to form a firm surface.
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Urbanization Solutions
Urbanization Solutions is one of our four core businesses, a portfolio of products and services that leverages our building materials expertise to offer complementary solutions for sustainable cities, emphasizing net-zero and sustainability, circular solutions, and resilient buildings and infrastructure. Urbanization solution focuses on four key market segments:
Performance Materials.
Performance materials are formulated products that are used to modify or enhance the performance of building materials and construction systems. Performance materials include admixtures, mortars (e.g., masonry, rendering and plastering, tile setting systems, among others) and asphalt. The following are examples of performance materials we offer to our customers:
| • | Admixtures ISOMILL 4000 Series grinding aids and cement enhancers that provide significant carbon reduction, higher process efficiency and enhanced strength. |
| • | Admixtures ISOFLOW 6000 Series high-performance superplasticizer technology for ready-mixed concrete producers that enable water and carbon reduction of up to 50% in concrete mix designs. |
| • | Cemex dry silo mortar provides an innovative and efficient solution to mortar delivery, particularly to larger sites. There is no need for mixing areas on site as all the material is pre-blended in the silo. The guaranteed color, consistency and controlled workability are backed up by Cemex’s training and support. The dedicated Cemex dry silo team can support with silo placement and specification. |
| • | VIALOW is our low temperature asphalt, that enables quicker re-opening of road works after completion, as the asphalt reaches appropriate trafficking temperatures faster than conventional hot mix asphalt. VIALOW reduced carbon asphalt includes the option to offset residual CO2 to provide a CarbonNeutral® product, in accordance with the CarbonNeutral® Protocol. |
Industrialized Construction.
We manufacture finished building elements that are easy and safe to transport and install on-site. Industrialized construction products range from precast components to complete structures, 2D panels, 3D modules, 3D structures, etc. The following are examples of industrialized construction products we offer to our customers:
| • | Precast elements for mobility and urban infrastructure: these include rail sleepers, box culverts, bridges, drainage basins, barriers, and parking curbs. |
| • | High-end architectural concrete products with a range of styles for different building and urban landscaping projects: these include fully serviced façade panels, standard and architectural blocks, block paving, and decorative paving solutions. |
| • | Social infrastructure solutions for rapid response: these include solutions like fully equipped COVID-19 hospital sections. |
Circularity.
We provide services that improve the circularity of the construction value chain by focusing on three waste streams:
| • | Construction, Demolition & Excavation Waste—These are generated specifically from the built environment. All debris, returned concrete, bricks, shingles, wood, excavation soil, etc., that can be recycled and reintegrated is incorporated into the construction value chain as raw materials. As an example, the Cemex Circularity Center |
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| in France, located in an industrial harbor in Paris, offers a wide range of circular economy services to the construction industry. The center receives a variety of materials, including construction, demolition and excavation waste, that is processed and transformed into recycled aggregates used in different infrastructure projects, such as the Grand Paris, and as insert materials for land restoration. |
| • | Industrial by-products—These are derived from waste streams of various industries. This allows Cemex to contribute to the preservation of natural resources and reduce our CO2 footprint. Substances such as slag, fly ashes, pozzolans, calcined clays, and other decarbonated raw materials serve as alternatives to limestone and clinker in our production processes. |
| • | Municipal & Industrial Waste—These originate from households, commercial activities, and industrial operations, including the waste generated from our increasing operational presence in metropolitan areas in Mexico. The process captures recyclables from waste streams, and transforms most of the remaining non-recyclable waste into alternative fuels. These fuels replace part of the fossil fuels used in our cement kilns, subsequently increasing the sustainability attributes of our products and reducing our carbon footprint. |
Related Services.
We provide complementary services to offer integrated solutions through logistics and transportation, retail, pavement services and design and engineering, among others, that add value along the construction value chain. These services enable Cemex to provide value for our customers by offering building solutions for their construction needs. The following are examples of related services we offer to our customers:
| • | Logistics services provide multi-faceted transportation solutions like Alliera (a business unit that provides supply chain solutions in North America), as well as our New Line Transport business that serves the pneumatic tank, aggregate dump, and flatbed markets promoting safety and providing a superior customer service through a centralized customer care dispatch center. |
| • | Retail services like ConstruramaSupply®, an eCommerce platform for construction materials such as steel, hardware, plumbing, finishes and electrical material that brings the Cemex product offer closer to the Construrama retail network. |
| • | Pavement services specialize in surface schemes from major highways and airfield surfacing to business parks, car parks, storage and materials handling depots where we offer a comprehensive range of paving solutions to both private and public sector clients. |
| • | Design and engineering services like Construhub, a Building Information Modeling (“BIM”) platform based on BIM methodology that reduces risks, improves quality, and facilitates the delivery of projects on time and within budget for our clients. |
Services
We continuously communicate and interact with our customers to identify and implement effective ways to meet their toughest challenges. We recognize that customer loyalty happens by design, not by chance. To better serve our customers, we not only need to have a clear understanding of what they need, but also the means and passion to fulfill those needs.
In each market and locality in which we operate, we do our best to provide our customers with the most compelling integrated building solutions. For example, to solve infrastructure needs in major cities, we not only provide ready-mix concrete, but for some projects we also design the project, define the best technical solution, offer different financial schemes and execute the project in collaboration with local builders. Similarly, we work alongside our neighbors in small, less-affluent communities to help them solve their housing needs and pave their streets and sidewalks.
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The following are examples of the different services offered to our customers throughout our operations, which may vary from location to location:
Enhanced Loading Experience. This service offers our customers flexibility and efficiency by applying technologies and solutions in the loading process in order to, among other results, minimize loading time and improve truck efficiency. These technologies and solutions include: ATM-like bulk-cement, fast lanes, real time loading status, license plate recognition, and radio-frequency identification.
Customer-oriented Educational and Training Services. Webinars continue to be an effective channel to engage with existing and potential customers. In 2023, Cemex hosted over 98 webinars on several topics, including Cemex Go trainings about new functionalities, new product releases, Vertua, and sustainability.
Online Services. During 2023, within the Houston ready-mix market, we focused on enabling and deploying the online connection experience with digital confirmation, allowing customers to confirm orders in real-time from both mobile and web platforms. This new feature includes the ability to fully manage orders, which allows for consumers to modify, cancel, and repeat orders at any time during the online process without interruption. Additional milestones include the introduction of the Multiple Orders feature, which allows customers to create and confirm several orders at the same time, as well as the Various locations feature, which provides customers the ability to create new points of delivery. We aim to roll out these new features to the rest of the United States, as well as the United Kingdom, throughout 2024.
Service Centers. Our Service Centers globally play a key role in providing a superior customer experience to our customers. In 2023, we significantly advanced standard processes and platforms for our omnichannel customer experience and leveraged data to enable rich, agile and personalized customer interactions.
Technical Support. We aim to provide our customers with top-level technical assistance through our state-of-the-art equipment and our highly professional, well-trained technical services staff. We strive to provide value above and beyond fulfilling our customers’ need for cement, aggregates, ready-mix concrete, and related products such as mortar.
These services do not produce revenues on a stand-alone basis but are part of our comprehensive value proposition.
Description of Our Raw Materials Resources and Reserves
We are a leading global provider of building materials and solutions, including cement, ready-mix concrete, aggregates and Urbanization Solutions. Our cement production process begins with the mining and crushing of limestone and clay, and, in some instances, other raw materials. We have access to limestone and clay quarries near most of our cement plant sites worldwide since these minerals are the main raw materials in the cement production process.
In addition, we are one of the world’s largest suppliers of aggregates, primarily hard rock, sand, and gravel, obtained from quarries, to be used in ready-mix concrete and other concrete-based products such as blocks and pipes.
Customers use our aggregates for a wide array of purposes, from key components in the construction and maintenance of highways, walkways, and railways to indispensable ingredients in concrete, asphalt and mortar. Aggregates can be used in their natural state or crushed into smaller size pieces.
The types of mines mostly used to extract raw materials for aggregates and cement production are open pit or open cut, which relate to deposits of economically useful minerals or rocks that are found near the land surface. Open-pit mines that produce raw materials for our industry are commonly referred to as quarries.
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Open-pit mines are typically enlarged until either the mineral resource is exhausted or an increasing ratio of overburden to exploitable material makes further mining uneconomic. In some cases, we also extract raw materials by dredging underwater deposits.
Raw materials for our own cement production processes are obtained mainly from our own sources. However, we may cover our aggregates and other raw materials needs through supply from third parties. For the year ended December 31, 2023, approximately 3.6% of our total raw material needs were supplied by third parties.
Mineral resources are defined as a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for its economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable.
Our resources estimates are prepared by Cemex’s engineers and geologists, some of which are considered qualified persons under sub-part 1300 of Regulation S-K of the Securities Act (“Regulation S-K 1300”), and such estimates are then analyzed and verified annually by other business units within the Company, jointly with the associated regional technical managers, once information is available. Our quarries must also be operated and maintained in accordance with applicable environmental permits and requirements. For more information, see “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters” for details. In specific circumstances we have used the services of third-party geologists and/or engineers to validate our own estimates. The three categories of resources, in decreasing level of confidence, are the following:
| (1) | A measured mineral resource is that part of a mineral resource for which quantity is estimated on the basis of conclusive geological evidence and sampling. A measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource. It may be converted to a proven mineral reserve or to a probable mineral reserve. |
| (2) | An indicated mineral resource is that part of a mineral resource for which quantity is estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. An indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource and may only be converted to a probable mineral reserve. |
| (3) | An inferred mineral resource is that part of a mineral resource for which quantity is estimated on the basis of limited geological evidence and sampling. An inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability. An inferred mineral resource may not be converted to a mineral reserve. |
Mineral reserves are defined as the economically mineable part of a measured or indicated mineral resource. Our reserves estimates are prepared by Cemex’s engineers and geologists, some of which are considered qualified persons under Regulation S-K 1300, and such estimates are then analyzed and verified annually by other business units within the Company, jointly with the regional technical managers associated, once information is available. Our quarries must also be operated and maintained in accordance with applicable environmental permits and requirements. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters” for more information. In specific circumstances we have used the services of third-party geologists and/or engineers to validate our own estimates. The two categories of reserves, in decreasing level of confidence, are the following:
| (1) | Proven reserves are for which (i) the quantity is computed from dimensions revealed by drill data, together with other direct and measurable observations such as outcrops, trenches and quarry faces; (ii) the grade and/or |
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| quality are computed from the results of detailed sampling; and (iii) the sampling and measurement data are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of the reserves are well-established. Reserves are considered as proven when all legal and environmental conditions have been met and required permits and approvals have been obtained to allow for the extraction of the material. |
| (2) | Probable reserves are those for which quantity and grade and/or quality are computed from information similar to that used from proven reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation. |
Our reserves determination incorporates only materials meeting specific quality requirements. For aggregates used in ready-mix concrete, such requirements are based on hardness, shape and size. For cement raw materials (mainly limestone and clay), such requirements are based on a chemical composition that matches the quality demanded by the production process. In the case of cement raw materials, since chemical composition varies from production sites and even within the same site, we conduct geostatistical chemical tests and determine the best blending proportions to meet production quality criteria and to try to maintain an extraction ratio close to 100% of the reported reserves for such materials.
The main equipment utilized in our production sites consists of the following:
| • | In our cement facilities: drills, crushers, kilns, coolers, mills, packing/loading machines, pay loaders, excavators, off-road trucks, and other material handling equipment. |
| • | In our ready-mix concrete facilities: batch plants, silos, and mobile equipment and mixer trucks. |
| • | In our aggregates facilities: drills, crushers, screens, belt conveyors, pay loaders, excavators, trucks, and other material handling equipment. |
Our estimates distinguish between owned and leased reserves, the latter being determined over the term of the lease contract, and including only those permitted reserves which are proven and probable. As of December 31, 2023, our total cement raw materials and aggregates resources and reserves were located in 385 sites, comprising a property surface of approximately 91,569 hectares. Of these sites, 73.7% are located on land owned by Cemex, 10.4% are on land leased by Cemex, and 13.0% are on land owned in part and leased in part. The following maps show our production stage and development stage quarries’ locations as of December 31, 2023:
Mexico, USA, and SCA&C regions
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EMEAA region(1)
(1) Excludes 15 marine extraction sites in the United Kingdom.
Our mining properties are classified as follows:
| (1) | Production Stage: Properties with reported proven or probable reserves where we have active mining operations, |
| (2) | Development Stage: Properties with reported proven or probable reserves where we do not have active mining operations, and |
| (3) | Exploration Stage: Properties with no reported reserves. |
As of December 31, 2023, we have 303 cement raw materials and aggregates properties in the production stage, 64 properties in the development stage and 18 properties in the exploration stage.
As of December 31, 2023, we had 135 cement raw materials quarries in the production and development stage and nine quarries in exploration stage across our global operations, serving our facilities dedicated to cement production, which are commonly located at or near the cement plant facilities. Annualized production of cement raw materials totaled 61.2 million tons for 2023, 67.4 million tons for 2022 and 75.5 million tons for 2021. We estimate that our proven and probable cement raw material reserves, on a consolidated basis, have an average remaining life of approximately 81.8 years. Average remaining life, also known as years to depletion, is calculated based on total reserves divided by the average production of the five previous years; so, for the year ended December 31, 2023, total reserves are divided by the average annual cement raw materials production between the years ended December 31, 2019 and December 31, 2023. Reserves and production from the quarry located in Maceo are excluded from this calculation. As of December 31, 2023, we operated substantially all of our cement raw materials quarries, some of which are jointly-operated with third parties.
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The tables set forth below present our total measured, indicated and inferred cement raw materials resources (exclusive of proven and probable reserves) and permitted (based on our interpretation of existing permits) proven and probable cement raw materials reserves by geographic segment and material type extracted or produced in our cement raw materials quarries operations.
| As of December 31, 2023 | ||||||||||||||||||||
| Resources (million tons)(5)(6)(7) | ||||||||||||||||||||
| Country(1) |
Mineral | Measured (M) | Indicated (I) |
Total (M) + (I) |
Inferred | |||||||||||||||
| Mexico(2) |
Limestone | 58 | 325 | 383 | 1,551 | |||||||||||||||
| Clay | 7 | 0 | 7 | 105 | ||||||||||||||||
| Others | 0 | 1 | 1 | 4 | ||||||||||||||||
| United States(3) |
Limestone | 19 | 184 | 202 | 321 | |||||||||||||||
| Clay | 0 | 0 | 0 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| EMEAA: |
||||||||||||||||||||
| United Kingdom |
Limestone | 0 | 59 | 59 | 0 | |||||||||||||||
| Clay | 0 | 5 | 5 | 0 | ||||||||||||||||
| Germany |
Limestone | 0 | 0 | 0 | 51 | |||||||||||||||
| Poland |
Limestone | 0 | 0 | 0 | 174 | |||||||||||||||
| Spain |
Limestone | 5 | 0 | 5 | 207 | |||||||||||||||
| Clay | 0 | 0 | 0 | 2 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| Philippines(4) |
||||||||||||||||||||
| Property that supplies Solid Cement |
||||||||||||||||||||
| Plant |
Limestone | 494 | 394 | 888 | 0 | |||||||||||||||
| Other properties |
Limestone | 195 | 190 | 385 | 0 | |||||||||||||||
| Clay | 0 | 0 | 0 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| Rest of EMEAA |
Limestone | 266 | 0 | 266 | 89 | |||||||||||||||
| Clay | 71 | 0 | 71 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| SCA&C: |
||||||||||||||||||||
| Colombia |
Limestone | 348 | 413 | 761 | 927 | |||||||||||||||
| Clay | 57 | 58 | 115 | 11 | ||||||||||||||||
| Others | 4 | 7 | 11 | 3 | ||||||||||||||||
| Panama |
Limestone | 52 | 4 | 55 | 0 | |||||||||||||||
| Clay | 1 | 1 | 2 | 0 | ||||||||||||||||
| Caribbean TCL |
Limestone | 252 | 0 | 252 | 0 | |||||||||||||||
| Clay | 0 | 0 | 0 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| Dominican Republic |
Limestone | 391 | 0 | 391 | 0 | |||||||||||||||
| Clay | 4 | 0 | 4 | 0 | ||||||||||||||||
| Others | 0 | 50 | 50 | 0 | ||||||||||||||||
| Rest of SCA&C(8) |
Limestone | 14 | 5 | 20 | 0 | |||||||||||||||
| Clay | 0 | 0 | 0 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
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| As of December 31, 2023 | ||||||||||||||||||||
| Resources (million tons)(5)(6)(7) | ||||||||||||||||||||
| Country(1) |
Mineral | Measured (M) | Indicated (I) |
Total (M) + (I) |
Inferred | |||||||||||||||
| Cemex Consolidated |
Limestone | 2,092 | 1,574 | 3,667 | 3,321 | |||||||||||||||
| Clay | 140 | 64 | 205 | 118 | ||||||||||||||||
| Others | 4 | 58 | 62 | 7 | ||||||||||||||||
| Totals | 2,237 | 1,696 | 3,934 | 3,446 | ||||||||||||||||
| As of December 31, 2023 | ||||||||||||||||||||||||
| Reserves (million tons)(5)(6)(7) | ||||||||||||||||||||||||
| Country(1) |
Mineral | Number of quarries(8) |
Proven | Probable | Total | 2023 Annualized Production |
||||||||||||||||||
| Mexico(2) |
Limestone | 15 | 1,305 | 1,614 | 2,919 | 20.4 | ||||||||||||||||||
| Clay | 12 | 154 | 148 | 302 | 2.2 | |||||||||||||||||||
| Others | 12 | 5 | 4 | 9 | 0.3 | |||||||||||||||||||
| United States(3) |
Limestone | 20 | 490 | 130 | 620 | 9.5 | ||||||||||||||||||
| Clay | 3 | 16 | 16 | 32 | 0.3 | |||||||||||||||||||
| Others | 3 | 1 | 0 | 1 | 0.1 | |||||||||||||||||||
| EMEAA: |
||||||||||||||||||||||||
| United Kingdom |
Limestone | 2 | 47 | 0 | 47 | 1.4 | ||||||||||||||||||
| Clay | 3 | 20 | 0 | 20 | 0.5 | |||||||||||||||||||
| Germany |
Limestone | 1 | 4 | 77 | 81 | 1.7 | ||||||||||||||||||
| Poland |
Limestone | 2 | 112 | 84 | 196 | 2.3 | ||||||||||||||||||
| Spain |
Limestone | 11 | 100 | 70 | 170 | 2.3 | ||||||||||||||||||
| Clay | 4 | 1 | 5 | 6 | 0.1 | |||||||||||||||||||
| Others | 2 | 0 | 15 | 15 | 0.0 | |||||||||||||||||||
| Philippines(4) |
||||||||||||||||||||||||
| Property that supplies Solid Cement Plant |
Limestone | 4 | 257 | 0 | 257 | 1.0 | ||||||||||||||||||
| Other properties |
Limestone | 3 | 96 | 35 | 131 | 2.7 | ||||||||||||||||||
| Clay | 1 | 0 | 0 | 0 | 0.0 | |||||||||||||||||||
| Others | 2 | 4 | 0 | 4 | 0.3 | |||||||||||||||||||
| Rest of EMEAA |
Limestone | 6 | 81 | 194 | 275 | 5.6 | ||||||||||||||||||
| Clay | 2 | 3 | 13 | 16 | 0.7 | |||||||||||||||||||
| Others | 1 | 0 | 0 | 0 | 0.0 | |||||||||||||||||||
| SCA&C: |
||||||||||||||||||||||||
| Colombia |
Limestone | 11 | 59 | 150 | 208 | 3.0 | (9) | |||||||||||||||||
| Clay | 2 | 7 | 5 | 12 | 0.0 | |||||||||||||||||||
| Others | 2 | 1 | 4 | 4 | 0.1 | |||||||||||||||||||
| Panama |
Limestone | 3 | 55 | 31 | 86 | 1.4 | ||||||||||||||||||
| Clay | 2 | 5 | 1 | 6 | 0.2 | |||||||||||||||||||
| Caribbean TCL |
Limestone | 4 | 1 | 23 | 24 | 2.3 | ||||||||||||||||||
| Clay | 1 | 0 | 5 | 5 | 0.0 | |||||||||||||||||||
| Others | 3 | 0 | 14 | 14 | 0.4 | |||||||||||||||||||
| Dominican Republic |
Limestone | 1 | 86 | 0 | 86 | 2.0 | ||||||||||||||||||
| Clay | 1 | 16 | 0 | 16 | 0.0 | |||||||||||||||||||
| Others | 1 | 10 | 0 | 10 | 0.2 | |||||||||||||||||||
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| As of December 31, 2023 | ||||||||||||||||||||||||
| Reserves (million tons)(5)(6)(7) | ||||||||||||||||||||||||
| Country(1) |
Mineral | Number of quarries(8) |
Proven | Probable | Total | 2023 Annualized Production |
||||||||||||||||||
| Rest of SCA&C |
Limestone | 4 | 2 | 9 | 11 | 0.3 | ||||||||||||||||||
| Cemex Consolidated |
Limestone | 87 | 2,695 | 2,417 | 5,112 | 55.8 | ||||||||||||||||||
| Clay | 31 | 222 | 193 | 416 | 4.1 | |||||||||||||||||||
| Others | 26 | 21 | 37 | 59 | 1.3 | |||||||||||||||||||
| Totals | 144 | 2,938 | 2,648 | 5,586 | 61.2 | |||||||||||||||||||
| (1) | Country indicates location unless otherwise noted. |
| (2) | Our cement raw materials operations in Mexico include three limestone quarries that also produce hard rock aggregates. |
| (3) | Our cement raw materials operations in the United States include one limestone quarry that also produces hard rock aggregates. |
| (4) | Although Cemex, S.A.B. de C.V. consolidates CHP into its consolidated financial statements under IFRS, as of December 31, 2023 we did not control the raw materials used in our operations in the Philippines. Such raw materials were primarily supplied by APO Land & Quarry Corporation (“ALQC”) and Island Quarry and Aggregates Corporation (“IQAC”). As of December 31, 2023, ALQC was wholly owned by Impact Assets Corporation, which is a corporation in which we owned a 40% equity interest. As of December 31, 2023, IQAC was wholly owned by Albatross Holdings, Inc. (“Albatross Holdings”), which is a corporation in which we owned a 40% equity interest. Values presented for properties in the Philippines have not been prorated by the 40% interest. |
| (5) | Figures for reserves and resources are rounded. |
| (6) | Our 2023 cement raw materials resources and reserves were estimated based on an average sales price during 2023 for cement of $135.2 per metric ton, excluding freight. This price is impacted by product mix, location, and exchange rates. One ton of limestone is used to produce 1.08 tons of cement. |
| (7) | Resources and reserves are reported excluding expected wastes, meaning its best estimation of final usable/saleable material. |
| (8) | The number of quarries may include sites in exploration stages. |
| (9) | Production from the quarry located in Maceo is excluded from this calculation. |
As of December 31, 2023, we had 232 aggregates quarries in the production and development stage and nine quarries in the exploration stage across our global operations, mostly dedicated to serving our ready-mix concrete and aggregates businesses. Annualized production of aggregates totaled 112.5 million tons for 2023, 117.7 million tons for 2022 and 116.1 million tons for 2021. We estimate that our proven and probable aggregates reserves, on a consolidated basis, have an average remaining life of 30 years. Average remaining life, also known as years to depletion, is calculated based on total reserves divided by the average production of the five previous years; so, for the year ended December 31, 2023, total reserves are divided by the average annual cement raw materials production between the years ended December 31, 2019 and December 31, 2023. As of December 31, 2023, we operated substantially all of our aggregates quarries, some of which are jointly-operated with third parties.
The tables set forth below present our total measured, indicated, and inferred aggregates resources (exclusive of proven and probable reserves) and permitted (based on our interpretation of existing permits) proven and probable aggregates reserves by geographic segment and material type extracted or produced in our aggregates quarries operations. We note that the locations of our aggregates reserves differ from those of our cement reserves:
|
|
As of December 31, 2023 | |||||||||||||||||||
|
|
Resources (million tons)(4)(5)(6) | |||||||||||||||||||
| Country(1) |
Mineral | Measured (M) | Indicated (I) | Total (M) + (I) | Inferred | |||||||||||||||
| Mexico |
Hardrock | 1 | 21 | 22 | 24 | |||||||||||||||
| United States(2) |
Hardrock | 100 | 125 | 225 | 1,201 | |||||||||||||||
| Sand&Gravel | 40 | 352 | 392 | 36 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| EMEAA: |
||||||||||||||||||||
| United Kingdom |
Hardrock | 0 | 54 | 54 | 24 | |||||||||||||||
| Sand&Gravel | 28 | 150 | 178 | 148 | ||||||||||||||||
| France |
Hardrock | 0 | 0 | 0 | 49 | |||||||||||||||
| Sand&Gravel | 0 | 24 | 24 | 35 | ||||||||||||||||
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|
|
As of December 31, 2023 | |||||||||||||||||||
|
|
Resources (million tons)(4)(5)(6) | |||||||||||||||||||
| Country(1) |
Mineral | Measured (M) | Indicated (I) | Total (M) + (I) | Inferred | |||||||||||||||
| Germany |
Hardrock | 24 | 19 | 43 | 3 | |||||||||||||||
| Sand&Gravel | 3 | 1 | 4 | 1 | ||||||||||||||||
| Poland |
Hardrock | 0 | 0 | 0 | 25 | |||||||||||||||
| Sand&Gravel | 12 | 6 | 17 | 3 | ||||||||||||||||
| Spain |
Hardrock | 0 | 0 | 0 | 0 | |||||||||||||||
| Sand&Gravel | 0 | 0 | 0 | 0 | ||||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| Philippines(3) |
Hardrock | 144 | 208 | 352 | 0 | |||||||||||||||
| Israel |
Hardrock | 0 | 0 | 0 | 0 | |||||||||||||||
| Sand&Gravel | 0 | 0 | 0 | 0 | ||||||||||||||||
| Rest of EMEAA |
Hardrock | 0 | 0 | 0 | 1 | |||||||||||||||
| Sand&Gravel | 0 | 17 | 17 | 0 | ||||||||||||||||
| SCA&C: |
||||||||||||||||||||
| Colombia |
Sand&Gravel | 0 | 0 | 0 | 0 | |||||||||||||||
| Panama |
Hardrock | 0 | 0 | 0 | 0 | |||||||||||||||
| Others | 0 | 0 | 0 | 0 | ||||||||||||||||
| Caribbean TCL |
Hardrock | 0 | 212 | 212 | 4,700 | |||||||||||||||
| Sand&Gravel | 4 | 5 | 9 | 0 | ||||||||||||||||
| Dominican Republic |
Hardrock | 0 | 0 | 0 | 0 | |||||||||||||||
| Rest of SCA&C |
Sand&Gravel | 0 | 0 | 0 | 0 | |||||||||||||||
| Cemex Consolidated |
Hardrock | 269 | 639 | 908 | 6,027 | |||||||||||||||
| Sand&Gravel | 155 | 663 | 818 | 610 | ||||||||||||||||
| Others | 142 | 52 | 194 | 76 | ||||||||||||||||
| Totals | 566 | 1,355 | 1,921 | 6,714 | ||||||||||||||||
|
|
As of December 31, 2023 | |||||||||||||||||||||||
|
|
Reserves (million tons)(4)(5)(6) | |||||||||||||||||||||||
| Country(1) |
Mineral | Number of quarries(7) |
Proven | Probable | Total | 2023 Annualized Production |
||||||||||||||||||
| Mexico |
Hardrock | 13 | 215 | 146 | 361 | 12.4 | ||||||||||||||||||
| United States |
Hardrock | 19 | 703 | 213 | 916 | 28.8 | ||||||||||||||||||
| Sand&Gravel | 34 | 306 | 85 | 391 | 17.2 | |||||||||||||||||||
| Others | 1 | 3 | 0 | 3 | 0.1 | |||||||||||||||||||
| EMEAA: |
||||||||||||||||||||||||
| United Kingdom |
Hardrock | 3 | 264 | 0 | 264 | 6.0 | ||||||||||||||||||
| Sand&Gravel | 43 | 158 | 54 | 212 | 9.4 | |||||||||||||||||||
| France |
Hardrock | 7 | 64 | 34 | 98 | 2.7 | ||||||||||||||||||
| Sand&Gravel | 31 | 136 | 23 | 159 | 6.5 | |||||||||||||||||||
| Germany |
Hardrock | 10 | 88 | 36 | 124 | 3.1 | ||||||||||||||||||
| Sand&Gravel | 13 | 33 | 61 | 93 | 2.7 | |||||||||||||||||||
| Poland |
Hardrock | 2 | 21 | 4 | 24 | 1.8 | ||||||||||||||||||
| Sand&Gravel | 4 | 6 | 4 | 11 | 1.9 | |||||||||||||||||||
| Spain |
Hardrock | 19 | 283 | 83 | 366 | 2.7 | ||||||||||||||||||
| Sand&Gravel | 4 | 32 | 0 | 32 | 1.3 | |||||||||||||||||||
| Others | 1 | 2 | 1 | 3 | 0.1 | |||||||||||||||||||
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|
|
As of December 31, 2023 | |||||||||||||||||||||||
|
|
Reserves (million tons)(4)(5)(6) | |||||||||||||||||||||||
| Country(1) |
Mineral | Number of quarries(7) |
Proven | Probable | Total | 2023 Annualized Production |
||||||||||||||||||
| Philippines(3) |
Hardrock | 1 | 138 | 0 | 138 | 0.0 | ||||||||||||||||||
| Israel |
Hardrock | 7 | 36 | 12 | 49 | 12.3 | ||||||||||||||||||
| Sand&Gravel | 0 | 0 | 0 | 0 | 0.0 | |||||||||||||||||||
| Rest of EMEAA |
Hardrock | 4 | 3 | 0 | 3 | 0.7 | ||||||||||||||||||
| Sand&Gravel | 8 | 11 | 5 | 16 | 1.7 | |||||||||||||||||||
| SCA&C: |
||||||||||||||||||||||||
| Colombia |
Sand&Gravel | 8 | 1 | 32 | 33 | 0.1 | ||||||||||||||||||
| Panama |
Hardrock | 0 | 0 | 0 | 0 | 0.0 | ||||||||||||||||||
| Others | 0 | 0 | 0 | 0 | 0.0 | |||||||||||||||||||
| Caribbean TCL |
Hardrock | 2 | 8 | 12 | 20 | 0.6 | ||||||||||||||||||
| Sand&Gravel | 2 | 0 | 4 | 4 | 0.5 | |||||||||||||||||||
| Dominican Republic |
Hardrock | 1 | 18 | 0 | 18 | 0.0 | ||||||||||||||||||
| Rest of SCA&C |
Sand&Gravel | 3 | 0 | 2 | 2 | 0.0 | ||||||||||||||||||
| Cemex Consolidated |
Hardrock | 88 | 1,841 | 539 | 2,380 | 71.2 | ||||||||||||||||||
| Sand&Gravel | 150 | 683 | 270 | 953 | 41.3 | |||||||||||||||||||
| Others | 3 | 5 | 15 | 19 | 0.2 | |||||||||||||||||||
| Totals | 241 | 2,529 | 824 | 3,353 | 112.6 | |||||||||||||||||||
| (1) | Country indicates location unless otherwise noted. |
| (2) | Our aggregates quarries for our operations in the United States include one quarry located in Canada. |
| (3) | Although Cemex, S.A.B. de C.V. consolidates CHP into its consolidated financial statements under IFRS, as of December 31, 2023, we did not control the raw materials used in our operations in the Philippines. Such raw materials were primarily supplied by ALQC and IQAC. As of December 31, 2023, ALQC was wholly owned by Impact Assets Corporation, which is a corporation in which we owned a 40% equity interest. As of December 31, 2023, IQAC was wholly owned by Albatross Holdings, which is a corporation in which we owned a 40% equity interest. Values presented for properties on the Philippines have not been prorated by the 40% interest. |
| (4) | Figures for Reserves and Resources are rounded. |
| (5) | Our 2023 aggregates resources and reserves were estimated based on an average sales price during 2023 for aggregates of $16.2 per ton, excluding freight. This price is impacted by product mix, location, and exchange rates. |
| (6) | Resources and reserves are reported excluding expected wastes, meaning its best estimation of final usable/salable material. |
| (7) | The number of quarries may include sites in exploration stages. |
See “Item 4—Information on the Company—Our Corporate Structure” for further details on our processing plants, other available facilities and operations.
Internal Controls on Production Activities and Associated Information
Cemex has implemented controls and procedures designed for quality assurance and quality control on the Company’s production activities and associated information for the estimation of mineral resources and reserves.
The quality assurance and quality control measures are applied to exploration, quarry production and cement plant processing activities. Cemex applies industry standards to evaluate the reliability of laboratory results that analyze exploration samples used in calculating mineral resource and reserve estimates, which are then analyzed and verified annually by other business units within the Company, jointly with the associated regional technical managers, once such information is available. Qualified persons and experts also verify the data resulting from analysis prior to using it in their work.
Additionally, Cemex has implemented internal controls designed for its mineral resources and reserves estimates to be compliant with Regulation S-K 1300 requirements, including the preparation of resources and reserve estimates by qualified persons and experts on the matter in the different locations where Cemex operates.
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Our Vision
Cemex has a general vision and value creation model comprised of the following six elements: (i) purpose, (ii) values, (iii) strategic priorities, (iv) operating model, and (v) stakeholders.
PURPOSE. Our purpose is to help the world reach the next frontier of sustainable living.
VALUES. We strive to: (i) foster a common principle of care that extends to life inside and outside of work to protect the health and safety of our stakeholders; (ii) focus on our customers by aligning ourselves closely with their business and their needs and, following through with our commitments, resolving problems quickly and making it easy to do business with us; (iii) act with integrity by adhering to high ethical standards and best practices in corporate governance that exceed simple compliance with laws and regulations; (iv) work as one Cemex by leveraging our collective strength and global knowledge to share best practices, replicate good ideas and collaborate across boundaries; (v) foster innovation by embracing creativity, experimentation, and transformation in line with industry leadership in the digital journey; and (vi) embrace diversity by integrating different backgrounds and perspectives, capturing the value that these experiences and ways of thinking bring to Cemex.
STRATEGIC PRIORITIES. To achieve our purpose, our strategy is to create value and deliver sustainable growth by building and managing a global portfolio of cement, ready-mix concrete, aggregates and Urbanization Solutions businesses. Our five strategic priorities, in no particular order, are (i) Health and Safety (“H&S”), (ii) Customer Centricity, (iii) Sustainability, (iv) Innovation, and (v) Operating EBITDA Growth.
During 2023, we continued to advance our corporate strategy. For example, we achieved a leverage of 2.06x, reaching three years in a row with a leverage ratio below our expectations at the start of the year, with a total debt plus other financial obligations reduction of $661 million during 2023; and as of December 31, 2023, a reduction in CO2 emissions of 33% compared to our 1990 baseline. As a result of the progress made, we now look to accelerate our bolt-on growth strategy, setting a sustainable shareholder return policy and further strengthening our capital structure. After obtaining investment grade credit ratings in March 2024, we intend to not only maintain but to continue or improving our ratings going forward.
During 2023, as a result of our financial strategy and our operating results, we reduced consolidated net debt, as defined in the Credit Agreements, by $733 million and decreased our leverage ratio, as calculated under the Credit Agreements, by 0.78x to 2.06x. In addition, to further fortify our balance sheet, we continue to be focused mainly on the following three initiatives, while at all times remaining committed to building a better world and helping alleviate some of the biggest challenges communities are facing today: (i) growing our Operating EBITDA through further
cost-reduction efforts, operating efficiencies, customer-centric commercial strategies across all our core businesses and strategic growth investments; (ii) maximizing our free cash flow, which is expected to be used mainly for bolt on investments, return to shareholders and debt reduction; and (iii) continuing to execute selective accretive divestments by selling what we believe are non-essential assets, which could allow us to free up more free cash flow.
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Health and Safety
H&S remains our top value and priority. We are working towards developing a culture within which everyone in our organization embraces H&S. We believe that the health and safety of our employees, contractors, and the people we interact with in our local communities on a day-to-day basis is of the utmost importance.
To help us meet our goals, we focus on three areas: (i) our Zero4Life initiative, pursuant to which we strive for a work environment with zero injuries; (ii) promoting a H&S culture under standardized global programs that foster a common principle of care across our operations in all geographies; and (iii) procuring the global well-being of our employees inside and outside of work by supporting them in caring for their emotional and physical health, financial fitness and workforce experience.
Our Global Health and Safety Policy is the cornerstone of our Health and Safety Management System (“HSMS”) and sets out clear expectations for our leaders and workforce to carry out their activities in a safe manner and to care for the well-being of our employees, contractors and other people with whom we interact. Additionally, it sets expectations and reinforces communication with suppliers, performance reports, and incident investigations. The HSMS is our main tool to establish performance requirements and goals for our operations by helping us assess potential risks and plan the measures needed to mitigate them in a coordinated manner. The HSMS is designed to empower our leaders to implement a successful health and safety strategy across our operations and guides us on how to adequately allocate resources to training programs for our employees. Furthermore, our line managers utilize our HSMS on an ongoing basis to make an annual review of further improvement opportunities and to formulate annual Health and Safety Improvement Plans. Operations with implemented HSMS can achieve external certification according to the ISO
45001 standard.
We are constantly working towards our ultimate target of zero injuries worldwide, evidenced by our Zero4Life objective. In 2023, our employee Lost Time Injuries (“LTI”) frequency rate increased slightly to 0.6. However, we are working toward reducing this rate to 0.2 by the end of 2025. Our employee Total Recordable Injuries (“TRI”) frequency rate increased to 2.7, and we expect to reduce this rate in 2024. The number of contractor LTIs decreased by 31% when compared to 2022, contractor TRIs decreased by 16% in 2023. We continue to work on health-related actions to achieve a reduction in our employee sickness absence rate, which decreased by 11% in 2023.
In 2023, we had four fatalities when considering third-party, contractor and employee fatalities, one more than in 2022. The number of employee fatalities remained the same. Our figures are aligned with the Global Cement & Concrete Association’s (“GCCA”) guidelines and guidance. We also continued to make progress in most countries, as 96% of our operations achieved zero fatalities and LTIs of employees and contractors.
In 2023, we continued to leverage digital technologies to advance our health and safety efforts. We have explored using artificial intelligence aiming to enhance and optimize safety, along with other innovative strategies, including mobile and digital solutions and process improvements, virtual reality training in real and controlled environments, using drones to anticipate and mitigate risks, safety assistance systems, and telematics data. As of December 31, 2023, 99% of our vehicles in Mexico had geofencing and telematic data. We will continue to work hard and drive forward with our initiatives so that our employees and contractors understand the importance of and become integral to our H&S culture.
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The following table sets forth our performance indicators with respect to safety by geographic location as of December 31, 2023, in accordance with the GCCA’s guidelines and guidance:
| Mexico | United States |
EMEAA | SCA&C | Total Cemex | ||||||||||||||||
| Total fatalities, employees, contractors and other third parties (#) |
1 | 1 | 2 | 0 | 4 | |||||||||||||||
| Fatalities employees (#) |
1 | 1 | 1 | 0 | 3 | |||||||||||||||
| Fatality rate employees(1) |
0.6 | 1.1 | 0.9 | 0 | 0.7 | |||||||||||||||
| Lost-Time injuries (LTI), employees (#) |
34 | 15 | 7 | 7 | 63 | |||||||||||||||
| Lost-Time injuries (LTI), contractors (#) |
14 | 2 | 9 | 9 | 34 | |||||||||||||||
| Lost-Time injury (LTI) frequency rate, employees per million hours worked(2) |
0.7 | 0.7 | 0.3 | 0.5 | 0.6 | |||||||||||||||
| (1) | Incidents per 10,000 employees in a year. |
| (2) | Working hours are directly measured and/or obtained using recognized industry methods. |
At Cemex, training is a key part of our strategy to achieve our Zero4Life commitment. We continuously revise and seek to improve our training programs and strive for all our employees to possess the correct knowledge, skills, and experience to perform their jobs safely.
As part of our training program, executives, line managers, and supervisors must complete our Health and Safety Academy, designed to enhance their leadership skills in relation to our Health and Safety number one value and priority across our organization. The Health and Safety Academy was launched in 2016 with our Foundation Module, which prepares our line managers to lead by example and play a fundamental role in ensuring safety throughout our operations. Launched in 2017, Module 2 enables our line managers to utilize our HSMS tool to help achieve our Zero4Life commitment in their operations. Module 3, deployed in 2018, is designed to enhance the health and safety proficiency of our line managers in key topics. In 2023, more than 6,300 employees participated in the Cemex Health and Safety Academy, with over 91,000 hours of training.
In 2021, due to restrictions on face-to-face meetings, we strengthened our Health and Safety Academy training to address the new pandemic and epidemics element in our HSMS tool through Cemex University’s self-learning platform. During 2022, following our implementation of Behaviors That Save Lives, we restarted our in-person Health and Safety Academy sessions in EMEAA, Mexico, SCA&C, and the United States covering an audience of over 2,000 learners. This effort focused not only on training employees but also on developing new trainers. To support this effort, we enhanced our 360-assessment, which is a crucial element of the Health and Safety Academy, and translated it into nine languages. We expect to deploy the 360-assessment across the regions in which we operate.
We developed an online course focused on the principles of Visible Felt Leadership. This learning experience has been deployed globally across our operations as a tool to help continually develop our leaders from a health and safety standpoint. In 2023, approximately 7,000 leaders were trained in the Visible Felt Leadership online course.
In 2023, we continued implementing our Cemex Wellbeing Model to serve as a common framework for all our operations worldwide. This Model is helping to create a unified approach and a solid base to improve our wellbeing offering. We have developed a gap analysis tool to assist our operation teams when they need to define action plans for implementing the model. The initiative will be supported by medical professionals from our Global Health Forum of experts. Activities are focused on the four pillars of our Wellbeing Model: emotional health, physical health, financial fitness, and workforce experience. All activities included in the Cemex Wellbeing Model are designed to reduce the prevalence of health risks and encourage employees to live a healthy lifestyle both inside and outside the workplace.
As part of our Contractor Health and Safety Verification Program, in 2023, we surpassed our goal of evaluating health and safety practices of at least 85% of our procurement contractors spend, reaching 93%. To achieve this goal, we engaged our operations in different countries and worked closely with our Health and Safety Functional Network made up of national health and safety specialists.
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Customer Centricity
Cemex is dedicated to helping our customers succeed and our efforts are focused on what success means to them. We are passionate about finding new ways to inspire and satisfy them by innovating around their needs to surpass their expectations in every interaction. Through our One Cemex Commercial Model, we aim to provide our customers with a superior omnichannel experience everywhere and every time, and are creating new opportunities to serve them better. In 2023, we focused on four key efforts:
(1) Smart Service Centers
Since 2021, we set a goal to provide our customers with a frictionless, consistent, and personalized omnichannel experience to deliver fast responses to their needs. Our Smart Service Centers aim to leverage cost efficiencies and unleash revenue growth potential, while improving our customers’ experience across geographies and within each of our customer segments. We are continuing to evolve our service centers to support a seamless and integrated digital customer experience.
(2) A Robust Voice of The Customer Program
We have been using Bain & Co.’s Net Promoter System® to gather, manage, and act on customer feedback. The Net Promoter Score (“NPS”) is a key experience indicator used to measure our customers’ loyalty across all of our business units since 2018. In 2023, we achieved an outstanding annual global NPS result of 70, significantly above the Retently 2023 NPS benchmark of 60 for the construction and engineering industry and reaching our 2030 NPS target of 70, which we updated from 60 to 70 in 2021.
This Net Promoter System® allows us to transform our customers’ feedback into actionable improvements, leverage enhanced analytics to better understand them, and develop insights to design more targeted, data-based value propositions for them. In our ongoing efforts to address service challenges experienced by our customers, we established service committees over five years ago across our operations, gradually expanding their presence to all our regions by 2023. These committees facilitate improved two-way communications with customers. Following the evaluation of customer feedback, local multidisciplinary teams implement initiatives to enhance customer service and address specific requests. Additionally, select customers participate in research activities, providing valuable feedback to co-create innovations within Cemex.
(3) An Empowered Sales Force
The Cemex University Commercial Academy, a continuous global learning experience, prepares our sales force worldwide to become trusted advisors for our customers, helping them achieve their sustainable construction goals.
Our Academy’s employee-driven LEAP program empowers our sales force with specialized masterclasses focused on sustainable construction, supporting our goal of achieving net zero CO2 by 2050. The program provides a tailored learning experience for our commercial advisors and managers, helping us further align our teams with our customer-centric mindset. In 2023, we introduced three new masterclasses for our global sales force to increase their knowledge of sustainable construction trends. More than 1,900 advisors and managers have participated in this continuous learning program.
As part of our customer-centricity practice, we recognize excellence and best practices adopted across our business units that lead to a superior customer experience. In 2023, we celebrated our Company’s customer-centric culture and commitment toward our customers at Cemex’s third Customer Experience Day.
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(4) Cemex: A Digital First Company
Our digital first commitment indicates that we are going beyond our commercial processes to digitally enable all aspects of our business. Our goal is to establish an unparalleled omnichannel experience.
Cemex Go is our flagship digital solution that provides better services through digitalization. From our operation, including production and supply chain, to our administration and support services, we have digitized our customer-facing processes. Today, Cemex Go covers all customer transaction needs, helping us deliver a superior customer experience while making us a more efficient company. As of December 31, 2023, more than 60,000 customers across 19 countries, have been onboarded to our Cemex Go Online Store, and we received approximately 60% of our global orders processed through Cemex Go.
(4)(a) Leading the Industry’s Digital Transformation through Cemex Go
Cemex Go Acceleration
Cemex has created its Acceleration program to achieve total digital adoption among customers. By improving functionality and systems integration, and developing new tools in the Cemex Go Online Store, the program aims to achieve the goal of providing our customers with the best digital experience, and in parallel provide full automation of our internal processes, practices and competences. Currently deployed in the Houston region as a pilot, the Acceleration program has increased from 48% to 60% adoption as of December 31, 2023. With confirmation that we are moving in the right direction, we will initiate the program throughout all U.S. regions and the United Kingdom in 2024.
Ready-Mix Revamp
Cemex’s new digital solutions allow customers to manage their ready-mix orders, including their online confirmation and real-time tracking via the web and mobile platforms. Customers now have autonomy throughout the journey of their ready-mix orders.
Going Paperless
We have been encouraging the digitalization of internal and customer processes to minimize the use of paper. As of December 31, 2023, approximately 84% of our invoices are delivered in a fully digital manner, putting us on track to achieving our global paperless goal.
(4)(b) Cemex Go Link
Cemex Go Link allows customers to interact directly with our systems via digital platforms and Application Programming Interfaces (“APIs”). By allowing for communication between systems, Cemex Go Link helps customers from 11 countries reduce operating costs, optimize internal processes, and automate tasks such as orders, invoices, and payments.
(4)(c) Cemex Go CRM: The Digital Ally for Customer Relationship Service
Cemex Go Customer Relationship Management (“CRM”) is our commercial advisors’ main digital tool that helps them manage customer relationships more efficiently and systematically. Currently available in multiple geographies, we continue upgrading the tool and releasing new features to increase its global presence and reinforce best practices. Cemex Go CRM for Sales helps commercial teams save time planning and managing daily activities by personalizing customer follow-up activities such as demand planning. We have also integrated Artificial Intelligence (“AI”) that optimizes our commercial team’s efforts through data-driven insights.
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(4)(d) Buying Construction Materials in the Digital Age
Construrama.com is the e-commerce solution for Construrama, the largest building materials distribution network in Mexico. Today, more than 300,000 online users can purchase more than 51,500 SKUs via website or app.
Our Virtual Storefront (“VSF”) designated for professional self builders seeks to deliver a seamless ready-mix experience that guides customers to select the right concrete products, place orders and pay online. VSF is currently available in the United States, the United Kingdom, Mexico and Colombia. VSF reached a 73% adoption rate in 2023, thanks to the Houston Acceleration project. This project aims to increase customer satisfaction and reduce the cost-to-serve by promoting the digital adoption of Cemex Go, using a two-pronged approach: (i) through closer contact with important customers, to ensure we cover their specific needs, and (ii) by integrating Cemex’s IT systems for full visibility across the supply chain, to offer more agile business processes. We intend to expand these efforts in our new storefront “Cemex Direct” which focuses on the Bay Area.
Cemex is also leveraging AI to enhance customer service across touchpoints, streamlining transactions for a seamless user experience. Our platforms capture customer interactions, which allows us to constantly provide service enhancements. An AI driven visibility app holds personalized conversations by identifying customers and providing customized responses and solutions. Intelligent routing boosts productivity, directing customers to proper support staff to resolve issues. Beyond service, AI drives our dynamic pricing engine, adjusting prices in real-time based on market conditions. Our AI platform delivers personalized, efficient, and data-driven solutions.
Sustainability
Our sustainability efforts begin with Cemex, S.A.B. de C.V.’s Board of Directors and are then facilitated across our entire organization. During 2023, Cemex, S.A.B. de C.V.’s Sustainability, Climate Action, Social Impact, and Diversity Committee was comprised of four members, appointed by Cemex, S.A.B. de C.V.’s shareholders, of Cemex, S.A.B. de C.V.’s Board of Directors. This committee reports directly to Cemex, S.A.B. de C.V.’s Board of Directors and is supported by our Vice President of Global Sustainability. To help embed sustainability into our entire business strategy, we have coordinators representing each geographical region where we operate. In parallel, our Global Sustainability Functional Network works to implement our core sustainability initiatives across all our operating regions and business lines. The members of the committee as of the date of this annual report were elected at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting on March 22, 2024. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
Our Climate Action Strategy. In 2020, we announced that we would move ahead with our Climate Action Strategy and continue advancing towards our vision of a carbon-neutral economy. At the time, we defined a 2030 reduction target of 35% of net CO2 emissions per ton of cementitious product compared with our 1990 baseline, established our ambition to deliver net-zero CO2 concrete globally to all our customers by 2050 and developed a detailed CO2 roadmap for each of our manufacturing plants aligned with a 2°C scenario.
In 2020, we announced our “Future in Action” climate action program focused on developing lower-carbon products, solutions and processes while increasing sustainability awareness and promoting a green economy. Under “Future in Action”, we have accelerated our efforts to decarbonize and set new ambitious goals of a 35% reduction of Scope 1 CO2 emissions in cement compared to our 1990 baseline, to achieve a 40% reduction of CO2 content in concrete compared to our 1990 baseline, increasing our alternative fuels usage to more than 50% of our total fuel mix, reducing our clinker factor to 71% and reaching 55% in clean electricity consumption, all by 2030.
In 2022, as a result of our better than anticipated decarbonization performance in 2021, we set new more ambitious CO2 emissions reduction targets for 2030, aligned with the 1.5° scenario of the SBTi: (i) achieve a 47% reduction of Scope 1 CO2 emissions in cement
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in comparison to our 1990 baseline, (ii) achieve a 41% reduction of CO2 content in concrete in comparison to our 1990 baseline, (iii) increase our use of alternative fuels to more than 55% of our total fuel mix, (iv) reduce our clinker factor to 68%, and (v) reach 24 kg CO2 per ton of cementitious product in Scope 2 CO2 emissions. In addition, we defined new targets for the main categories in our Scope 3 CO2 emissions which include a 25% reduction in kg CO2 per ton of purchased clinker and cement; 30% reduction in kg CO2 per ton of transported products; 40% reduction in kg CO2 per ton of purchased fuels; and 42% reduction in absolute CO2 tons of traded fuels, all these reductions in scope 3 emissions when compared to our 2020 baseline. Also, in 2022, we validated our 2050 net-zero CO2 target and new 2030 decarbonization goals under SBTi’s 1.5ºC scenario methodology, becoming one of the first companies in the industry to do so. As a result, our GFF and SLFF were updated in 2023 to align with these goals. Most importantly, these goals should keep us on the right path to achieving our expected objective of net-zero emissions across the company by 2050. As of the end of 2023, we reduced our direct CO2 emissions to 541 kg CO2 per ton of cementitious product, which represents a 33% reduction compared to our 1990 baseline and is in line with how our industry measures progress on reducing net CO2 emissions.
To achieve our 2030 goals, we have updated our detailed CO2 roadmap for each of our manufacturing plants to accelerate the rollout of proven technologies worldwide. Our roadmap is mainly based on the following CO2 reduction levers: (i) increasing the use of alternative fuels with high biomass content, rather than conventional fossil fuels, (ii) reducing clinker factor in our cement, (iii) increasing the use of decarbonated raw materials in clinker, (iv) optimizing thermal efficiency in our kilns, and (vi) decarbonizing our global vehicle fleet.
In 2023, Cemex reduced its clinker factor by 1.4% to 72.3%. Additionally, as of December 31, 2023, 50% of our clinker production utilized hydrogen injection technology and we reached an alternative fuel substitution rate of 36.8%.
The technology we must implement to achieve our 2050 ambition is still in the early stages of development, setting an open path for innovation that requires continuous work in our Research and Development Center, new investments by Cemex Ventures, the formation of strategic partnerships, and cross-industry collaboration. Nevertheless, we anticipate working towards our 2050 ambition, pushing further our 2030 CO2 reduction cement levers and developing new technologies such as carbon capture, utilization, and storage, as well as other innovative solutions, such as concentrated solar thermal power to drive clinker production and CO2 mineralization, among others.
Furthermore, to reinforce our commitment with climate action, we have signed the Business Ambition for 1.5°C commitment led by the We Mean Business Coalition in partnership with the SBTi and the U.N. Global Compact, joined the Race to Zero Campaign of the United Nations Framework Convention on Climate Change (the “UNFCCC”) launched to mobilize net-zero commitments from cities, businesses, and investors ahead of the 2021 United Nations Climate Change Conference (“COP26”), joined the Corporate Leaders Group Europe convened by the Cambridge Institute for Sustainability Leadership in support of a climate neutral economy, and are founding members of both the First Movers Coalition launched at COP26 by the World Economic Forum and the U.S. State Department and of the U.N. Global Compact CFO Coalition for the Sustainable Development Goals, which provides a platform to interact with peers, investors, financial institutions, and the United Nations with the aim of attracting more capital towards sustainable development. Cemex had a strong presence at the 2023 United Nations Climate Change Conference (“COP28”) in Dubai. In that forum, Cemex joined the Industrial Transition Accelerator that aims to catalyze decarbonization across heavy-emitting sectors and accelerate the delivery of Paris-aligned targets.
Pursuing Excellence in Sustainability Management. We believe the pursuit of excellent practices benefits sustainable growth. In addition to Cemex, S.A.B. de C.V. Board of Directors’ Sustainability, Climate Action, Social Impact, and Diversity Committee, our sustainability executives responsible for each of our operating regions share new trends, proposals and best practices to identify, inform, and tackle key environmental management and social concerns.
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We are committed to contributing to climate change mitigation. For years, as part of our carbon emissions reduction strategy, we have focused on using low-emission alternatives to traditional fossil fuels, decreasing our clinker factor, promoting clean energy and increasing energy efficiency across our operations. To this end, we have continuously sought to increase our use of low carbon alternative fuels, which represented 36.8% of our total fuel mix in 2023, and generated approximately $345 million in cost avoidance including fossil fuels costs and CO2 emissions avoided in carbon regulated markets.
As a result of our efforts, in 2023, the reduction of our specific Scope 1 CO2 emissions per ton of cementitious products by 33% compared to our 1990 baseline and our increased use of clean electricity led to reductions equivalent to the annual emissions generated by 2.8 million passenger vehicles driven in a year. We actively seek to develop new technologies to reduce our carbon footprint. Most notably, as of December 31, 2023, we are participating in more than 220 disruptive projects in the pipeline across our value chain to assess potential CO2 emissions reduction solutions as well as carbon capture, utilization and storage technologies. Furthermore, we explore alternatives to traditional clinker and cement chemistry that enable the production of less CO2-intensive cements.
To complement these technical measures, we participate in several forums and bilateral dialogues with key stakeholders. These activities are designed to disseminate knowledge about potential reduction measures in our sector and to promote a legislative framework that enables us to implement these measures. As an example, we have a long history of contributing our best practices through our work with the Cement Sustainable Initiative (“CSI”). The work done in CSI was transferred as of January 1, 2019 to the GCCA.
We have the expertise to responsibly source, process, store and recover energy from alternative fuels and we believe that increasing co-processing residues from other sectors in our cement plants will further contribute to overcoming challenges such as climate change, waste management and fossil fuel depletion, while utilizing the principles of a circular economy.
Our key contribution to a circular economy is our transformation of waste streams from other sectors into valuable materials. In 2023, mainly through Regenera, our new global waste management business, we repurposed approximately 28 million tons of waste in our business, including alternative fuels and raw materials, alternative/secondary aggregates, own recycled material in our main businesses and other waste managed by the company. This is about the same amount of waste collected across England during the year. By 2030, we aim to increase this to 41 million tons with a focus on municipal and industrial waste; construction, demolition, and excavation waste; and other waste and industry by products. Regarding our own waste, to reduce most of the waste generated from our processes, we maximize our reuse of clinker kiln dust in our production loop, largely avoiding landfill disposal.
In 2023, we were recognized by Carbon Disclosure Project (“CDP”) on its prestigious A list for transparency on climate change disclosures. Additionally, we expect to continue to proactively enhance our disclosures on sustainability-related matters and to comply with upcoming regulations and requirements that, as of the date of this report, Cemex is not required to report under, including the EU Corporate Sustainability Reporting Directive (“CSRD”), EU Corporate Sustainability Due Diligence Directive (“CS3D”), UK Sustainability Disclosure Standards, and UK’s Commercial Organizations and Public Authorities Duty (Human Rights and Environment) Bill, among others.
Cemex Environmental Management System (“EMS”). We use EMS to evaluate and facilitate consistent and complete implementation of risk-based environmental management tools across our operations. The EMS consists of key mechanisms for environmental performance enhancement and impact assessment, stakeholder engagement and accident response based on input from a range of environmental and biodiversity specialists.
As of December 31, 2023, 91% of our operations had implemented either the EMS or equivalent programs. As we approach full implementation of our global EMS, our goal is for all of Cemex’s operational facilities to be 100% compliant with our internal environmental criteria.
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The release of nitrogen oxides, sulfur compounds and particulate matter occurs during cement manufacturing. Other emissions, including dioxins, furans, volatile organic compounds and other heavy metals, are released in very small quantities. To control our stack emissions and assist us in remaining compliant with local and national regulations, we have steadily expanded emissions monitoring at our manufacturing operations even exceeding regulation requirements in many geographies.
Through our internal EMS and more specifically through our Atmospheric Emissions Global Procedure, we monitor major emissions which assists us with our compliance with local regulation limits. In 2020, we launched a new industry-benchmark online tool that allows operators and management teams to closely analyze major emissions, improve monitoring abilities from kilns with a Continuous Emissions Monitoring System installed, and strengthen emissions performance. To further improve upon these efforts, we have updated the minimum performance levels to fulfill annually for major emissions. In addition, we are working on establishing more stringent environmental standards for air emissions that are expected to be based on EU “Best Available Techniques.”
In 2023, we invested $150.3 million in sustainability related projects at our global operations, including projects to monitor and control our air emissions, increase our operations efficiency and mitigate our carbon footprint through alternative fuels and clinker substitution efforts.
Our Environmental Incidents Management. We consistently work to minimize our environmental impact, and we believe we are generally prepared to respond to emergencies that may pose a potential threat to our operations and local communities: (i) we work with our neighbors, law enforcement officials, public agencies, and other stakeholders to develop contingency plans at each of our sites; (ii) we created emergency response teams that are specifically trained to address environmental incidents and hold annual emergency drills; and (iii) we consistently record and report incidents at every level of our business to identify recurring root causes and to share corrective actions.
Our Global Environmental and Social Incident Reporting Process enables our sites to maintain a proactive approach to respond to emergencies that could potentially impact our communities or our operations. The application of this reporting procedure requires a timely registration of environmental and social impact events, identification and analysis of the root causes, and the implementation of corrective and preventive action plans as a first step toward avoiding their occurrence and reducing their severity. In 2023, our total reported incidents decreased by 11%, which is consistent with our permanent efforts for risks monitoring and transparency. There were no category 1 environmental events (major) registered in the year.
Preserving Land, Water and Biodiversity. The preservation of land, biodiversity and water plays a key role in our long-term resource management strategy.
To protect water and enable our business to succeed, we are increasing our water efficiency and minimizing our water waste through the implementation of our Corporate Water Policy. This policy includes standardization of our water measurement based on the water protocol developed in coordination with the International Union for Conservation of Nature. We also have the goal of developing a specific Water Action Plan (“WAP”) comprised of a customized set of response actions to maximize water use efficiency and mitigate specific water risks for each community by adopting recommendations based on the Water Risk Filter tool from the World Wildlife Foundation, for each one of more than 1,500 of our cement, ready-mix concrete and aggregates sites in water- stressed zones. Results indicate that 16% of our operations are in high water-stressed zones. In line with our 2030 targets, we plan to develop a specific WAP and follow the implementation roadmap for each of these sites. As of December 31, 2023, we implemented WAPs in 30% of our sites located in high water-stressed zones.
Improving Quality of Life and Well-being. As a company that aims to make a progressive positive impact through its innovative services and solutions, our ability to operate as a responsible business is fundamental to our business
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model. This enables us to understand stakeholders’ material issues, map social impacts, and identify risks and opportunities to create shared value for us and society.
Complementary to our sustainability initiatives, our high impact social strategy directly contributes to our vision of seeking to build a better future and aims to create value, understand our stakeholders’ expectations by managing our impacts and contribute to the quality of life and well-being of the cities and communities where we operate through four focus areas:
| • | People. We provide community members with access to education and workplace training, aiming to enable inclusive, long-term upward mobility. |
| • | Economy. We assist organizations and individuals in developing sustainable development and entrepreneurship skills to foster a sustainable economy and lay the groundwork for a just transition. |
| • | Structures. We leverage our expertise and quality building materials, aiming to improve housing and essential infrastructure standards in the cities and communities where we operate. |
| • | Cities. We seek to contribute to resilient and equitable communities, emphasizing the development of green spaces, services, and infrastructure to harmonize the natural and built environments. |
Although our social projects focus on leveraging our core business expertise to create value and enhance well-being, we believe that we also contribute positively to addressing other global challenges. Thus, consistent with our commitment to the United Nations Sustainable Development Goals, we measure our progress and contributions towards specific goals.
Sustainable Finance. In 2021, Cemex released its original SLFF, one of the most comprehensive in the building materials sector, enhancing alignment between corporate sustainability commitments and financing strategy. This framework outlines principles for issuing various sustainability-linked financing instruments, including bonds, private placements, loans, and derivatives. In 2022, Cemex launched its GFF, which facilitates the issuance of bonds, loans, and other debt-like instruments for eligible green projects. Both frameworks were updated in 2023 to support our more ambitious decarbonization goals, validated by the SBTi for alignment under their 1.5°C scenario, the most ambitious pathway defined for the cement industry. This latest update of the GFF expands eligibility criteria to incorporate innovative projects such as carbon capture, utilization, and storage (“CCUS”) technology, crucial for achieving net-zero CO2 emissions.
Developments related to sustainability-themed funding in 2023 include:
| • | Updating both our SLFF and GFF to align them with Cemex’s more ambitious 2030 decarbonization goals; |
| • | Closing the refinancing of our sustainability-linked Amended 2021 Credit Agreement, which now consists of a US$1 billion term loan and US$2 billion committed revolving credit facility; |
| • | Issuing Ps 6,000 million in sustainability-linked 2023 CEBURES. This transaction represents Cemex’s return to the Mexican debt capital markets after a 15-year hiatus; |
| • | Closing the refinancing of our sustainability-linked Mexican Peso Banorte Agreement for Ps 6,000 million; |
| • | Linking our accounts receivable securitization programs to our SLFF; and |
In 2023, we also issued US$1 billion of our 9.125% Subordinated Notes, the net proceeds of which we intend to use to finance or refinance eligible green projects as per our GFF.
Attracting and Retaining Talent. Our employees are our competitive advantage and the reason for our success. We aim to offer programs, benefits and a work environment that are designed to attract and retain talented employees.
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Our approach to talent management is founded on three pillars: (i) employ the right people, in the right place, at the right time to perform the right job to achieve our strategy; (ii) enable a high-performing and rewarding culture to deliver sustainable business value in a safe, ethical workplace; and (iii) build and develop our workforce capabilities to confront challenges and pursue excellence.
As we transform and look to expand, one of our main objectives is to develop people with the potential to fill key leadership positions, increasing their experience and capabilities with the intention of having them succeed in increasingly challenging roles. Through this process, we make efforts to help our employees meet their career development expectations and prepare them for key roles as they face critical challenges in their professional development. Our succession management process enables us to build a talented pool of leaders with the skills and understanding of our business fundamentals required to continue the successful implementation of our strategy. Through ongoing training and development opportunities, our employees are taught new skills and their expertise is deepened in several critical areas, including H&S, customer-centric capabilities, environmental conservation, and awareness, leadership development, and stakeholder engagement.
We look to foster a dynamic, high-performance environment where open dialogue is encouraged and rewarded. Apart from competitive compensation, more than 82% of our global workforce receives health and life insurance benefits beyond those required by local law in their respective countries. Approximately 76% of our global workforce receives retirement provision benefits above local requirements and more than 77% of our operations receive additional funds for disability and invalidity coverage beyond what is required by local laws in their respective countries.
In 2017, we introduced Cemex University, which aims to develop a digital continuous learning ecosystem for our employees and respond to our multi-region, multi-business learning needs. Cemex University leverages traditional in-person training with new digital learning platforms to embed a growth mindset throughout our organization and fulfill our employees’ potential. Today, Cemex University’s learning portfolio comprises of seven academies and a suite of leadership development programs, reaching 18,442 employees in 2023.
Through our Health & Safety, Cement Operations, Culture & Values, Supply Chain, Commercial, Sustainability and Digital Academies, Cemex University develops business capabilities among our people to support Cemex’s strategy. An example of this is our Award-Winning program LEAP, which in 2021 and 2022 released 13 modules in eight languages and a podcast, to help Sales Advisors better understand successful commercial interactions and our new commercial model. During this time, Cemex University also introduced a new Sustainability Academy and three new modules for the Operations Academy providing in-depth perspectives of our production and maintenance processes, as well as our strategy to decarbonize our operation. We continue to develop continuous learning pathways on current topics such as cybersecurity and anticorruption and, during 2023, we added a new Inclusive Leadership course and an entirely new set of modules for LEAP with master classes on the topic of Sustainable Construction, among others.
Our Human Rights Policy reflects our support and respect for the protection of internationally proclaimed human rights principles, as expressed in the International Bill of Human Rights and the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work. In addition, it recognizes employees, communities, contractors, and suppliers as main areas of impact and reaffirms our commitment to the promotion of and respect for human rights throughout our worldwide operations, local communities, and supply chain. This includes providing a workplace that is free from harassment and discrimination on the basis of race, gender, national origin, sexual orientation, disability and membership in any political, religious or union organization and, as reaffirmed in our Global Recruitment Policy launched in 2020, offering equal opportunities for training, personal development, individual recognition and promotion on the basis of merit. Employees who believe that there may have been a violation of the principles laid down in our Human Rights Policy can report it through various channels, including local Human Resources departments, Ethics Committees and our secured ETHOS line internet website. Community members, contractors and suppliers are also encouraged to submit a report through the ETHOS line if they believe there may have been a violation of our Human Rights Policy or any other guideline as stated in our Code of Ethics and Business Conduct.
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Our four Leadership Development Programs-Connect, Thrive, Ignite and Leader-to-Leader, allow us to provide new managers, newly appointed directors, and top-tier executives the foundational knowledge and necessary tools to support a successful transition and development in their roles. In 2023, 209 leaders across all our regions and business units participated in these programs, and 57 Leader-to-Leaders provided them a unique development experience, guiding them as mentors and facilitators.
In order to comprehensively measure the positive net balance of our employee experience, we build on the Employee Net Promoter Score (“eNPS”) methodology, a straightforward statistic. When asked whether they would recommend Cemex as a good place to work, our employees’ responses generated an eNPS score of 57 in 2023, higher than the global benchmark score measured by our survey provider and above our recently updated 2030 goal of 43 points. We are using this indicator to identify areas for improvement and for structuring regional, local, and team-specific action plans to address employee concerns.
Additionally, our Workforce Experience Survey helps us better understand from the perspective of our employees what organizational, digital, physical and interpersonal elements of our company require strengthening or developing so we can provide a consistently positive work experience for our employees worldwide. In 2023, over 80% of our employees worldwide participated in this anonymous engagement survey, which yielded many important findings. To allow for a faster and consistent follow-up to the insights, we not only digitized much of the survey process but also empowered our “X Force” teams, a select group of employees who lead our coordinated follow-up and implementation of action plans that have been derived from our survey results.
INNOVATION
Innovation is key to remaining at the forefront of our industry and advance in achieving our strategic goals as a forward-looking company. More importantly, it is one of the key levers in building a sustainable and profitable business in the new green economy.
Cemex’s innovation activities occur on two fronts: “Open Innovation” and Internal Research and Development (“R&D”). Open Innovation initiatives, led by Cemex Ventures, aim to monitor and identify the next generation of products and services, invest in high potential opportunities/technological breakthroughs, seek strategic collaborations, accelerate technological developments with high potential and create an ecosystem of collaboration with partners. Internal innovation is led by our Global R&D team in Switzerland, and our experts work in close collaboration with Cemex Ventures to harness R&D knowledge and experience and bring value to the Open Innovation process, as well as develop novel and alternative paths to address climate change and sustainable construction needs. A key element of Cemex’s R&D is the engagement and close collaboration with key partners and stakeholders, whether that is start-ups, universities, companies or external and internal customers.
Our Global R&D team’s technological agenda is focused on addressing climate change to support Cemex’s “Future in Action” climate program, which is built on six pillars: (i) developing sustainable products and solutions; (ii) decarbonizing Cemex’s operations; (iii) circular economy; (iv) water, biodiversity and air quality; (v) innovations and partnerships; and (vi) promoting a green economy. As a result of these efforts, in 2021 we developed a range of low embodied CO2 cement and ready-mix products under the global brand Vertua, including Vertua Lower Carbon, a range of products in our portfolio that have a lower embodied CO2 compared to a corresponding reference. For cement, the reference is 822 net kg CO2/ton of gray cement, which is the GCCA default value for gray clinker emissions, based on the world weighted average for clinker net direct emissions. For ready-mix concrete, the reference is a concrete composed of 100% Ordinary Portland Cement fulfilling the average strength of the most standard structural concrete, which is 350 kg CO2/m3. On the sustainable products and solutions front, sales of Vertua Lower Carbon products have reached 60% for cement and 52% for ready-mix concrete in 2023. Also in 2023,
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the scope of Vertua has been extended beyond Lower Carbon, and currently includes the following attributes in its value proposition: energy efficiency, design optimization, water conservation, and recycled materials. Consequently, Cemex is well positioned to offer a portfolio of products and solutions addressing as well as promoting sustainable construction practices. As of the date of this annual report, Cemex estimates that, during 2023, Vertua-branded cement represented 63% of total cement volumes and Vertua-branded ready-mix represented 51% of total ready-mix volumes, a 28% and 19% year-over-year increase, respectively.
Our focus goes beyond products. We establish meaningful targets to de-carbonize our operations and drive our CO2 footprint of concrete to net zero. Some innovations in our pipeline include novel approaches to reduce clinker factor, value creation from CO2, CO2 utilization in mineralization (carbonation) of materials (e.g., recycle concrete), technologies to repurpose waste materials to enable their reuse and recycling, and the exploration of renewable energy sources to replace fossil fuels. In 2022, one of our projects provided an example of value creation from CO2 by demonstrating that it is possible to use CO2 directly as is from the flue gases to produce carbon nano materials, which in turn have several high-value uses in the automotive, electronic, and medical fields, among others. As we previously announced, Cemex is working on using Concentrated Solar Thermal energy to entirely drive the clinker production process with renewable energy. In 2022, we produced the first-ever solar clinker. Furthermore, we are developing processes that can micronize materials that are potential clinker substitutes and we are finding that due to increased reactivity of these materials, we can expect to further decrease the clinker factor in our cement products. CCUS is another central focus of our research. We expect that approximately 30% of our total CO2 emissions may one day be reduced through CCUS. CCUS is an important part to achieve our net zero concrete strategy by 2050. We are diligently working to assess different technologies and pilot the most promising ones, taking a targeted approach. Cemex is also competing for public funds in Europe and the United States. At least 50% of such publicly funded projects are related to CCUS. Other publicly funded projects include electrification, renewable energy, waste heat recovery, circularity, and sustainable products. Additionally, through Global R&D, Cemex is actively participating in the GCCA’s innovation network Innovandi to develop pre-competitive knowledge on these very same key technologies for our industry. Collaboration among companies from different sectors of the industry is fundamental to address the challenge of climate change in unison. We have played an active role in GCCA’s Innovandi Open Innovation Challenge, which has resulted in the first six consortia between start-ups and GCCA member companies, which are formal working partnerships supported by the GCCA to accelerate groundbreaking technologies addressing CCUS. Innovation at Cemex is taking place on different fronts, processes, and initiatives that harness the most advanced knowledge and experience to support Cemex in achieving its strategic goals.
During 2023, we have been active in the integration of building information modeling technology into our interaction with customers, which provides our customers with tools that allow them to visualize the impact of our products on their projects as well as the potential time, energy, and CO2 savings from incorporating our technologies and construction solutions. By providing superior and sustainable products, solutions and services, we aim to grow from being a product-selling company to a comprehensive solutions provider.
To the best of our knowledge, as the only global building materials company that develops and manufactures its own chemical admixtures for cement, ready-mix concrete, and aggregates, we can design and develop novel, tailor-made product technologies with our proprietary chemicals. An increasing number of admixtures are being developed to enhance the performance and sustainable characteristics of our core products and solutions, such as increasing our cement strength and helping concrete to harden more rapidly, improve its flow, develop its self-curing properties and water repellency, and enable the recycling of returned concrete into aggregates. But beyond specific products or solutions, our value proposition is designed around a “Palette of Technologies” from which we can draw up new solutions based on each project’s specific and unique requirements. We expect our Urbanization Solutions core business to be well positioned to develop and grow in the performance materials market and be competitive due to the growing range of admixture products. An important development from Cemex’s admixtures R&D efforts has been
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the development of the D.fab admixture family for the 3D Printing of ready-mix concrete-a true first. With Cemex’s D.fab technology it is possible to adopt locally sourced materials, instead of bagged and very specific as well as highly expensive mortar products, to produce actual concrete for 3D printing construction at one-sixth the price of mortars. Cemex and its 3D Printing partner COBOD, manufacturers of multifunctional construction robots based on 3D printing technology, have seen a very important adoption of the D.fab technology in 2023, where 55% of the projects were printed by COBOD.
Technologies developed by our Global R&D team are protected by more than 50 international patent families and over 60 trade secrets covering new types of cement, cementitious materials, concrete mix designs, admixtures formulations, construction systems and advanced manufacturing processes. In 2023, four important new patent applications were filed in relation to “Future in Action”, namely on 3D printing, carbonation of clinker (CO2 uptake) with no impact on strength development of the corresponding cements, and electro-precipitation of sand from CO2 saturated seawater.
In addition, we have more than 40 core strategic software solutions, developed to enable new specific capabilities in Cemex’s Digital Commercial Model and supply chain, which are protected by copyrights that primarily cover online stores and order-to-fulfillment in our cement, ready-mix, and aggregates businesses. This software includes proprietary developments in machine learning and vectorized algorithms to reduce response time, reduce costs, and honor commitments made with customers, providing Cemex with cutting edge competitive advantages.
Fostering Innovation and Enabling New Business Opportunities. Since its launch in 2017, our open innovation and corporate venture capital unit, Cemex Ventures, continues to engage with startups, entrepreneurs, universities, and other stakeholders to shape the construction ecosystem of tomorrow by tackling our industry’s toughest challenges.
Leveraging our knowledge of the industry and Cemex’s leading edge technologies and platforms, Cemex Ventures develops collaboration opportunities and targets innovating partnerships and investments in the following four target areas connected to the execution of our strategic priorities, which we further subdivide as set forth below:
| • | Green Construction - CO2 capture, utilization and storage; sustainable materials; circular economy; waste management and recycling; water conservation and new energy sources and solutions. |
| • | Construction Supply Chain – Materials, resourced procurement, and marketplaces; logistic tools and materials tracking; fleet management and dispatching; last mile and delivery marketplaces; inventory management and on-site handling. |
| • | Enhanced Productivity – Project design, specification, and budgeting; planning and scheduling; project monitoring and control; document management; H&S compliance; project quality; and asset management and maintenance. |
| • | Future of Construction – Advanced building materials; 3D printing; industrialized construction (offsite, modular, and precast); robotics and machine assisted applications; and smart cities and buildings. |
Jointly with the Cemex Global R&D and other functions, Cemex Ventures also promotes the expansion of our open innovation ecosystem in search of opportunities in new construction trends and technologies, including construction materials, decarbonization and processes evolution.
Cemex Ventures’ main role is to look for strategic partnerships and investment opportunities that go beyond our core businesses, to create new businesses for Cemex and prepare Cemex for future disruptions. It also aims to identify and assess emerging technologies to bring Cemex new ideas and perceptions of the construction ecosystem. To this end, Cemex Ventures allocates resources to search, incubate, accelerate and deploy innovative construction-related opportunities and solutions.
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As of December 2023, Cemex Ventures has invested in 23 startups headquartered in 11 countries and focused on developing the aforementioned target areas within the construction industry. During 2023, Cemex Ventures invested in two new startups and two follow-on investments in its portfolio companies. Additionally, Cemex Ventures held its 2023 Construction Startup Competition with other top industry partners, seeking entrepreneurs and startups to drive innovation in the construction industry. More than 400 startups participated, closing the event with eight winners.
A significant contribution of Cemex Ventures has been the establishment of strategic collaborations with external partners to contribute to Cemex’s strategic goals in Cemex’s climate action, digitalization and Urbanization Solutions programs, strategy, and business, respectively. We have closed several agreements in collaboration with the relevant Cemex areas. Some examples are: 1) cooperation in the development and large-scale deployment of electrification technology for high-temperature heating in production sites of Cemex for low-CO2 clinker and cement production; 2) processing of waste (refuse-derived fuel) for the production of syngas and hydrogen as an energy source for our cement operations; 3) deployment of breakthrough technology to gradually scale up hydrogen injection as an energy source for our cement production kilns; and 4) development of a CO2 mineralization technology to activate different feedstocks and reduce clinker content in cement.
In addition, the Cemex Ventures’ Leaplab acceleration program was launched in 2022. The Leaplab consists of a 14-week collaboration scheme with high-potential startups aiming to catalyze their growth and enhance Cemex’s open innovation approach by timely accessing promising solutions that could generate strategic value and business opportunities for our company. The first two editions of Leaplab have facilitated connections between our global operations and 10 startups from eight countries. These solutions have been deployed through real-scale pilots across Cemex installations in 15 different countries. Value propositions from startups in Leaplab 2022 and 2023 cohorts included: solutions related to energy harvesting, tires management, industry 4.0, electromobility, decarbonization, and water security, among others. The program is also designed to expose and connect a key group of Cemex subject matter experts to Cemex Ventures open innovation platform and the wider entrepreneurial ecosystem.
In 2019, Cemex Ventures launched the “Smart Innovation” platform, aiming to coordinate and empower Cemex’s innovation model. Smart Innovation is also a vehicle to foster innovation at all levels of the organization, seeking to challenge the status quo, promote a culture of innovation within Cemex and facilitate the execution of ideas.
Through this effort, Cemex has strengthened the portfolio management process within the organization, working for initiatives to be correctly managed, and for resources to be assigned to experiment and scale up innovative solutions.
As of the date of this annual report, the Smart Innovation platform has more than 250 projects in the experimentation phase which we expect to have a direct impact on Cemex and the construction industry.
Operating EBITDA Growth
We look to operate in markets where we can add value for our employees, our customers and our shareholders. We intend to focus on those markets that offer long-term profitability and Operating EBITDA growth potential, especially around high growth metropolitan areas, leveraging those assets that are best suited to achieve this. We believe that a geographically diverse portfolio of assets, in markets, regions or cities that we believe offer long-term profitability, provides us with the opportunity for significant value creation through profitable organic growth over the medium-to-long-term. Consequently, we intend to be selective and strategic about where we remain and where we operate. We believe our business portfolio should be particularly focused on high growth metropolitan areas, primarily in the U.S., Europe and Mexico, that combine strong fundamentals, ranging from economic growth potential to strong construction investment, population growth, degree of urban development and political stability, all under the basis of sustainable urbanization. By identifying the needs of these markets and metropolises, we expect to be in a better
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position to offer a more complete value proposition of products and solutions to our clients and citizens of these markets and metropolises.
As of the date of this annual report, as part of our strategic priorities, we are undertaking actions that are designed to streamline and reposition our portfolio in order to enhance our diversification and achieve higher profitable growth. As such, we expect to rebalance our portfolio by focusing on the markets we believe offer long-term growth potential and retaining those assets that we believe are best suited to grow, offering us long-term profitability. While these actions are being undertaken, we could continue to complement our strategic priorities with organic, bolt-on investments, on a stand-alone basis or with other partners, using a metropolis-centric approach leveraging our businesses and digital strategy.
We believe that by managing our core operations as one vertically integrated business, we capture a significant portion of the construction value chain and create value for our customers by offering comprehensive building products and solutions. Historically, this strategic focus has enabled us to grow our existing businesses, particularly in high-growth markets and with specialized, high-margin products.
In particular, as outlined in our strategic priorities, we believe that the United States, Europe and Mexico are well-suited for vertically integrated positions near growing metropolises; and, in addition to our traditional cement, aggregate and ready-mix concrete core businesses, these metropolises exhibit a need for a value proposition we’re well-positioned to deliver through our Urbanization Solutions businesses, which has led us to consider it as a key component of our Operating EBITDA Growth strategic priority.
Urbanization Solutions. Urbanization Solutions is one of our four core businesses. It is a business that complements our value offering of products and solutions, looking to connect with the broader city ecosystem. It seeks to address urbanization challenges and provide means to all stakeholders in the construction value chain to enable sustainable urbanization by focusing on four key market segments:
| • | Performance Materials. |
They are used to modify or enhance the performance of building materials and construction systems. Performance materials include admixtures, mortars and asphalt.
| • | Industrialized Construction. |
We manufacture finished building elements that are easy and safe to transport and install on-site. Products of industrialized construction range from precast components to complete structures, 2D panels, 3D modules, 3D structures, etc.
| • | Circularity. |
Efficient management of resources to improve the circularity of the construction value chain, ranging from transforming construction, demolition and excavation waste into recycled aggregates, municipal industrial waste into alternative fuels and alternative raw materials.
| • | Related Services. |
We provide certain services to offer integrated solutions through logistics and transportation, retail, pavement services, and design and engineering, among others, that add value along the construction value chain and complement our offering in performance materials, industrialized construction and waste management, while enabling Cemex to provide value for our customers by offering building solutions for their construction needs.
OPERATING MODEL. We aim to operate effectively and achieve the greatest possible value by leveraging our knowledge and scale to establish best practices and common practices worldwide. Our operating model consists of:
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(i) working to share operative best practices and market our products and solutions; (ii) providing modern support functions and technology to clients and customers; (iii) having clear and effective transactional functions at all levels of our business; and (iv) maintaining efficient governance controls.
STAKEHOLDERS. Our stakeholders include our employees, customers, shareholders, investors, and analysts, suppliers, and communities where we operate.
We add value to our: (i) employees through resources that we believe foster growth and provide a great workplace that helps them grow and build skills, expertise and a strong sense of purpose; (ii) customers by tailoring our offerings to solve their construction needs while making it easy for them to work with us and by providing enhanced performance and reliability; (iii) shareholders, investors and analysts by focusing on plans designed to drive revenue growth, reduce costs, optimize assets, manage risks and enforce strong governance; (iv) communities by serving as a catalyst for economic growth, fostering the creation of more capable, inclusive and resilient communities, while also reducing our local environmental impact and conserving biodiversity; and (v) suppliers by encouraging the creation of innovative solutions to reduce costs while promoting sustainable goods and services, and being a reliable and trustworthy client throughout the value chain.
Environment and Biodiversity Partners. We work closely with several partners to protect the environment and biodiversity of the countries in which we operate by engaging in fruitful partnerships with global, national and local organizations, among others.
Knowledge and Innovation Partners. We often leverage the knowledge and expertise of thought partners from varied perspectives such as consulting, research institutions, universities, technology partners and others.
These collaborations enable the design, development, curation and delivery of relevant learning experiences aligned with our strategic capabilities and emerging practices.
Shared Value Partners. Collaborations and partnerships with multilateral or international organizations, the private sector, academia and others, allow us to build synergies to scale our contributions to build a better future, continue to contribute to the development of sustainable communities and to support the enablement of a just transition to a lower-carbon economy.
Some of the most relevant partners we collaborate or have collaborated with include the World Economic Forum, the U.N. Global Compact, All4Youth, among others. We leverage our partnerships to foster the creation and scaling of social impact programs through four focus areas: (i) People, to provide community members with access to education and workplace training aiming to enable inclusive long-term upward mobility; (ii) Economy, to support organizations and individuals in developing sustainable development and entrepreneurship skills to foster a sustainable economy, and lay the groundwork for a just transition; (iii) Structures, to leverage our expertise and quality building materials to improve the standards of livable housing and essential infrastructure in cities and communities where we operate; and (iv) Cities, to actively contribute to resilient and equitable communities, emphasizing the development of green spaces, services and infrastructure to harmonize the natural and built environments.
Industry and Business Associations. We actively participate in various global, regional and national industry and business associations to develop and strengthen partnerships, support our advocacy efforts, and promote our products and solutions. Our active involvement in these associations provides us, alongside other companies in our industry, with a platform to advocate for and educate on important topics such as promoting the use of concrete as an essential material for sustainable construction and policies. As of December 31, 2023, we held nearly 200 industry leadership roles across the globe. In 2023, our CEO was elected as president of the GCCA, which represents 80% of the world’s cement production capacity outside of China and recently signed a historic partnership with the China
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Cement Association, which represents more than 50% of the world’s cement production, to work together to accelerate decarbonization across the industry. We see this as the decade to deliver with public and private sectors collaborating to reach our full potential as a carbon-neutral society.
Our Investment Grade Rating
Our financial strategy is designed to strengthen our capital structure by: (i) reducing refinancing risks, mainly by reducing short-term maturities and extending average life of debt, which reached 4.8 years as of the end of 2023; (ii) lowering our financial costs, using available free cash flow and divestments to reduce our liabilities and/or optimizing our funding sources by looking for opportunities to issue new securities while redeeming other securities with higher costs, as well as managing our interest rate mix between fixed and floating rates; and (iii) maintaining ample liquidity through the revolving credit facility under the Amended 2021 Credit Agreement and access to short-term credit lines. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent
Developments Relating to Our Indebtedness—Refinancing of 2022 EUR Credit Agreement.” We believe that our debt portfolio currency mix, mainly in Dollars and Euros, together with our financial derivatives strategy, allows us to balance exposures to currency fluctuations in our most important markets while allowing for optimization of our funding costs.
As a result of implementing our “Operation Resilience” strategy, in June 2021, we reached our investment grade capital structure target of reducing our consolidated leverage ratio (as defined in our then-effective 2017 Facilities Agreement (as defined below)) below 3.0x. In 2023, we reduced our total debt plus other financial obligations by $661 million. In March 2024, we advanced our strategic priorities by obtaining an investment grade rating, and now we are focused on maintaining or improving these ratings and obtaining investment grade ratings from additional rating agencies; this is one of our top priorities. We believe our strategic priorities should allow us to make progress in reaching this goal, as we expect that we should be able to increase our free cash flow, which would enable us to further reduce our debt, invest in our business, and potentially return value to our shareholders. Maintaining our credit ratings depends on strong financial results and on other factors, including the outlook of the rating agencies on our sector and the market generally. Generally, rating agencies base their ratings on material information and their own investigations, studies, and assumptions, as they deem appropriate. There can be no assurance that a credit rating will remain in effect for any given period of time or that a rating will not be lowered, suspended, or withdrawn. Ratings are not a recommendation to buy, sell, or hold any security, and each agency’s rating should be evaluated independently of any other agency’s rating.
Also, we have been focusing, and expect to continue to focus, on optimizing our operations by looking to grow our market positions in the markets that we believe offer the highest growth potential and our core businesses, implementing our pricing policies for our products, strengthening our capital structure, regaining financial flexibility through reducing our debt and cost of debt, improving cash flow generation, and extending maturities. Our efforts in lowering our interest expense and our effective management of working capital have allowed us to support our free cash flow. As of the date of this annual report, we plan to continue with these efforts.
We have also introduced a comprehensive pricing strategy for our products that we expect to more fully reflect and capture the high value-creating capability of our products and services. Our strategy focuses on value enhancement, optimizing gains in customer relationships, and generating sufficient returns that would allow us to reinvest in our business. Under this strategy, we are establishing internal procedures and guidelines that are expected to support our approach to pricing our different products and services.
In addition, we plan to maintain and grow our market positions in cement, ready-mix concrete, aggregates, and Urbanization Solutions by being one of the most customer-centric companies in the industry. Among other actions, we
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also expect to implement pricing initiatives for our products and receive compensation through fees for the services we provide that should allow us to improve our overall profits, as well as to operate in the most capital and cost-efficient manner possible. We may also seek to expand our presence in businesses related to cement, ready-mix concrete, aggregates and Urbanization Solutions, and potentially also implement similar pricing strategies in the markets related to these businesses.
We continue to look to reduce our overall production related costs for all our products and regional and corporate overhead through disciplined cost management policies and through improving efficiencies by removing redundancies. We have implemented several worldwide standard platforms as part of this process and have also started different initiatives, such as a system designed to improve our operating processes worldwide and other digital-based solutions to achieve this. In addition, we implemented, and have been using, centralized management information systems throughout our operations, including administrative, accounting, purchasing, customer management, budget preparation and control systems, which have helped us achieve cost efficiencies. We also have agreements with several service providers expected to improve some of our business processes. We have also transferred key processes, such as procurement and trading, from a centralized model to a regional model and are simplifying and delayering our business to accelerate decision-making and maximize efficiency.
In a number of our core markets, such as Mexico, we launched initiatives aimed at reducing the use of fossil fuels, consequently looking to reduce our overall energy costs.
Furthermore, significant economies of scale in key markets at times allow us to obtain competitive freight contracts for key components of our cost structure, such as fuel and coal, among others.
Through a worldwide import and export strategy, we plan to continue to seek to optimize capacity utilization and maximize profitability by redirecting our products from countries experiencing economic downturns to target export markets where demand may be greater. Our global trading system enables us to coordinate our export activities globally to try and take advantage of demand opportunities. Should demand for our products in the United States improve as a result of the Infrastructure and Jobs Act of 2021 and the Inflation Reduction Act of 2022, we believe we are well-positioned to service this market through our established presence in the southern and southwestern regions of the country and our current ability to import into the United States.
Our industry relies heavily on natural resources and energy, and we use cutting-edge technology to increase energy efficiency, reduce CO2 emissions and optimize our use of raw materials and water. We are committed to measuring, monitoring and improving our environmental performance. In the last few years, we have implemented various procedures to improve the environmental impact of our activities as well as our overall product quality, such as a reduction of CO2 emissions, an increased use of alternative fuels to reduce our reliance on primary fuels, an increased number of sites with local environmental impact plans in place and the use of alternative raw materials in our cement.
Operational Improvements
As a key lever to achieve our Operating EBITDA growth objective, we are constantly looking for ways to implement reductions in our cost structure. Throughout the years, such global cost-reduction initiatives have encompassed different undertakings, including headcount reductions, capacity closures across the cement value chain and a general reduction in global operating expenses. During the past years, Cemex has launched company-wide programs aimed at enhancing competitiveness, providing a more agile and flexible organizational structure and supporting an increased focus on the Company’s markets and customers.
Our latest significant initiative with operational improvement and cost-reduction implications is our Working Smarter digital transformation initiative. With Working Smarter, we leverage a combination of digital technologies, operative
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models, and innovation from leading service suppliers to reshape our business management services. As part of this initiative, in the first quarter of 2022, we signed separate multi-year contracts that range from 5 to 7 years that in the aggregate total $500 million with six service providers in the fields of finance and accounting, information technology, and human resources. The integration of these next-generation contracts, alongside the implementation of other Working Smarter initiatives, is translating into savings in our business management services.
As part of our strategic priorities, we have implemented initiatives that seek to improve our operational performance and expense rationalization, increasing our use of alternative fuels in several of the countries in which we operate, serving our customers better and at lower costs, optimizing our production and logistics supply chain models and optimizing our procurement strategy. Also, in connection with the implementation of our cost-reduction initiatives, since 2017, we have implemented a low-cost sourcing initiative which is designed to maintain the continuity of our operations, while looking to provide attractive costs without materially affecting the quality of the products and services we acquire by using a strategic sourcing process empowered by our people’s knowledge and quality management. This initiative is intended to reduce our cost of operations, while maintaining quality and timely delivery by acquiring goods and equipment from Mexico, India, Turkey and certain countries in Asia and Eastern Europe, among others.
Also, as part of these initiatives, at times we temporarily shut down (in some cases for a period of at least two months) some of our cement production lines in order to rationalize the use of our assets and reduce the accumulation of our inventories. In the past we have announced the permanent closure of some of our cement plants. Similar actions were taken in our ready-mix concrete and aggregates businesses. In the past, such rationalizations have included, among others, our operations in Mexico, the United States, including Puerto Rico, Spain, Croatia, and the United Kingdom. As of December 31, 2023, we had five cement and grinding plants temporarily shut down (two cement plants in the United States, one cement plant in the United Kingdom, and two cement plants in Spain).
Furthermore, we intend to achieve energy cost-savings by actively managing our energy contracting and sourcing, and by increasing our use of alternative fuels. We believe that these cost-saving measures could better position us to quickly adapt to potential increases in demand and thereby benefit from the operating leverage we have built into our cost structure.
We also aim to better serve our customers at lower cost and to optimize our production and logistics supply chain models.
During different parts of the past years, we had reduced capital expenditures related to maintenance and expansion of our operations in response to weak demand for our products in some of the markets in which we do business. Such reductions were implemented with the intention of maximizing our free cash flow generation available for debt service and debt reduction, consistent with our ongoing efforts to strengthen our capital structure, improve our conversion of Operating EBITDA to free cash flow and regain our financial flexibility. In the past, we had restrictions under our debt agreements and instruments regarding making capital expenditures. No restrictions apply pursuant to the Credit Agreements as long as we are in compliance with our financial covenants. We expect this additional flexibility to allow us to execute our portfolio rebalancing efforts and bolt-on growth investments. During 2022 and 2023, our capital expenditures related to maintenance and expansion of our operations were $1,362 million and $1,417 million, respectively, higher than the $1,099 million expended in 2021.
User Base
Cement is the primary building material in the industrial and residential construction sectors of the majority of markets in which we operate. We believe that the lack or shortage of available cement substitutes further enhances the marketability of our product. The primary end-users of cement in each region in which we operate vary but usually
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include, among others, wholesalers, ready-mix concrete producers, industrial customers and contractors in bulk. Additionally, sales of bagged cement to individuals for self-construction and other basic needs have traditionally been a significant component of the retail sector. The end-users of ready-mix concrete generally include homebuilders, commercial and industrial building contractors and road builders. Major end-users of aggregates include ready-mix concrete producers, mortar producers, general building contractors and those engaged in road building activity, asphalt producers and concrete product producers. Our Urbanization Solutions have a wide user base which includes, but is not limited to, architects, civil engineers, builders, developers and paving and general contractors, in addition to ready-mix concrete, cement and mortars producers. In summary, because of the many favorable qualities of our products and solutions, a considerable number of builders and other users worldwide use our cement, ready-mix concrete, aggregates and Urbanization Solutions for almost every kind of construction project in the infrastructure, commercial and residential segments.
As of December 31, 2023, we did not depend on any single existing customer to conduct our business and the loss of any of our existing customers individually would not have had a material adverse effect on our financial condition or results of operations. For the period ended December 31, 2023, none of our individual customers represented more than 10% of our consolidated revenues.
Our Corporate Structure
Cemex, S.A.B. de C.V. is an operating and a holding company that primarily operates its business through subsidiaries which, in turn, hold interests in Cemex’s cement, aggregates, ready-mix concrete and Urbanization Solutions operating companies, as well as other businesses. The following chart summarizes Cemex’s corporate structure as of December 31, 2023. The chart also shows for each company, unless otherwise indicated, Cemex’s approximate direct or indirect, or consolidated, percentage equity ownership or economic interest. The chart has been simplified to show only some of Cemex’s major holding companies and/or operating companies in most of the main countries in which Cemex operates, and/or relevant companies in which Cemex holds a significant direct or indirect interest and does not include all of Cemex’s operating subsidiaries and its intermediate holding companies.
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Cemex’s Corporate Structure as of December 31, 2023
| (1) | Includes Cemex’s direct or indirect, or consolidated, interest. |
| (2) | Includes COM’s, CIH’s and Cemex, S.A.B. de C.V.’s interest, as well as shares held in Cemex España’s treasury. |
| (3) | Includes Cemex España’s direct or indirect, or consolidated, interest. |
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| (4) | Represents Cemex España’s indirect economic interest in three companies incorporated in the United Arab Emirates; Cemex Topmix LLC, Cemex Supermix LLC and Cemex Falcon LLC. Cemex España indirectly owns a 49% equity interest in each of these companies and indirectly holds the remaining 51% of the economic benefits through agreements with other shareholders. |
| (5) | Represents CHP’s direct and indirect equity interest. |
| (6) | Represents outstanding shares of CLH’s capital stock and excludes treasury stock. |
| (7) | Represents CLH’s 99.483% indirect interest in ordinary shares, which excludes a 0.516% interest held in Cemento Bayano, S.A.’s treasury. |
| (8) | Represents CLH’s direct and indirect interest in three companies incorporated in Guatemala; Cemex Guatemala, S.A., Global Concrete, S.A., and Cementos de Centroamérica, S.A. |
| (9) | Represents CLH’s direct and indirect interest in ordinary and preferred shares and includes shares held in Cemex Colombia’s treasury. |
| (10) | Includes Cemex Colombia’s 99% interest and Corporación Cementera Latinoamericana, S.L.U.’s 1% interest. |
| (11) | Includes TCL’s direct and indirect 74.08% interest and Cemex’s indirect 4.96% interest held through other subsidiaries. |
Our Operations in Mexico
Overview. For the year ended December 31, 2023, our operations in Mexico represented 28% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in Mexico represented 31% of our total installed cement capacity and 19% of our total assets, in Dollar terms.
Following the completion of its expansion involving the construction of a new kiln and a mill, as of December 31, 2023, our Tepeaca cement plant in Puebla, Mexico had a production capacity of 4.2 million tons of cement per year based on mill capacity. In May 2021, in order to generate enough supply to meet the increasing demand in the U.S. market and strengthen our position in the region, we resumed our operations in our CPN cement plant in Sonora, which has a production capacity of 1.7 million tons of cement per year.
In March 2022, following the successful restart of our operations in our CPN cement plant in Sonora, we announced the reactivation of our second CPN kiln in the Sonora plant to continue leveraging Cemex’s regional trading network to meet growing cement demand throughout the western United States. This project was completed during the fourth quarter of 2022.
In 2001, we launched the Construrama program, a registered brand name for construction material stores. Through this program, we offer to an exclusive group of our Mexican distributors the opportunity to sell a variety of products under the Construrama brand name, a concept that includes the standardization of stores, image, marketing, products and services. As of December 31, 2023, 1,145 independent concessionaries with 2,389 stores were integrated into the Construrama program, with nationwide coverage.
Industry. For 2023, the National Institute of Statistics and Geography (Instituto Nacional de Estadística y Geografía) indicated that total construction activity in Mexico increased 15.5% as of December 2023 (seasonally adjusted figures). Such increase has been attributed to major infrastructure projects and the dynamism of the formal construction industry, particularly in the industrial sector.
Cement in Mexico is sold mainly through distributors, with the remaining balance sold through ready-mix concrete producers, manufacturers of precast concrete products and construction contractors. Cement sold through distributors is mixed with aggregates and water by the end user at the construction site to form concrete. Ready-mix concrete producers mix the ingredients in plants and deliver it to local construction sites in mixer trucks, which pour the concrete. Unlike more developed economies, where purchases of cement are concentrated in the commercial and industrial sectors, retail sales of cement through distributors in 2023 accounted for approximately 52% of Mexico’s demand (bagged presentation). Individuals who purchase bags of cement for self-construction and other basic construction needs are a significant component of the retail sector. We believe that this large retail sales base is a factor that significantly contributes to the overall performance of the cement market in Mexico.
The retail nature of the Mexican cement market also enables us to foster brand loyalty, which distinguishes us from other worldwide producers selling primarily in bulk. We own the registered trademarks for our brands in Mexico, such
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as “Tolteca,” “Monterrey,” “Maya,” “Anahuac,” “Campana,” “Gallo,” “Centenario,” as well as certain sub-brands, such as “Extra,” “Impercem,” and “Optimo” for gray cements and mortar and, additionally, recently launched “Multiplast” for coatings. We believe that these brand names are important in Mexico since cement is principally sold in bags to retail customers who may develop brand loyalty based on differences in quality and service. We also have trademark registrations for our special concrete’s brands such as “Promptis,” “Resilia,” “Pervia,” “Insularis,” and “Evolution.” In Mexico, we introduced Vertua as a value cement and concrete brand. Vertua is Cemex’s global brand for low carbon footprint products. In addition, we own the registered trademark for the “Construrama” brand name for construction material stores and for our new digital solution we have trademark registrations for “Cemex Go” and “Olivia.”
Competition. In the early 1970s, the cement industry in Mexico was regionally fragmented. However, since that time, cement producers in Mexico have increased their production capacity and the cement industry in Mexico has consolidated into a national market, thus becoming increasingly competitive. As of December 31, 2023, the major cement producers in Mexico were Cemex; Holcim; Fortaleza Materiales (formerly named Elementia); Sociedad Cooperativa Cruz Azul, a Mexican operator; Cementos Moctezuma, an associate of Cements Molins and Buzzi-Unicem; and GCC, S.A.B. de C.V. (“GCC,” formerly named Grupo Cementos de Chihuahua, S.A.B. de C.V.), a Mexican operator in whose majority holder, Camcem, S.A. de C.V., we hold a minority interest. As of December 31, 2023, the major ready-mix concrete producers in Mexico were Cemex, Holcim, Sociedad Cooperativa Cruz Azul, and Cementos Moctezuma. In addition, as of December 31, 2023, the use of non-integrated ready-mixers has been increasing.
We believe potential entrants into the Mexican cement market face various barriers to entry, including, among other things: the time-consuming and expensive process of establishing a retail distribution network and developing the brand identification necessary to succeed in the retail market; the lack of port infrastructure and the high inland transportation costs resulting from the low value-to-weight ratio of cement; the distance from ports to major consumption centers and the presence of significant natural barriers, such as mountain ranges, which border Mexico’s east and west coasts; the strong brand recognition and the wide variety of special products with enhanced properties; the extensive capital expenditure requirements; and the length of time required for construction of new plants, which we estimate is approximately two years. Nevertheless, Fortaleza Materiales started operation of a stand-alone cement mill in the Yucatán Peninsula in October 2020. Additionally, at the end of the first quarter of 2021, Holcim started operating a stand-alone cement mill located in the Yucatán Peninsula, aiming to strengthen its market position and supply cost in this region. During 2022, a new independent producer, Grupo Comercial AMORI, entered the market in the Yucatán Peninsula with a cement mill facility located in Progreso, Yucatán, under the brand “Cementos Jaguar.” This facility corresponds to the first new entry into the cement industry since Fortaleza’s incursion in 2013.
For 2024, we anticipate the introduction of new capacities into the market. An expansion of milling capacity is expected by the end of the first half of the year from Fortaleza Materiales at its Palmar Plant. Holcim has announced the expansion of its plant in Macuspana, Tabasco which is expected to be ready by the end of 2024. Additionally, GORSA, a non-integrated player (independent), is developing a milling project in Salina Cruz, Oaxaca, which is expected to be in operation during the fourth quarter of 2024.
Urbanization Solutions. In Mexico, for the year ended December 31, 2023, in terms of relevant revenues, our admixtures, mortars, and circularity verticals were the main contributors. These businesses are located across Mexico.
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Our Operating Network in Mexico
During 2023, we operated 15 cement plants and 111 cement distribution centers (including eight marine terminals) located throughout Mexico.
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We operate cement plants on the Gulf of Mexico and Pacific coasts of Mexico, most of the time allowing us to take advantage of attractive transportation costs to export to the United States and the SCA&C region, when possible.
Products and Distribution Channels
Cement. For the year ended December 31, 2023, our cement operations represented 55% of our external revenues from our operations in Mexico in Dollar terms and our domestic cement sales volume represented 90% of our total cement sales volume in Mexico. As a result of the retail nature of the Mexican market, our operations in Mexico are not dependent on a limited number of large customers. The total volume of the five most important distributors accounted for 13% of our total cement sales by volume in Mexico in 2023 (excluding our in-house channels).
Ready-Mix Concrete. For the year ended December 31, 2023, our ready-mix concrete operations represented 29% of our external revenues from our operations in Mexico in Dollar terms. Our ready-mix concrete operations in Mexico purchase substantially all their cement requirements from our cement operations in Mexico. Ready-mix concrete is sold through our own internal sales force and facilities network.
Aggregates. For the year ended December 31, 2023, our aggregates operations represented 3% of our external revenues from our operations in Mexico in Dollar terms.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 13% of our external revenues from our operations in Mexico in Dollar terms.
Exports. Our operations in Mexico export a portion of their cement production, mainly in the form of cement and to a lesser extent in the form of clinker. Exports of cement by our operations in Mexico represented 10% of our total cement sales volume in Mexico for 2023. In 2023, 92% of our cement exports from Mexico were to the United States and 8% were to our Rest of SCA&C segment.
The cement and clinker exports by our operations in Mexico to the United States are mostly marketed through our trading network subsidiaries. Our cement and clinker transactions between Cemex and its subsidiaries, are conducted on an arm’s-length basis.
Production Costs. Our cement plants in Mexico primarily utilize pet coke and alternative fuels. Two 20-year pet coke supply contract agreements with PEMEX Madero refinery expired at the end of September 2022. The contracts were replaced by a 5-year supply agreement awarded in a tender for an estimated 30% of our pet coke consumption. By the end of October 2022, PEMEX unilaterally suspended deliveries from the Cadereyta refinery in two additional contracts. Cemex and PEMEX agreed on a new pricing methodology based on the current pet coke market for the remainder of the contract period. Following an unsuccessful tender for the Cadereyta facility, PEMEX extended its contract with Cemex until January 2025. Cemex was also awarded a 2-year contract for the Minatitlan refinery in November 2022, which is equivalent to 11% of our cement plant consumption. In general, we have been able to purchase pet coke in the open market when needed to make up for any quantities not supplied by PEMEX. In addition, in 1992, our operations in Mexico began using alternative fuels to further reduce the consumption of residual fuel oil and natural gas. These alternative fuels represented 43% of the total fuel consumption for our cement plant operations in Mexico in 2023. For additional information, see “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments—Cash Requirements.”
In 1999, we entered into an agreement with an international partnership, which financed, built and operated TEG, a 230 megawatt (“MW”) energy plant in Tamuín, San Luis Potosí, Mexico. We entered into this agreement in order to reduce the volatility of our energy costs. The power plant commenced commercial operations in April 2004. In 2007, the original operator was replaced and the agreement was extended to 2027. As of the date of this annual report,
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TEG has migrated to the wholesale market to supply Cemex load points. For additional information, see “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments—Cash Requirements,” and “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Environmental Matters—Mexico.”
In 2006, in order to take advantage of the high wind potential in the “Tehuantepec Isthmus,” Cemex and the Spanish company ACCIONA, S.A. (“ACCIONA”), formed an alliance to develop a wind farm project for the generation of 250 MW in the Mexican state of Oaxaca. The installation of 167 wind turbines in the farm was finished on November 15, 2009. For additional information, see “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments—Cash Requirements.”
In connection with the beginning of full commercial operations of Ventika, S.A.P.I. de C.V. and Ventika II S.A.P.I. de C.V. wind farms (jointly, “Ventikas”), located in the Mexican state of Nuevo León, with a combined generation capacity of 252 MW, we agreed to acquire a portion of the energy generated by Ventikas for our Mexican plants for a period of 20 years, which began in April 2016. During 2023, Ventikas supplied 9% of Cemex’s overall electricity needs in Mexico. This agreement is for Cemex’s own use and as of the date of this annual report, Cemex does not intend to engage in energy trading in Mexico.
On October 24, 2018, in order to take advantage of lower electric energy prices, we entered into agreements for a period of 20 years with Tuli Energía, S. de R.L. de C.V. (“Tuli Energía”) and Helios Generación, S. de R.L. de C.V. (“Helios Generación”) to acquire a portion of the energy generated by such solar projects. The solar plants located in the Mexican state of Zacatecas have a combined generation capacity of 300 MW. These solar plants started producing test energy in September 2019, and the effective commencement date of such agreements was December 21, 2019 for Tuli Energía and April 22, 2020 for Helios Generación.
We have, from time to time, purchased hedges from third parties to reduce the effect of volatility in energy prices in Mexico. See “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments—Cash Requirements.” Additionally, a Cemex subsidiary participated as a buyer in the third long-term power auction organized in 2017 by the National Center for Energy Control (Centro Nacional de Control de Energía) (“CENACE”) (the independent system operator) and has been allocated a 20-year contract, that started in November 2020. The contract is for 16,129 clean energy certificates per year for compliance with legal requirements and 14.9 GWh/a of electric power.
Description of Properties, Plants and Equipment. As of December 31, 2023, we had 15 wholly-owned cement plants (all of them active) with a cement installed capacity of 28.2 million tons per year and proportional interests through associates in three other cement plants located throughout Mexico. We have exclusive access to limestone quarries and clay reserves near each of our plant sites in Mexico. As of December 31, 2023, all of our producing plants in Mexico utilized the dry process.
As of December 31, 2023, we had a network of 103 land distribution centers in Mexico, which are supplied through a fleet of our own trucks and rail cars, as well as leased trucks and rail facilities, and operated eight marine terminals. In addition, we had 261 ready-mix concrete plants (44 were temporarily inactive) throughout 75 cities in Mexico, more than 2,600 ready-mix concrete delivery trucks and 13 aggregates quarries (two were temporarily inactive).
Capital Expenditures. We made capital expenditures of $190 million in 2021, $265 million in 2022, and $264 million in 2023. As of December 31, 2023, we expected to make capital expenditures of over $311 million in our operations in Mexico during 2024.
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Our Operations in the United States
Overview. For the year ended December 31, 2023, our operations in the United States represented 31% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in the United States represented 16% of our total installed cement capacity and 46% of our total assets, in Dollar terms. As of December 31, 2023, Cemex, Inc. was the main holding company of our operating subsidiaries in the United States.
On September 23, 2013, we and Concrete Supply Company, a leading producer of ready-mix concrete throughout North and South Carolina, entered into a joint venture agreement and formed a joint venture company named Concrete Supply Co. LLC, in which Concrete Supply Holdings Co. holds a majority ownership stake in and acts as the managing member. This joint venture is a locally-managed leading concrete supplier in North and South Carolina.
Industry. Demand for cement is derived from the demand for ready-mix concrete and concrete products which, in turn, is dependent on the demand for construction. The construction industry is composed of three major sectors: the residential, nonresidential and public sectors. The public sector is the most cement-intensive sector, particularly for infrastructure projects such as streets, highways and bridges. Just as construction is highly pro-cyclical, so too is each subsector.
The construction industry consistently grew over the decade preceding the COVID-19 pandemic as it recovered from the collapse suffered during and in the immediate aftermath of the Great Recession. From 2010 through 2019, real annual GDP growth averaged 2.4% as the value of total construction put-in-place increased 6.2% annually, on average, in nominal terms. Similar to the recovery from the Great Recession, the three segments that drive cement demand—residential, nonresidential buildings, and public construction—have each recovered from the 2020 pandemic-induced recession at different paces. Housing led the economic recovery as total starts surged to 1.6 million in 2021, a 16.0% increase over 2020 and the highest level since 2006. Single-family starts edged 5.3% lower in 2023 but ended the year at 947,000, 39.1% higher than the 2010-2019 average. In contrast, the real value of construction put-in-place of nonresidential buildings after declined in 2021 and 2022 but reversed course and increased 21.3% in 2023. Additionally, private fixed investment in nonresidential structures contributed 0.4% to GDP growth in 2023 after subtracting from growth the prior two years. The value of public sector construction put-in-place climbed 9% in 2023, accounting for nearly one-fifth of the total.
Cement demand had been increasing annually since 2014 prior to an estimated 2.5% decline in 2023. As of March, 2024, the Portland Cement Association is forecasting a 0.9% increase in cement demand in the United States for 2024, but as of the date of this annual report we are not able to assess whether the cement demand in the United States will increase or decrease during 2024. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Future pandemics and epidemics, such as the COVID-19 pandemic, could materially adversely affect our financial condition and results of operations.” High mortgage rates resulting from Federal Reserve interest rate increases and quantitative tightening could result in lower than expected single family housing demand. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations.”
Competition. As of December 31, 2023, the cement industry in the United States was highly competitive, including national and regional cement producers in the United States. As of December 31, 2023, our principal competitors in the United States were Holcim, CRH plc (“CRH”), Buzzi-Unicem, Summit Materials Inc., and HeidelbergCement.
As of December 31, 2023, the independent U.S. ready-mix concrete industry was highly fragmented. According to the National Ready Mixed Concrete Association (“NRMCA”), it is estimated that as of December 31, 2023 there were about 7,000 ready-mix concrete plants that produce ready-mix concrete in the United States and about 80,000 ready-mix concrete mixer trucks that delivered the concrete to the point of placement. The NRMCA estimates that, as of December 31, 2023, the value of ready-mix concrete produced by the industry was approximately $62.7 billion per year. Given that the concrete industry has historically consumed approximately 75% of all cement produced annually in the United States, many cement companies choose to develop concrete plant capabilities.
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Aggregates are widely used throughout the United States for all types of construction because they are the most basic materials for building activity. The United States Geological Survey (“USGS”) estimates over 2.4 billion tons of aggregates were produced in 2023, a decrease of about 3% over 2022. As of December 31, 2023, crushed stone accounted for 61% of aggregates consumed, sand and gravel for 38%, and slag for 1%. These products are produced in all 50 states and had a value of $36 billion as of December 31, 2023. The United States aggregates industry is highly fragmented and geographically dispersed. The top 10 producing states represented more than 54% of all production as of year-end 2023. According to the USGS, during 2023, an estimated 3,400 companies operated 6,500 sand and gravel sites and 1,400 companies operated 3,500 crushed stone quarries in the 50 states.
Urbanization Solutions. In the United States, for the year ended December 31, 2023, in terms of relevant revenues, Related Services and concrete block were the main contributors. These businesses are located mainly in the state of Florida.
Our Operating Network in the United States
The maps below reflect the location of our operating assets, including our cement plants and cement terminals giving service to our operations in the United States as of December 31, 2023.
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Products and Distribution Channels
Cement. For the year ended December 31, 2023, our cement operations represented 23% of our external revenues from our operations in the United States, in Dollar terms. In the United States, we deliver a substantial portion of cement by rail, which occasionally goes directly to customers. Otherwise, shipments go to distribution terminals where customers pick up the product by truck or we deliver the product by truck. The majority of our cement sales in the United States are made directly to users of gray portland and masonry cements, generally within a radius of approximately 200 miles of each plant.
Ready-Mix Concrete. For the year ended December 31, 2023, our ready-mix concrete operations represented 57% of our external revenues from our operations in the United States, in Dollar terms. Our ready-mix concrete operations in the United States purchase most of their cement aggregates requirements from our cement operations in the United States. Our ready-mix concrete products are mainly sold to residential, commercial and public contractors and to building companies.
Aggregates. For the year ended December 31, 2023, our aggregates operations represented 17% of our external revenues from our operations in the United States, in Dollar terms. Our aggregates are consumed mainly by our internal operations and by our trade customers in the ready-mix, concrete products and asphalt industries.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 3% of our external revenues from our operations in the United States in Dollar terms.
Production Costs. The largest cost components of our plants are usually electricity and fuel. Fuel accounted for 13% of our total production costs of our cement operations in the United States in 2023. As of December 31, 2023, we had been implementing a program expected to gradually replace coal with more economic fuels, such as pet coke, tires and other alternative fuels, which has resulted in reduced energy costs. By retrofitting our cement plants to handle alternative energy fuels, we believe we have gained more flexibility in supplying our energy needs and have become less vulnerable to potential price spikes in energy. Power costs in 2023 represented 8% of the cash manufacturing cost of our cement operations in the United States, which represents production cost before depreciation. We aim to improve the efficiency of our electricity usage of our cement operations in the United States, concentrating our manufacturing activities in off-peak hours and negotiating lower rates with electricity suppliers.
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Description of Properties, Plants and Equipment. As of December 31, 2023, we operated a geographically diverse base of 10 cement manufacturing plants in the United States (two were temporarily inactive) located in Alabama, California, Colorado, Florida, Georgia, Pennsylvania, Tennessee, and Texas, and had a total installed cement capacity of 14.1 million tons per year. As of December 31, 2023, we operated a distribution network of 32 cement terminals (four of which we distributed fly ash through) and 11 deep-water import terminals. All of our 10 cement production facilities in 2023 were wholly-owned by Cemex, Inc. As of December 31, 2023, Cemex, Inc. had 294 ready-mix concrete plants (30 were temporarily inactive) located in Alabama, Arizona, California, Florida, Georgia, Louisiana, Nevada, Tennessee, Texas, and Virginia and operated a total of 50 aggregates quarries (seven were temporarily inactive) in Arizona, California, Florida, Georgia, Nevada, South Carolina, and Texas, one of these quarries was located in Canada. As of December 31, 2023, we had 17 concrete block facilities.
In the United States, we have continued to take a number of actions to streamline our operations and improve productivity, including temporary capacity adjustments and rationalizations in some of our cement plants, and shutdowns of ready-mix concrete and block plants and aggregates quarries. As of December 31, 2023, we were utilizing approximately 90% of our ready-mix concrete plants, 100% of our block manufacturing plants and 86% of our operating aggregates quarries in the United States.
Capital Expenditures. We made capital expenditures of $373 million in 2021, $551 million in 2022, and $521 million in 2023 in our operations in the United States. As of December 31, 2023, we expected to make capital expenditures of $549 million in our operations in the United States during 2024.
EMEAA
For the year ended December 31, 2023, our business in the EMEAA region, which includes our operations in the EMEAA region and the Rest of EMEAA segment, as described below, represented 29% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in the EMEAA region represented 38% of our total installed capacity and 22% of our total assets, in Dollar terms.
Our Operations in the United Kingdom
Overview. For the year ended December 31, 2023, our operations in the United Kingdom represented 6% of our consolidated external revenues, in Dollar terms. As of December 31, 2023, our operations in the United Kingdom represented 5% of our total assets, in Dollar terms.
As of December 31, 2023, we were a leading provider of building materials in the United Kingdom with vertically integrated cement, ready-mix concrete, aggregates and asphalt operations, and we were also an important provider of concrete and precast materials solutions such as concrete block, concrete block paving, flooring systems and sleepers for rail infrastructure.
Industry. According to the Construction Products Association (“CPA”), total construction output decreased by 6.4% in 2023, which follows an increase of 5.6% in 2022. The CPA also reported that new construction orders decreased by 7.6% year-over-year in 2023. This was driven by a 17.1% decline in new housing orders. Industrial projects were one of the few growth areas during the year, increasing by 2.3%. Meanwhile, infrastructure decreased by 1.1% in 2023. As of December 31, 2023, the official data corresponding to 2023 has not been released by the Mineral Products Association, but as of the date of this annual report we estimate that domestic cement demand decreased at high single-digit rates in 2023 compared to 2022. Ready-mix concrete consumption in the full year 2023 decreased by 6.2%.
Competition. As of December 31, 2023, our primary competitors in the United Kingdom are: Tarmac (owned by CRH after divestments by Lafarge and Holcim during their merger), Hanson (a subsidiary of Heidelberg), Aggregate
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Industries (a subsidiary of Holcim) and Breedon, which acquired Hope Construction Materials (owned by Mittal Investments). In addition, during 2023 an estimated 3.4 million tons of cement were imported to the United Kingdom by various players including CRH, Holcim, Heidelberg and other independents, with products that compete with ours increasingly arriving from over-capacity markets including Ireland, Spain and Greece.
Urbanization Solutions. In the United Kingdom, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of rail sleepers, asphalt and concrete block, among others. These businesses are located mainly in Yorkshire and North West, England.
Our Operating Network in the United Kingdom
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Products and Distribution Channels
Cement. For the year ended December 31, 2023, our cement operations represented 21% of our external revenues from our operations in the United Kingdom in Dollar terms. About 81.1% of our United Kingdom cement sales were of bulk cement, with the remaining 18.9% in bags. Our bulk cement is mainly sold to ready-mix concrete, concrete block and pre-cast product customers and contractors. Our bagged cement is primarily sold to national builders’ merchants.
Ready-Mix Concrete. For the year ended December 31, 2023, our ready-mix concrete operations represented 35% of our external revenues from our operations in the United Kingdom in Dollar terms. Special products, including self-compacting concrete, fiber-reinforced concrete, high strength concrete, flooring concrete and filling concrete, represented 20.3% of our 2023 United Kingdom sales volume. In 2023, our ready-mix concrete operations in the United Kingdom purchased 94.2% of its cement requirements from our cement operations in the United Kingdom and 78.5% of its aggregates requirements from our aggregates operations in the United Kingdom. Our ready-mix concrete products are mainly sold to public, commercial and residential contractors.
Aggregates. For the year ended December 31, 2023, our aggregates operations represented 31% of our external revenues from our operations in the United Kingdom in Dollar terms. In 2023, our United Kingdom aggregates sales were divided as follows: 60% were sand and gravel, 39% were limestone, and 1% was hardstone. In 2023, 35% of our aggregates volumes were obtained from marine sources along the United Kingdom’s coast. In 2023, 27% of our United Kingdom aggregates production was consumed by our own ready-mix concrete operations as well as our asphalt, concrete block and precast operations. We also sell aggregates to major contractors to build roads and other infrastructure projects.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 13% of our external revenues from our operations in the United Kingdom in Dollar terms.
Cement Production Costs. In 2023, fixed production costs increased by 5.2% driven by increased maintenance costs and significant inflationary pressures. Variable costs increased by 15% in absolute terms, primarily as a result of increased costs of energy and purchased cement. During 2023, we continued to implement our cost reduction programs through our use of alternative fuels.
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Ready-Mix Concrete Production Costs. In 2023, fixed production costs increased by 3.3%, in comparison to fixed production costs in 2022, due to increased wages and salary costs following significant periods of inflation in the United Kingdom.
Aggregates Production Costs. In 2023, fixed production costs increased by 4.3% in comparison to 2022 fixed production costs due to increased wages and salaries following significant inflation in the United Kingdom and increased temporary labor and environmental fees.
Description of Properties, Plants and Equipment. As of December 31, 2023, we had two cement plants (one was temporarily inactive) and one clinker grinding facility in the United Kingdom. Assets in operation at year-end 2023 represent an installed cement capacity of 3.6 million tons per year, the same level as 2022. As of December 31, 2023, we also owned three cement import terminals and operated 108 ready-mix concrete plants (15 were temporarily inactive), 26 aggregates quarries (five were temporarily inactive), 15 marine licenses (all of them active), 16 distribution centers, and 13 marine terminals in the United Kingdom. In addition, we had operating units dedicated to the asphalt, concrete block, concrete block paving, sleepers, and flooring businesses in the United Kingdom.
In order to have access to blended cements, which are more sustainable based on their reduced clinker factor and use of by-products from other industries, our grinding and blending facility at the Port of Tilbury, located on the Thames River east of London has an annual grinding capacity of 0.9 million tons, which allows us to have access to blended cements.
Capital Expenditures. We made capital expenditures of $94 million in 2021, $74 million in 2022, and $107 million in 2023 in our operations in the United Kingdom. As of December 31, 2023, we expected to make capital expenditures of $67 million in our operations in the United Kingdom during 2024.
Our Operations in France
Overview. As of December 31, 2023, we were a leading ready-mix concrete producer and a leading aggregates producer in France. For the year ended December 31, 2023, our ready-mix concrete operations represented 78%, and aggregates represented 22%, respectively, of our external revenues from our operations in France in Dollar terms. We distribute most of our materials by road and a significant quantity by waterways, seeking to maximize the use of this efficient and sustainable alternative. For the year ended December 31, 2023, our operations in France represented 5% of our external revenues in Dollar terms. As of December 31, 2023, our operations in France represented 3% of our total assets, in Dollar terms.
Industry. According to the National Institute of Statistics and Economic Studies, housing starts in the residential sector decreased by 23.3% in 2023 compared to 2022. Non-residential starts (m2) decreased by 14.2% in 2023 compared to 2022 and demand from the public works sector increased by 4.5% over the same period. According to National Union of Quarrying and Building Materials Industries (French Association), ready-mix concrete consumption decreased by 6.5% in 2023.
Competition. As of December 31, 2023, our main competitors in the ready-mix concrete market in France included Holcim, Heidelberg, CRH, and Vicat SA, and our main competitors in the aggregates market in France included Holcim, Heidelberg, Colas (Bouygues), Eiffage, and Eurovia (Vinci). In France, we rely on sourcing cement from third parties, while many of our major competitors in ready-mix concrete are subsidiaries of French cement producers.
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Urbanization Solutions. In France, for the year ended December 31, 2023, our Urbanization Solutions business consisted of admixtures. This business mainly serves our concrete operations in France.
Our Operating Network in France
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Description of Properties, Plants and Equipment. As of December 31, 2023, we operated 195 ready-mix concrete plants in France (12 were temporarily inactive), two marine terminals located in Le Havre, on the northern coast of France, 18 land distribution centers, 38 aggregates quarries (two were temporarily inactive) and 11 river ports.
Capital Expenditures. We made capital expenditures of $44 million in 2021, $57 million in 2022, and $44 million in 2023 in our operations in France. As of December 31, 2023, we expected to make capital expenditures of $40 million in our operations in France during 2024.
Our Operations in Germany
Overview. For the year ended December 31, 2023, our operations in Germany represented 3% of our consolidated external revenues, in Dollar terms. As of December 31, 2023, our operations in Germany represented 2% of our total assets, in Dollar terms. For the year ended December 31, 2023, cement represented 38%, ready-mix concrete represented 38%, aggregates represented 18% and Urbanization Solutions and our other businesses represented 6%, respectively of our external revenues from our operations in Germany in Dollar terms. As of December 31, 2023, we were a leading provider of building materials in Germany, with vertically integrated cement, ready-mix concrete and aggregates businesses.
Industry. Preliminary estimates suggest that domestic sales volume decreased by 17% in 2023 compared to 2022. This coincided with a 2.4% decrease in producer prices for cement during this same period according to DESTATIS, the German Federal Statistical Office.
Competition. As of December 31, 2023, our primary competitors in the cement market in Germany were Heidelberg, Dyckerhoff (a subsidiary of Buzzi-Unicem), Holcim, CRH, and Schwenk, a local German competitor. These competitors, along with Cemex in Germany, represented a market share of above 95%, as estimated by us, for 2023. The ready-mix concrete and aggregates markets in Germany are fragmented and regionally heterogeneous, with many local competitors. The consolidation process in the ready-mix concrete and aggregates markets is moderate.
Urbanization Solutions. In Germany, for the year ended December 31, 2023, our Urbanization Solutions business consisted of admixtures and mortars. This business is located mainly in the northeast and southeast of Germany.
Our Operating Network in Germany
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Description of Properties, Plants and Equipment. As of December 31, 2023, we operated one cement plant and one cement grinding mill in Germany and our installed cement capacity was 3.1 million tons per year. In November 2023, Cemex completed the acquisition of Kiesel, a German mortars and adhesives company, including one active mortars and adhesives plant. As of December 31, 2023, our operations in Germany also included 57 ready-mix concrete plants (three of them inactive), 23 aggregates quarries (seven were temporarily inactive) and three land distribution centers.
Capital Expenditures. We made capital expenditures of $29 million in 2021, $33 million in 2022, and $47 million in 2023 in our operations in Germany. As of December 31, 2023, we expected to make capital expenditures of $38 million in our operations in Germany during 2024.
Our Operations in Poland
Overview. For the year ended December 31, 2023, our operations in Poland represented 3% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operating business in Poland represented 1% of our total assets, in Dollar terms. As of December 31, 2023, we were a leading provider of building materials in Poland, serving the cement, ready-mix concrete and aggregates markets. As of December 31, 2023, we operated two cement plants (two of them active) and one grinding mill with an installed cement capacity of 3.5 million tons per year. As of December 31, 2023, we also operated 44 ready-mix concrete plants (two were temporarily inactive), six aggregates quarries (all of them active), two distribution centers and two marine terminals in Poland. For the year ended December 31, 2023, cement represented 55%, ready-mix concrete represented 36%, and aggregates represented 9%, respectively of our external revenues from our operations in Poland in Dollar terms.
Industry. Preliminary estimates suggest that total cement consumption in Poland decreased approximately 14% in 2023 from 2022.
Competition. As of December 31, 2023, our primary competitors in the cement, ready-mix concrete and aggregates markets in Poland were Heidelberg, Holcim, CRH, Dyckerhoff, and Miebach.
Urbanization Solutions. In Poland, for the year ended December 31, 2023, in terms of relevant revenues, our
Urbanization Solutions business consisted primarily of the trading of admixtures and mortars (with some third-party dry mortar plants in Poland producing Cemex brands, and subsequently distributing under Cemex’s products declarations of conformity, as formal manufacturer).
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Capital Expenditures. We made capital expenditures of $29 million in 2021, $33 million in 2022, and $44 million in 2023 in our operations in Poland. As of December 31, 2023, we expected to make capital expenditures of $39 million in our operations in Poland during 2024. However, this amount could change based on current economic conditions and uncertainty.
Our Operations in Spain
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Overview. For the year ended December 31, 2023, our operations in Spain represented 2% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operating business in Spain represented 2% of our total assets, in Dollar terms.
Industry. According to the Spanish Ministry of Industry, total cement consumption in Spain decreased by 2.6% in 2023 compared to 2022. As of December 31, 2023, cement exports from Spain amounted to 3.96 million tons. In recent years, Spanish cement and clinker export volumes have fluctuated, reflecting the rapid changes in demand in the Mediterranean basin as well as the strength of the Euro and changes in the domestic market. According to the Spanish Ministry of Industry, these total export volumes increased 25% in 2021, decreased 2% in 2022 and decreased 6% in 2023 compared to 2022.
Competition. According to our estimates, as of December 31, 2023, we were one of the top four producers of clinker and cement in Spain. Competition in the ready-mix concrete industry is intense in large urban areas. The overall high degree of competition in the Spanish ready-mix concrete industry is reflected in the multitude of offerings from a large number of concrete suppliers. We have focused on developing value-added products and attempting to differentiate ourselves in the marketplace. The distribution of ready-mix concrete remains a key component of our business strategy in Spain.
Urbanization Solutions. In Spain, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of mortars and admixtures. These businesses are located across Spain.
Products and Distribution Channels
Cement. For the year ended December 31, 2023, our cement operations represented 64% of our external revenues from our operations in Spain in Dollar terms. We offer various types of cement in Spain, targeting specific products to
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specific markets and users. In 2023, 15% of the domestic sales volume of our main operating subsidiary in Spain consisted of bagged cement, and the remainder of its domestic sales volume consisted of bulk cement, primarily to ready-mix concrete operators, including sales to our other operations in Spain, as well as industrial customers that use cement in their production processes and construction companies.
Ready-Mix Concrete. For the year ended December 31, 2023, our ready-mix concrete operations represented 29% of our external revenues from our operations in Spain in Dollar terms. Our ready-mix concrete operations in Spain in 2023 purchased 87% of their cement requirements from our cement operations in Spain and 66% of their aggregates requirements from our aggregates operations in Spain.
Aggregates. For the year ended December 31, 2023, our aggregates operations represented 6% of our external revenues from our operations in Spain in Dollar terms.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 1% of our external revenues from our operations in Spain in Dollar terms.
Production Costs. We have improved the efficiency of our operations in Spain by introducing technological improvements that have significantly reduced our energy costs, including the use of alternative fuels, in accordance with our cost reduction efforts. In 2023, we used organic waste, tires and plastics as fuel, achieving a 53% substitution rate for pet coke in our gray and white clinker kilns for the year.
Description of Properties, Plants and Equipment. As of December 31, 2023, our operations in Spain included six cement plants (two were temporarily inactive) located in Spain with an annual installed cement capacity of 7.7 million tons. As of that date, we also had 30 distribution centers, including 19 land and 11 marine terminals, 50 ready-mix concrete plants (15 were temporarily inactive), 24 aggregates quarries (eight were temporarily inactive), eight mortar plants (three of them inactive), and one admixture plant.
Capital Expenditures. We made capital expenditures of $34 million in 2021, $27 million in 2022, and $38 million in 2023 in our operations in Spain. As of December 31, 2023, we expected to make capital expenditures of $58 million in our operations in Spain during 2024.
Our Operations in the Philippines
Overview. As of December 31, 2023, on a consolidated basis, Cemex España indirectly held 100% of CASEC, which in turn owned 89.86% of the outstanding share capital of CHP. As of December 31, 2023, CHP directly and indirectly owned 100% of our two principal operating subsidiaries in the Philippines, Solid Cement Corporation (“Solid Cement”) and APO Cement Corporation (“APO”). For the year ended December 31, 2023, our operations in the Philippines represented 2% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in the Philippines represented 3% of our total assets, in Dollar terms.
As of December 31, 2023, CHP was investing in a new 1.5 million ton integrated cement production line at the Solid Cement Plant located in Luzon, Philippines (the “Solid Cement Plant”). Upon completion, this new line should nearly double the capacity of the Solid Cement Plant and would represent a 26% increase in our cement capacity in the Philippines. In October 2018, we entered into principal project agreements with CBMI Construction Co., Ltd (“CBMI”), an affiliate of Sinoma International Engineering Co., Ltd., for the procurement, construction and installation of the new line. On April 25, 2019, Solid Cement held its ceremonial groundbreaking for the new line. Various work was already ongoing, including the mobilization of equipment and site development. The new rotary kiln was lifted into position in January 2021. On December 7, 2021, Solid Cement served a notice of termination with respect to the construction contract with CBMI, which covered the construction and installation of Solid Cement’s new line. Solid Cement’s notice
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of termination, which applies to one of the principal project agreements with CBMI, was issued due to the delay in construction and installation work. Solid Cement took measures to address contingencies which have arisen as a result of this termination, including engaging replacement contractors for the project. During the first quarter of 2022, Solid Cement entered into contracts with Atlantic Gulf and Pacific Company of Manila, Inc. and Betonbau Phil., Inc. to continue the construction and installation of Solid Cement’s new line. As of December 31, 2023, among the project components completed were (i) the slip form works for the raw meal silo, clinker silos, and cement silos of the new line, (ii) the commissioning and startup of the main electrical substation for the new line, and (iii) the limestone crusher system. In addition, during the fourth quarter of 2023, commissioning of the raw meal production system for the new line was started. CHP now estimates that the construction of the new line should be completed in the second half 2024 and the start of its operations could commence thereafter. The estimated total project cost for the new line remains at $323 million, while the estimated total interest capitalization for the project is adjusted to
$78 million.
Industry. According to the Philippine Statistics Authority, gross fixed capital formation in construction in 2023 was still below pre-COVID-19 pandemic 2019 levels by 5%. Although the public sector saw a resilient performance with its 49.8% growth compared to 2019, the private sector, which accounts for more than 60% of gross fixed capital formation in construction, pulled down the overall industry as it was lower by 23.2% in 2023 compared to 2019.
Competition. As of December 31, 2023, our major competitors in the Philippine cement market were Holcim, Republic, Eagle, Northern, Goodfound, Taiheiyo, and Mabuhay.
Description of Properties, Plants and Equipment. As of December 31, 2023, our operations in the Philippines included two cement plants (all of them active) with an annual installed cement capacity of 5.7 million tons, exclusive access to four quarries to supply raw materials to our cement plants, one aggregate quarry (which was temporarily inactive), 18 land distribution centers and six marine distribution terminals.
Cement. For the year ended December 31, 2023, our cement operations represented 99.7% of our external revenues from our operations in the Philippines in Dollar terms.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 0.3% of our external revenues from our operations in Philippines in Dollar terms.
Capital Expenditures. We made capital expenditures of $89 million in 2021, $72 million in 2022, and $85 million in 2023 in our operations in the Philippines. As of December 31, 2023, we expected to make capital expenditures of $116 million in our operations in the Philippines during 2024.
Urbanization Solutions. In the Philippines, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted of admixtures. This business is located in Luzon and Visayas.
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Our Operations in Israel
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Overview. We are a leading producer and supplier of raw materials for the construction industry in Israel. In addition to ready-mix concrete and aggregates, we produce a diverse range of building materials and infrastructure products in Israel. As of December 31, 2023, as indicated in the above maps, we operated 55 ready-mix concrete plants (55 of them active), seven aggregates quarries (seven of them active), two concrete products plants, one admixtures plant and one CDEW recycling plant. For the year ended December 31, 2023, our operations in Israel represented 5% of our consolidated external revenues in Dollar terms and 3% of our total assets, in Dollar terms. For the year ended December 31, 2023, ready-mix concrete represented 83%, aggregates represented 9%, Urbanization Solutions and our other businesses represented 8%, respectively of our external revenues from our operations in Israel in Dollar terms.
Capital Expenditures. We made capital expenditures of $45 million in 2021, $37 million in 2022, and $41 million in 2023 in our operations in Israel. As of December 31, 2023, we expected to make capital expenditures of $66 million in our operations in Israel during 2024.
Urbanization Solutions. In Israel, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of other concrete products and admixtures, among others. These businesses are located in the outskirts of Gush Dan.
Rest of EMEAA
As of December 31, 2023, our operations in the Rest of EMEAA segment consisted primarily of our operations in the Czech Republic, Croatia, Egypt, and the UAE. These operations represented 3% of our consolidated external revenues, in Dollar terms, for the year ended December 31, 2023, and 3% of our total assets as of December 31, 2023, in Dollar terms. As of December 31, 2023, we expected to make capital expenditures of $68 million in the Rest of EMEAA segment during 2024.
Our Operations in the Czech Republic
Overview. As of December 31, 2023, we were a leading producer of ready-mix concrete and aggregates in the Czech Republic. We also distribute cement in the Czech Republic. As of December 31, 2023, we operated one cement plant and one grinding mill with annual cement installed capacity of 1.7 million tons, one cement terminal and one admixtures plant in the Czech Republic. As of December 31, 2023, we also operated 70 ready-mix concrete plants (two of which were temporarily inactive), which include three mobile equipment producing concrete, and 12 aggregates quarries in the Czech Republic.
Industry. According to the Czech Statistical Office, total construction output in the Czech Republic declined by 2.2% year-over-year in 2023 as buildings construction decreased by 1.4% while civil engineering was down by 4.7% year-over-year.
According to the Czech Cement Association, total cement consumption in the Czech Republic reached a year- over-year decrease of 20% in the first half of 2023. According to our estimates, in 2024, ready-mix concrete production in the Czech Republic is estimated to decrease in comparison to 2023.
Competition. As of December 31, 2023, our main competitors in the cement, ready-mix concrete and aggregates markets in the Czech Republic were Heidelberg, Buzzi-Unicem, Holcim, Strabag and Skanska.
Capital Expenditures. We made capital expenditures of $26 million in 2021, $21 million in 2022, and $41 million in 2023 in our operations in the Czech Republic. As of December 31, 2023, we expected to make capital expenditures of $34 million in our operations in the Czech Republic during 2024.
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Urbanization Solutions. In the Czech Republic, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted of admixtures. This business is located in the eastern region of the Czech Republic.
Our Operations in Croatia
Overview. We were the largest cement producer in Croatia based on installed capacity as of December 31, 2023, according to our estimates. As of December 31, 2023, we had two cement plants (two of them active) in Croatia with an annual cement installed capacity of 2.2 million tons. As of December 31, 2023, we also operated 11 land distribution centers and two marine cement terminals in Croatia and Montenegro, eight ready-mix concrete facilities in Croatia (eight of them active), and one recycling yard in Croatia.
Industry. According to our estimates made as of the date of this annual report, total cement consumption in Croatia, Bosnia and Herzegovina and Montenegro decreased by 1.0% in 2023 compared to 2022.
Competition. As of December 31, 2023, our primary competitors in the cement market in Croatia were Nexe and Holcim.
Capital Expenditures. We made capital expenditures of $15 million in 2021, $11 million in 2022, and $17 million in 2023 in our operations in Croatia. As of December 31, 2023, we expected to make capital expenditures of $19 million in our operations in Croatia during 2024.
Urbanization Solutions. In Croatia, as of December 31, 2023, Urbanization Solutions were no longer being provided.
Our Operations in Egypt
Overview. As of December 31, 2023, we operated one cement plant in Egypt with an annual installed cement capacity of 5.4 million tons. This plant is located approximately 280 miles south of Cairo and serves the upper Nile region of Egypt, as well as Cairo and the Delta region, Egypt’s main cement market. In addition, as of December 31, 2023, we had three ready-mix concrete plants (one was inactive) and three land distribution centers in Egypt, and one admixtures plant. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Other Legal Proceedings—Egypt Share Purchase Agreement” for a description of certain legal proceedings relating to the share purchase agreement, signed in November 1999 between Cemex, S.A.B. de C.V. and state-owned Metallurgical Industries Company, pursuant to which Cemex, S.A.B. de C.V. acquired a controlling interest in ACC Limited (“ACC”).
Industry. According to the Ministry of Trade and Industry official figures and Cemex’s estimates, based on government data (local and imported cement), the Egyptian market cement consumption decreased by 7.1% in 2023 compared to 2022, which was mainly attributed to the governmental construction ban in 2020. As of December 31, 2023, the cement industry in Egypt had a total of 19 cement producers, with an aggregate annual installed cement production capacity of approximately 91 million tons.
Competition. According to the Ministry of Investment official figures, during 2023, Holcim, Lafarge Egypt, ACC and Heidelberg (Suez Cement, Torah Cement, and Helwan Portland Cement) represented approximately 26% of the total cement production in Egypt. Other significant competitors in Egypt are Arabian (La Union), Titan (Alexandria Portland
Cement and BeniSuef Cement), Amreyah (InterCement), Sinai (Vicat), South Valley, Nile Valley, El Seweedy, Arish Cement, National Company for Cement (Beni Suef plant), Aswan Medcom, Misr BeniSuef, Al Nahda and Misr Quena Cement Companies, Building Materials Industries Co., and ASEC Cement.
Capital Expenditures. We made capital expenditures of $20 million in 2021, $16 million in 2022, and $14 million in 2023 in our operations in Egypt. As of December 31, 2023, we expected to make capital expenditures of $11 million in our operations in Egypt during 2024.
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Urbanization Solutions. In Egypt, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of admixtures. This business is located mainly in Cairo.
Our Operations in the UAE
Overview. As of December 31, 2023, Cemex España held a 49% equity interest (and a 100% economic interest) in all of our main UAE companies: Cemex Topmix LLC and Cemex Supermix LLC, ready-mix concrete manufacturing companies, and Cemex Falcon LLC, which specializes in the production of cement and slag. We are not permitted to have a controlling interest in these companies because the UAE Commercial Companies Law requires 51% ownership by UAE nationals. However, through agreements with other shareholders in these companies, we have control over the remaining 51% of the economic benefits in each of the companies. As a result, we own a 100% economic interest in all three companies. As of December 31, 2023, we owned 12 ready-mix concrete plants (one was temporarily inactive), three pugmill plants, one admixture plant, and one cement and slag grinding facility in the UAE with an annual installed cement capacity of 1.2 million tons, serving the markets of Dubai and Abu Dhabi as well as neighboring countries such as Oman.
Capital Expenditures. We made capital expenditures of $5 million in 2021, $7 million in 2022, and $3 million in 2023 in our operations in the UAE. As of December 31, 2023, we expected to make capital expenditures of $4 million in our operations in the UAE during 2024.
Urbanization Solutions. In the UAE, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted of admixtures. This business is located mainly in Dubai.
SCA&C
For the year ended December 31, 2023, our business in the SCA&C region, which included our operations in Colombia, Panama, Caribbean TCL, the Dominican Republic and the Rest of SCA&C segment, as described below, represented 10% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in the SCA&C region represented 15% of our total installed capacity and 9% of our total assets, in Dollar terms.
CLH is the main holding company for Cemex’s operations in Colombia, Panama, Guatemala and Nicaragua.
On August 31, 2022, through certain of our subsidiaries, we concluded the sale of our operations in Costa Rica and El Salvador with affiliates of Cementos Progreso Holdings, S.L., for a total consideration of $325 million, related to our aggregate controlling interest. Our operations of these assets in Costa Rica and El Salvador for the year ended December 31, 2021 and for the period from January 1, 2022 to August 31, 2022 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2022 a gain on sale of $240 million.
Our Operations in Colombia
Overview. As of December 31, 2023, Cemex Colombia was the second-largest cement producer in Colombia, based on installed cement capacity of 4.1 million tons per year as of December 31, 2023. For the year ended December 31, 2023, our operations in Colombia represented 3% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operating business in Colombia represented 4% of our total assets, in Dollar terms.
Cemex Colombia has a significant market share in the cement and ready-mix concrete market in the “Urban Triangle” of Colombia comprising the cities of Bogotá, Medellin and Cali. During 2023, these three metropolitan areas accounted for approximately 37.2% of Colombia’s cement consumption. Cemex Colombia’s Ibagué plant, which is
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strategically located in the Urban Triangle, is Cemex Colombia’s largest plant as of December 31, 2023. Cemex Colombia, through its Cúcuta plant and Clemencia grinding facility, is also an active participant in Colombia’s northeastern and coastal markets.
Industry. According to our estimates made as of the date of this annual report, the installed capacity for cement in Colombia was 21.2 million tons in 2023. According to the Colombian National Statistical Administrative Department (Departamento Administrativo Nacional de Estadística), total cement consumption in Colombia reached 12.8 million tons during 2023, a decrease of 5.5% from 2022, while cement exports from Colombia during 2023 reached 1.13 million tons (according to the global trade and market research platform, SICEX). We estimate that as of December 31, 2023, close to 66% of cement in Colombia was consumed by the housing and self-construction sector, while the infrastructure sector accounted for approximately 27% of total cement consumption and has been growing in recent years up to December 31, 2023. The other construction segments in Colombia, including the formal housing and commercial sectors, account for the balance of cement consumption in Colombia.
Competition. As of December 31, 2023, our two largest competitors in Colombia were Cementos Argos, which has established a leading position in the Colombian Caribbean coast, Antioquia and Southwest region markets, and Holcim in the central region of the country. We estimate that as of December 31, 2023 there were 13 other local and regional competitors in Colombia.
The ready-mix concrete industry in Colombia was fairly consolidated with the top three producers accounting for approximately 61.2% of the market as of December 31, 2023. Cemex Colombia was the second-largest ready-mix concrete producer as of December 31, 2023. The first and third largest producers were Cementos Argos and Holcim Colombia, respectively.
The aggregates market in Colombia is highly fragmented and is dominated by the informal market. Approximately 95% of the aggregates market in Colombia was comprised of small independent producers as of December 31, 2023.
Urbanization Solutions. In Colombia, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of energy, admixtures, mortars, and circularity, among others. These businesses are located across Colombia.
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Our Operating Network in Colombia
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Products and Distribution Channels
Cement. For the year ended December 31, 2023, our cement operations represented 57% of our external revenues from our operations in Colombia in Dollar terms.
Ready-Mix Concrete. For the year ended December 31, 2023, our ready-mix concrete operations represented 36% of our external revenues from our operations in Colombia in Dollar terms.
Aggregates. For the year ended December 31, 2023, our aggregates operations represented 2% of our external revenues from our operations in Colombia in Dollar terms.
Urbanization Solutions and Others: For the year ended December 31, 2023, our Urbanization Solutions and other businesses operations represented 5% of our external revenues from our operations in Colombia in Dollar terms.
Description of Properties, Plants and Equipment. As of December 31, 2023, Cemex Colombia owned two operating cement plants and two cement grinding mills, having a total installed cement grinding capacity of 4.1 million tons. In 2023, we replaced 31% of our total fuel consumed in Cemex Colombia with alternative fuels, and we had an internal electricity generating capacity of approximately 42 MW as of December 31, 2023. The operating licenses for quarries in Colombia are renewed every 30 years; assuming renewal of such licenses, we estimate having sufficient
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cement raw materials reserves for our operations in Colombia for over 56 years assuming 2019 to 2023 average annual cement raw materials production levels. Reserves and production from the quarry located in Maceo are excluded from this calculation. As of December 31, 2023, Cemex Colombia also operated 10 distribution centers, one mortar plant, one admixtures plant, 34 ready-mix concrete plants (31 of them active), nine aggregates operations (eight were temporarily inactive) and one adhesives plant.
Cemex Colombia continues its progress on the Maceo Plant Project, with 86% and 52% of the plant and road portions completed as of the year ended December 31, 2023, respectively. We expect the Maceo Plant Project to enter into commission in the second half of 2024. See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Other Legal Proceedings—Maceo, Colombia—Legal Proceedings in Colombia” for the status of that project.
Capital Expenditures. We made capital expenditures of $27 million in 2021, $45 million in 2022, and $76 million in 2023 in our operations in Colombia. As of December 31, 2023, we expected to make capital expenditures of $121 million in our operations in Colombia during 2024.
Our Operations in Panama
Overview. For the year ended December 31, 2023, our operations in Panama represented 1% of our consolidated external revenues in Dollar terms. For the year ended December 31, 2023, cement represented 75%, ready-mix concrete represented 23%, aggregates represented 2%, Urbanization Solutions and other businesses represented less than 1%, respectively, of our external revenues from our operations in Panama in Dollar terms. As of December 31, 2023, our operating business in Panama represented 1% of our total assets, in Dollar terms.
Industry. As of the date of this annual report, we estimate that approximately 0.9 million cubic meters of ready-mix concrete were sold in Panama during 2023. Cement consumption in Panama increased 5.7% in 2023 compared to 2022, mainly due to public infrastructure such as the construction of phase 3 of the Panama Metro and additionally due to the housing sector. Cement consumption in Panama was still approximately 59% higher in 2023 when compared to 2020.
Competition. As of December 31, 2023, the cement industry in Panama included four cement producers: Cemento Bayano, Argos Panamá, an affiliate of Cementos Argos, Cemento Progresso and Cemento Chagres, a company that started operations during the second half of 2020 and is 100% owned by Panamanian investors.
Description of Properties, Plants and Equipment. As of December 31, 2023, our operations in Panama through Cemento Bayano operated one cement plant in Panama, with an installed cement capacity of 1.2 million tons and clinker capacity of 1.5 million tons. As of that date, Cemento Bayano also operated three ready-mix concrete plants (one was temporarily inactive), one admixtures plant and three distribution centers, including one location at the cement plant.
Capital Expenditures. We made capital expenditures of $9 million in 2021, $19 million in 2022, and $13 million in 2023 in our operations in Panama. As of December 31, 2023, we expect to make capital expenditures of $121 million in our operations in Panama during 2024.
Urbanization Solutions. In Panama, for the year ended December 31, 2023, in terms of relevant revenues, Urbanization Solutions business consisted primarily of admixtures. This business is located across Panama and exports to the Caribbean islands.
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Our Operations in Caribbean TCL
As of December 31, 2023, Caribbean TCL was one of the leading producers and marketers of cement and ready-mix concrete products in the Caribbean’s construction sector, with operations strategically located in Jamaica, Trinidad and Tobago, Guyana and Barbados. For the year ended December 31, 2023, our operations in Caribbean TCL represented 2% of our consolidated external revenues in Dollar terms. As of December 31, 2023, our operations in Caribbean TCL represented 2% of our total assets, in Dollar terms. For the year ended December 31, 2023, cement represented 96%, ready-mix concrete represented 2%, aggregates represented 2%, Urbanization Solutions and our other businesses represented less than 1%, respectively, of our external revenues from our operations in Caribbean TCL in Dollar terms.
As of December 31, 2023, our focus with respect to Caribbean TCL will continue on attempting to maximize further synergies from TCL’s integration with us. As of December 31, 2023, we intended to improve the productivity and capacity of our Caribbean TCL’s cement plants, continue the vertical integration of Caribbean TCL’s business, invest in developing its employees and offer strong value products to our customers in the region and elsewhere.
Capital Expenditures. We made capital expenditures of $22 million in 2021, $16 million in 2022, and $18 million in 2023 in Caribbean TCL. As of December 31, 2023, we expected to make capital expenditures of $52 million during 2024 in Caribbean TCL.
Our Operations in Trinidad & Tobago
Description of Properties, Plants and Equipment. As of December 31, 2024, TCL operated one cement plant in Trinidad & Tobago, with a total annual cement installed capacity of 1.0 million tons. As of December 31, 2023, TCL in Trinidad &Tobago had two operational ready-mix concrete plants, three aggregates quarries (three of them active), four land distribution centers and one marine terminal.
Urbanization Solutions. In Trinidad & Tobago, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of admixtures.
Our TCL Operations in Jamaica
Overview. As of December 31, 2023, we held an indirect controlling position mainly through TCL in CCCL.
Description of Properties, Plants and Equipment. As of December 31, 2023, CCCL operated one cement plant in Jamaica, with a total cement installed capacity of 1.5 million tons. As of December 31, 2023, CCCL had one aggregate quarry, four land distribution centers, including one location at the cement plant, and one marine terminal.
Our Operations in Barbados
Overview. As of December 31, 2023, through TCL, we held an indirect controlling position in Arawak Cement Company Limited (“Arawak”) in Barbados.
Description of Properties, Plants and Equipment. As of December 31, 2023, Arawak operated one cement plant in Barbados, with a total cement installed capacity of 0.4 million tons. As of that date, Arawak had one ready-mix concrete plant (temporarily inactive), one land distribution center and one marine terminal.
Urbanization Solutions. In Barbados, as of December 31, 2023, we did not have any Urbanization Solutions business.
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Our Operations in the Dominican Republic
Overview. As of December 31, 2023, Cemex Dominicana, S.A.’s (“Cemex Dominicana”) sales network covered the country’s main consumption areas, which are Santo Domingo, Santiago de los Caballeros, La Altagracia, San Cristobal and San Pedro de Macoris. On May 8, 2000, Cemex Dominicana entered into a lease agreement with the government of the Dominican Republic related to the exploitation of a gypsum mine located at Las Salinas, Barahona, which has enabled Cemex Dominicana to supply local and regional gypsum requirements. The lease agreement expires on May 8, 2025 and may be extended by the parties. For the year ended December 31, 2023, our operations in the Dominican Republic represented 2% of our consolidated external revenues, in Dollar terms. As of December 31, 2023, our operations in the Dominican Republic represented 1% of our total assets, in Dollar terms. For the year ended December 31, 2023, cement represented 79%, ready-mix concrete represented 7%, Urbanization Solutions and other businesses represented 14%, respectively, of our external revenues from our operations in the Dominican Republic in Dollar terms.
Industry. According to figures from the Dominican Cement Producers Association (Asociación Dominicana de Productores de Cemento Portland), cement consumption in the Dominican Republic reached 5.4 million tons in 2023.
Competition. As of December 31, 2023, our principal competitors in the Dominican Republic were: Cementos Cibao, a local producer; Domicem, a mixed Italian/local cement producer; Cementos Argos, a grinding operation of a Colombian cement producer; Cementos Santo Domingo, a cement grinding partnership between a local investor and Cementos La Union from Spain; Cementos Panam, a local cement producer; and Cementos Andino, a grinding operation; and a partially constructed cement kiln of a Colombian cement producer, currently inactive.
Description of Properties, Plants and Equipment. As of December 31, 2023, Cemex Dominicana operated one cement plant in the Dominican Republic, with an installed cement capacity of 2.4 million tons per year. As of that date, Cemex Dominicana also owned 12 ready-mix concrete plants (nine were temporarily inactive), one aggregate quarry (currently inactive), two land distribution centers and two leased marine terminals.
Capital Expenditures. We made capital expenditures of $15 million in 2021, $18 million in 2022, and $16 million in 2023 in our operations in the Dominican Republic. As of December 31, 2023, we expected to make capital expenditures of $20 million in our operations in the Dominican Republic during 2024.
Urbanization Solutions. In the Dominican Republic, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of multiproducts, among others. This business is located across the country.
Rest of SCA&C
As of December 31, 2023, our operations in the Rest of SCA&C segment consisted primarily of our operations and activities in Peru, Puerto Rico, Nicaragua, Jamaica, the Caribbean and Guatemala, excluding our Caribbean TCL segment. These operations represented 2% of our consolidated external revenues, in Dollar terms. As of December 31, 2023, our business in the Rest of SCA&C segment represented 1% of our total assets, in Dollar terms.
Our Operations in Puerto Rico
Overview. As of December 31, 2023, Cemex de Puerto Rico, Inc. (“Cemex Puerto Rico”) was our main subsidiary in Puerto Rico.
Industry. In 2023, cement consumption in Puerto Rico reached 0.63 million tons according to the Puerto Rico Economic Development Bank.
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Competition. The cement industry in Puerto Rico in 2023 was comprised of two cement companies: Cemex Puerto Rico and Cementos Argos (formerly Antilles Cement Co (Marine Terminal) and San Juan Cement Co (Cement Plant), respectively).
Description of Properties, Plants and Equipment. As of December 31, 2023, Cemex Puerto Rico operated one grinding mill, with an installed cement capacity of 1.3 million tons per year. As of that date, Cemex Puerto Rico also operated four ready-mix concrete plants (three were temporarily inactive), two land distribution centers (one was temporarily inactive) and one marine terminal used for fly ash.
Capital Expenditures. We made capital expenditures of $2 million in 2021, $3 million in 2022, and $1 million in 2023 in our operations in Puerto Rico. As of December 31, 2023, we expected to make capital expenditures of $2 million in our operations in Puerto Rico during 2024.
Urbanization Solutions. In Puerto Rico, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of lime, among others. These businesses are located across Puerto Rico.
Our Operations in Nicaragua
Overview. As of December 31, 2023, Cemex Colombia and Corporación Cementera Latinoamericana, S.L.U., both CLH subsidiaries, indirectly and directly owned 100% of Cemex Nicaragua, S.A. (“Cemex Nicaragua”), our operating subsidiary in Nicaragua.
Industry. We estimate that 0.98 million tons of cement, 0.3 million cubic meters of ready-mix concrete and five million tons of aggregates were sold in Nicaragua during 2023.
Competition. As of December 31, 2023, three market participants competed in the Nicaraguan cement industry, Cemex, Holcim and Cemento Continentales (cement importers).
Description of Properties, Plants and Equipment. As of December 31, 2023, we leased and operated one cement plant (currently active) and owned one grinding mill with a total installed cement capacity of 0.7 million tons, seven ready-mix concrete plants (three were temporarily inactive) and three distribution centers in Nicaragua (one of them inactive). We also had three aggregate quarries (all of them inactive). Since March 2003, Cemex Nicaragua has also leased a 100,000 tons milling plant in Managua, which has been used exclusively for pet coke milling.
Capital Expenditures. We made capital expenditures of $5 million in 2021, $4 million in 2022, and $9 million in 2023 in our operations in Nicaragua. As of December 31, 2023, we expected to make capital expenditures of $8 million in our operations in Nicaragua during 2024.
Urbanization Solutions. In Nicaragua, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of multiproducts. This business is located across Nicaragua.
Our Operations in Guatemala
Overview. As of December 31, 2023, Corporación Cementera Latinoamericana S.L.U. and Cemex Latam Holdings S.A. owned 100% of Cemex Guatemala, S.A. our main operating subsidiary in Guatemala.
Industry. We estimate that 5.3 million tons of cement, 1.2 million cubic meters of ready-mix concrete and 30.2 million tons of aggregate were sold in Guatemala during 2024. National cement consumption in Guatemala increased 1.7% against 2022, mainly driven by the reactivation of the formal construction section (e.g., vertical housing and industrial projects in metropolitan areas) and a steady consumption from the self-building sector.
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Competition. As of December 31, 2023, 11 market participants compete in the Guatemalan cement industry (Cemex, CEMPRO, REGIONAL, Wan Peng, Bonanza, Robusto, Mayacem, Stark, CEMGUA, Argos and Ultracem).
Description of Properties, Plants and Equipment. As of December 31, 2023, we owned and operated one cement grinding mill in Guatemala with an installed cement capacity of 0.6 million tons per year. As of that date, we also owned and operated five land distribution centers (including one located at the cement plant), one clinker dome close to our leased marine terminal in the southern part of the country and two ready-mix concrete plants (one was temporarily inactive).
Capital Expenditures. We made capital expenditures of $3 million in 2021, $10 million in 2022, and $11 million in 2023 in Guatemala. As of December 31, 2023, we expected to make capital expenditures of $18 million in our operations in Guatemala during 2024.
Urbanization Solutions. In Guatemala, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of multiproducts and pavement services, among others. These businesses are located across Guatemala.
Our Operations in the Rest of SCA&C
Overview. As of December 31, 2023, we held a non-controlling position in National Cement Ltd. in the Cayman Islands, Maxcem Bermuda Ltd. in Bermuda and Societe des Ciments Antillais, a company with cement operations in Guadalupe and Martinique. As of December 31, 2023, Cemex España additionally indirectly held a 100% interest in Cemex Jamaica Limited, which operates one calcined limestone plant in Jamaica with a capacity of 105,000 tons per year and one hydrate line with a capacity of 2,500 tons per year.
As of December 31, 2023, we operated a network of five marine terminals in these countries, which facilitated exports from our operations in Mexico, the Dominican Republic and Puerto Rico. Three of our marine terminals are in the Bahamas. As of December 31, 2023, we also had a non-controlling interest in two other terminals, one in Bermuda and one in the Cayman Islands. We also had two distribution centers in Guyana and Peru.
Capital Expenditures. In our operations in the Rest of SCA&C segment, we made capital expenditures of $4 million in 2021, $1 million in 2022, and $4 million in 2023. As of December 31, 2023, we expected to make capital expenditures of $8 million in our operations in other SCA&C countries during 2024.
Urbanization Solutions. In Jamaica, for the year ended December 31, 2023, in terms of relevant revenues, our Urbanization Solutions business consisted primarily of lime. This business serves specific customers.
Our Trading Operations
In 2023, we traded approximately 12 million tons of cementitious and non-cementitious materials in more than 50 countries, including approximately nine million tons of cement and clinker and approximately three million tons of cementitious and other materials. In addition, we traded approximately three million tons of certain primary fuels. More than four million tons of the traded cement and clinker consisted of exports from our operations in Mexico, Croatia, Spain, Germany, Trinidad and Tobago, Dominican Republic, and Panama, among others. Slightly less than five million tons remaining were purchased from third parties in countries such as Vietnam, Saudi Arabia, Turkey, Algeria, South Korea, Spain and Costa Rica, among others. In 2023, we traded approximately two million tons of granulated blast furnace slag, a non-clinker cementitious material, and slightly less than one million tons of other products. This information does not include our discontinued operations. See “Item 5—Operating and Financial Review and Prospects—Results of Operations—Discontinued Operations.” We believe that our trading network enables us to
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maximize the capacity utilization of our facilities worldwide while reducing our exposure to the inherent cyclicality of the cement industry. We are generally able to distribute excess capacity to regions around the world where there is demand. In addition, we believe that our worldwide network of strategically located marine terminals allows us to coordinate maritime logistics on a global basis and minimize transportation expenses. Our trading operations also enable us to explore new markets without significant initial capital expenditure.
Freight rates, which account for a large share of the total import supply cost, have been subject to significant volatility in recent years. However, our trading operations have obtained significant savings by contracting maritime transportation in due time and by using our own and chartered fleets, which transported approximately 75% of our coal, petcoke, cement, and clinker traded volume during 2023.
In addition, we provide freight related services to third parties, which allows us to generate additional revenues.
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Our Cement and Grinding Plants
The following table provides a summary of our cement and grinding plants, including location, used capacity, including grinding mill production, and years of operation as of and for the year ended December 31, 2023:
| Location |
Used Capacity |
Years of Operation(1) |
||||||
| Mexico: |
||||||||
| Atotonilco, Hidalgo |
1,270,873 | 65 | ||||||
| Barrientos, Estado de Mexico |
660,943 | 79 | ||||||
| Ensenada, Baja California |
430,195 | 48 | ||||||
| Guadalajara, Jalisco |
667,538 | 50 | ||||||
| CPN, Sonora |
673,165 | 43 | ||||||
| Hidalgo, Nuevo León |
59,556 | 118 | ||||||
| Huichapan, Hidalgo |
3,228,360 | 39 | ||||||
| Mérida, Yucatán |
784,035 | 70 | ||||||
| Monterrey, Nuevo León |
1,302,649 | 104 | ||||||
| Tamuín, San Luis Potosí |
1,580,989 | 59 | ||||||
| Tepeaca, Puebla |
2,855,827 | 29 | ||||||
| Torreón, Coahuila |
964,814 | 57 | ||||||
| Valles, San Luis Potosí |
485,414 | 58 | ||||||
| Yaqui, Sonora |
2,183,348 | 34 | ||||||
| Zapotiltic, Jalisco |
1,502,086 | 56 | ||||||
| USA: |
||||||||
| Balcones, TX |
1,448,522 | 43 | ||||||
| Brooksville, FL (North) |
0 | 48 | ||||||
| Brooksville, FL (South) |
1,183,359 | 36 | ||||||
| Clinchfield, GA |
530,015 | 49 | ||||||
| Demopolis, AL |
618,081 | 46 | ||||||
| Knoxville, TN |
563,244 | 44 | ||||||
| Miami, FL |
883,249 | 65 | ||||||
| Lyons, CO |
289,214 | 43 | ||||||
| Victorville, CA |
2,356,082 | 58 | ||||||
| Wampum, PA |
0 | 58 | ||||||
| United Kingdom: |
||||||||
| Rugby |
997,419 | 24 | ||||||
| Ferriby |
0 | 57 | ||||||
| Tilbury |
456,077 | 15 | ||||||
| Germany: |
||||||||
| Rudersdof |
1,493,901 | 57 | ||||||
| Eisenhüttenstadt |
241,989 | 71 | ||||||
| Spain: |
||||||||
| Alcanar |
714,443 | 55 | ||||||
| Castillejo |
488,020 | 112 | ||||||
| Lloseta |
0 | 56 | ||||||
| Morata |
383,228 | 91 | ||||||
| San Vicente |
813,636 | 48 | ||||||
| Gador |
0 | 47 | ||||||
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| Location |
Used Capacity |
Years of Operation(1) |
||||||
| Poland: |
||||||||
| Chelm |
1,348,483 | 63 | ||||||
| Rudniki |
642,988 | 58 | ||||||
| Gdynia |
175,120 | 23 | ||||||
| Czech Republic: |
||||||||
| Prachovice |
714,504 | 69 | ||||||
| Detmarovice |
145,116 | 20 | ||||||
| Croatia: |
||||||||
| Juraj |
1,162,720 | 111 | ||||||
| Kajo |
313,533 | 119 | ||||||
| Philippines: |
||||||||
| APO |
2,659,902 | 25 | ||||||
| Solid Cement |
1,283,597 | 30 | ||||||
| Egypt: |
||||||||
| Assiut |
3,512,754 | 37 | ||||||
| United Arab Emirates: |
||||||||
| Falcon |
446,627 | 16 | ||||||
| Colombia: |
||||||||
| Cucuta |
212,920 | 40 | ||||||
| Ibagué |
2,174,779 | 31 | ||||||
| Clemencia |
139,001 | 10 | ||||||
| Santa Rosa |
474,061 | 41 | ||||||
| Panama: |
||||||||
| Calzada Larga |
567,434 | 46 | ||||||
| Trinidad and Tobago: |
||||||||
| Claxton Bay |
719,368 | 70 | ||||||
| Jamaica: |
||||||||
| Rockport |
959,235 | 72 | ||||||
| Barbados: |
||||||||
| St. Lucy |
67,639 | 40 | ||||||
| Dominican Republic: |
||||||||
| San Pedro de Macorís |
1,937,957 | 33 | ||||||
| Nicaragua: |
||||||||
| San Rafael del Sur(2) |
368,086 | 81 | ||||||
| Managua |
247,427 | 8 | ||||||
| Puerto Rico: |
||||||||
| Ponce |
304,352 | 33 | ||||||
| Guatemala: |
||||||||
| Arizona |
604,538 | 18 | ||||||
| (1) | Approximate. |
| (2) | Leased. |
For the aggregate installed cement production capacity of our cement plants by region, see “Item 4—Information on the Company—Business Overview.”
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We have insurance coverage for our cement plants, which we believe is sufficient and in line with industry practices. However, in some instances, our insurance coverage may not be sufficient to cover all of our potential unforeseen losses and liabilities. In addition, our insurance coverage may not cover all the risks to which our cement plants may be exposed. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—Our insurance coverage may not cover all the risks to which we may be exposed or may cover them to an amount that may not be sufficient to satisfy our requirements.”
Regulatory Matters and Legal Proceedings
A description of regulatory matters and legal proceedings existing as of December 31, 2023, in which Cemex, S.A.B. de C.V. and/or its consolidated subsidiaries (“Cemex,” “us,” “we,” “our”) are involved and/or are affected by is provided below. Most of the matters and proceedings described herein are or were material, or could become material. Materiality is tested at a Cemex, S.A.B. de C.V. and its subsidiaries consolidated level. Not all regulatory matters and legal proceedings provided below are required to be publicly disclosed.
Antitrust Proceedings
Antitrust investigations in the construction chemicals sector
France. On October 17, 2023, the European Commission inspected our offices in France and requested certain information relating to our business in France in the construction chemicals sector, which includes chemical admixtures and additives for use in concrete, cement, mortars and related construction products. To the extent that we produce these products, we do so primarily for internal consumption and consequently have insignificant third-party sales. We are fully cooperating with the authorities conducting this investigation. The fact that this investigation is being conducted does not mean that the European Commission has concluded that we have violated the law. As of December 31, 2023, due to the early stages of this investigation, we are not able to assess the likely outcome of the investigation as it relates to us or whether it would have a material adverse impact on our results of operations, liquidity, and financial condition.
United States. On October 17, 2023, our operations in the United States received a grand jury subpoena issued by the DOJ in connection with an investigation of possible antitrust law violations in the cement additives and concrete admixtures (including chemical and mineral admixtures) sector. To the extent that we produce these products, we do so primarily for internal consumption and consequently have fairly insignificant third-party sales. We are fully cooperating with the authorities conducting this investigation. The fact that this investigation is being conducted does not mean that the DOJ has concluded that we have violated the law. As of December 31, 2023, due to the early stages of this investigation, we are not able to assess the likely outcome of the investigation as it relates to us or whether it would have a material adverse impact on our results of operations, liquidity, and financial condition.
Polish Antitrust Investigation
On January 2, 2007, Cemex Polska Sp. z.o.o. (“Cemex Polska”) received a notification from the Polish Competition and Consumer Protection Office (the “Protection Office”) informing it of the formal initiation of an antitrust proceeding against all cement producers in Poland, including Cemex Polska and another of our indirect subsidiaries in Poland. The notification alleged that there was an agreement between all cement producers in Poland regarding prices and other sales conditions for cement, an agreed division of the market with respect to the sale and production of cement, and the exchange of confidential information, all of which limited competition in the Polish market with respect to the production and sale of cement. On December 9, 2009, the Protection Office delivered to Cemex Polska its decision against Polish cement producers related to an investigation which covered a period from 1998 to 2006. The decision-imposed fines on a number of Polish cement producers, including Cemex Polska. The fine imposed on Cemex Polska
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was 115.56 million Polish Zloty (U.S. $29.32 million as of December 31, 2023, based on an exchange rate of 3.94 Polish Zloty to U.S. $1.00), which was 10% of Cemex Polska’s total revenue in 2008. Cemex Polska disagreed with the decision, denied that it committed the practices alleged by the Protection Office and, therefore, on December 23, 2009, Cemex Polska filed an appeal before the Polish Court of Competition and Consumer Protection in Warsaw (the “First Instance Court”). After a series of hearings, on December 13, 2013, the First Instance Court issued its judgment in regard to the appeals filed by Cemex Polska and other cement producers, which were previously combined into a joint appeal. The First Instance Court reduced the penalty imposed on Cemex Polska to 93.89 million Polish Zloty (U.S. $23.82 million as of December 31, 2023, based on an exchange rate of 3.94 Polish Zloty to U.S. $1.00), which was equal to 8.125% of Cemex Polska’s revenue in 2008. On May 8, 2014, Cemex Polska filed an appeal against the First Instance Court judgment before the Appeals Court of Warsaw. On March 27, 2018, after different hearings, the Appeals Court of Warsaw issued its final judgment reducing the fine imposed upon Cemex Polska to 69.4 million Polish Zloty (U.S. $17.61 million as of December 31, 2023, based on an exchange rate of 3.94 Polish Zloty to U.S. $1.00). This fine, which was equal to 6% of Cemex Polska’s revenue in 2008, was paid. On November 19, 2018, Cemex Polska filed before the Polish Supreme Court an extraordinary, narrow based cassation appeal against the Appeals Court of Warsaw’s judgment specifically seeking the reduction of the imposed fine. On July 29, 2020, the Polish Supreme Court rendered a judgment cancelling the Appeals Court of Warsaw’s decision with respect to the cement cartel process as it applied to Cemex Polska and four other cement producers. The cancelation was based on arguments raised in cassation regarding the calculation of penalties and the time at which the alleged agreement between the cement producers actually ended. Furthermore, the fine paid by Cemex Polska equal to 69.4 million Polish Zloty ($17.61 million as of December 31, 2023, based on an exchange rate of 3.94 Polish Zloty to U.S. $1.00) was returned to Cemex Polska on January 7, 2021.
Following the judgment issued by the Polish Supreme Court, the proceeding was referred again to the Appeals Court of Warsaw. On May 21, 2021, the Appeals Court of Warsaw, due to procedural reasons, cancelled the judgment of the First Instance Court issued on December 13, 2013, against five producers, including Cemex Polska, and referred the case to re-examination by the District Court of Warsaw, which would now serve as the court of first instance. On January 10, 2022, an appeal with the Polish Supreme Court was filed by Cemex Polska against the May 21, 2021 judgment of the Appeals Court of Warsaw. The appeal of Cemex Polska has concentrated on the wrongful appointment of judges of the Polish Supreme Court and selection of judges of the Appeals Court of Warsaw. The Protection Office has also filed an appeal with the Polish Supreme Court against the May 21, 2021 judgment of the Appeals Court of Warsaw, demanding that the Appeals Court of Warsaw conduct further proceedings, instead of the District Court of Warsaw. On January 24, 2023, Cemex Polska filed a motion for the Polish Supreme Court to carry out independence and impartiality tests on all three judges designated to consider the appeal of the Protection Office, requesting the exclusion of those judges determined to be not independent and impartial pursuant to the tests. Additionally, Cemex Polska made a formal request to the Polish Supreme Court to send judicial questions to the European Court of Justice (“ECJ”) on the proper appointment of the challenged judges of the Polish Supreme Court and their impartiality. On March 15, 2023, the Polish Supreme Court decided to send the judicial questions to the ECJ, as requested by Cemex Polska, regarding the status of only one of the Polish Supreme Court judges designated for the case. Cemex Polska is acting as a party in the ECJ proceeding. Court proceedings relating to this matter, including the one before the ECJ, are expected to last between three and five years, depending on the priority given to it by the courts adjudicating the case.
As of December 31, 2023, given that the case will be re-examined, at this stage we are not able to assess if Cemex Polska would receive an adverse resolution that could lead to any fines, penalties or remedies against our operations in Poland, but while we believe an adverse resolution is not probable, if adversely resolved, we do not expect that any fines, penalties or remedies would have a material adverse effect on our results of operations, liquidity or financial condition.
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Antitrust Cases in Georgia and South Carolina
On July 24, 2017, two ready-mix concrete producers filed a lawsuit in a U.S. Federal Court in the state of Georgia against certain subsidiaries of Cemex in the United States and other companies alleging customer allocation and price fixing in both the ready-mix concrete and cement markets in the coastal Georgia and southeastern coastal South Carolina areas. In addition, on January 22, 2020, new plaintiffs who were the prior owners of a ready-mix concrete producer, and the concrete producer, filed a lawsuit in the same court against the same subsidiaries of Cemex making substantially similar allegations as the suit filed on July 24, 2017. As Cemex does not participate in the ready-mix concrete market in these areas, the lawsuits do not allege any improper actions by Cemex with respect to ready-mix concrete. On October 2, 2017, Cemex filed a motion to dismiss the 2017 lawsuit. This motion to dismiss was denied on August 21, 2018, and, as a result, Cemex will continue to defend the allegations. In response to a request to stay the proceedings made in the first quarter of 2021 by the DOJ, the lawsuit filed on July 24, 2017, was administratively closed. On June 30, 2021, a motion to dismiss the lawsuit filed on January 22, 2020, was granted with leave to file an amended complaint by the concrete producer plaintiff within 21 days following entry of the order to dismiss. The claims of the prior owners were dismissed. In April 2021, the concrete producer in the January 2020 lawsuit voluntary dismissed its claims, which effectively terminated the lawsuit. On October 17, 2022, in respect to a motion by the plaintiffs, an order administratively reopening the July 2017 lawsuit was entered to allow for limited discovery to proceed through February 17, 2023. As of December 31, 2023, at this stage of the July 2017 lawsuit, while we cannot assess with certainty the likelihood of an adverse result in this lawsuit, we believe a final adverse resolution to this lawsuit is not probable; and, if adversely resolved, we believe an adverse resolution should not have a material adverse impact on our results of operations, liquidity, and financial condition.
Antitrust Investigation in Colombia
On September 5, 2013, Cemex Colombia was notified of Resolution No. 49141 dated August 21, 2013, issued by the Colombian Superintendency of Industry and Commerce (Superintendencia de Industria y Comercio) (“SIC”) pursuant to which the SIC opened an investigation and issued a statement of objections (pliego de cargos) against five cement companies and 14 directors of those companies, including Cemex Colombia, for alleged anti-competitive practices.
On December 11, 2017, the SIC’s Chief Superintendent decided to impose a sanction against Cemex Colombia, two other cement companies and six natural persons, for entering into an agreement to fix gray cement prices in Colombia. The fines imposed upon Cemex Colombia, which were paid on January 5, 2018, amounted to $73.77 billion Colombian Pesos (U.S. $19.13 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00).
Cemex Colombia decided not to file a reconsideration request, and, instead, on June 7, 2018 it filed an annulment and reestablishment of right claim (acción de nulidad y restablecimiento de derecho) before the Administrative Court (Tribunal Contencioso Administrativo) requesting that the charges brought forth by the SIC be annulled and that the restitution is made to Cemex Colombia of the fine it had paid, with any applicable adjustments as provided by Colombian Law. This claim could take up to six years to be resolved. As of December 31, 2023, we are not able to assess the likelihood of an adverse result in this matter, but if such matter is resolved adversely to us, and considering that the fines were paid in 2018, such adverse resolution should not have a material adverse impact on our results of operations, liquidity, and financial condition.
Colombian Class Action Lawsuit
On August 2020, a class action lawsuit (Acción Popular) (the “Colombian Class Action”) was filed with a Circuit Civil Court in Colombia against Cemex Colombia and other gray portland cement market participants (the “Colombian Class Action Defendants”). The lawsuit sought compensation for damages arising from alleged cartel actions for
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which the SIC fined the Colombian Class Action Defendants in December 2017. The lawsuit claimed that the Colombian Class Action Defendants caused damages to all consumers of gray portland cement in Colombia during the period of 2010 to 2012.
The plaintiff’s lawsuit claimed that the Colombian Class Action Defendants should be ordered to pay damages due to the higher price set on gray portland cement. The plaintiff also claimed that this amount should be indexed since 2013. The plaintiff’s arbitrary calculation of the total alleged damages caused by the Colombian Class Action Defendants was $1.32 trillion Colombian Pesos (U.S. $342.41 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00).
The Circuit Civil Court initially dismissed the Colombian Class Action, and the plaintiff filed an appeal, which, on April 9, 2021, was resolved by the Superior Court of Bogotá, reversing the decision by the Circuit Civil Court and ordering to review the admission of the claim again. On May 14, 2021, the Circuit Civil Court admitted the claim. Cemex Colombia subsequently filed an appeal against the admission of the claim, and on May 11, 2022, the Circuit Civil Court in Colombia issued a ruling in favor of Cemex Colombia, dismissing the proceeding. The plaintiff appealed this decision on May 16, 2022, and, on May 23, 2022, Cemex Colombia requested the Circuit Civil Court to ratify its decision to dismiss. Consequently, on July 11, 2022, the Circuit Civil Court ratified its decision to dismiss the case and subsequently sent the docket of the proceeding to the Superior Court of Bogota. The Superior Court of Bogota confirmed the dismissal on August 24, 2022. The plaintiff failed to file an Acción de Tutela against the confirmation of the dismissal within the 6-month term specified by law; and, therefore, as it relates to Cemex Colombia, the procedure has concluded and should not have a material adverse impact on our results of operations, liquidity, and financial condition.
Environmental Matters
The following is a general discussion of environmental regulations and related matters, including in our major markets.
In the ordinary course of business, we are subject to a broad range of environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations impose increasingly stringent environmental protection standards regarding, among other things, air emissions, wastewater discharges, the use and handling of hazardous waste or materials, waste disposal practices, facility siting and the remediation of environmental damage or contamination, among other standards. These laws and regulations expose us to the risk of not being able to comply, substantial environmental costs and liabilities, including liabilities associated with divested assets and past activities and, in some cases, the acts and omissions of the previous owners or operators of a property or facility that we own or operate. Furthermore, in some jurisdictions, certain environmental laws and regulations impose liability without regard to fault or the legality of the original activity at the time of the actions giving rise to liability. In line with our global initiatives on environmental management, we maintain an environmental policy designed to monitor and respond to environmental developments. Our environmental policies require that our subsidiaries respect and comply with local laws and meet our own internal standards to minimize the use of non-renewable resources and the generation of hazardous and other wastes. We use processes that are designed to reduce the impact of our operations on the environment throughout all the production stages in all our operations worldwide. In addition, during 2012 we started the implementation of a global EMS at our operating sites that provides a framework to facilitate the consistent and systematic implementation of practical, risk-based environmental management at our operating sites. As of December 31, 2023, substantially all of our operating sites in Mexico, EMEAA, and SCA&C have implemented the EMS, compliant with our internal environmental management standard. The EMS is designed to be used to support sites and businesses across Cemex globally to document, maintain and continuously improve our environmental performance. As of December 31, 2023, substantially all of our cement plants already have an environmental management system implemented (i.e. ISO 14000 certifications, Eco-Management and Audit Schemes
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(EMAs or Cemex EMS). As of December 31, 2023, most of the remaining implementation efforts are directed towards our aggregates and ready-mix plants.
Environmental expenditures that extend useful life, increase the capacity, improve the safety or efficiency of assets, or are incurred to mitigate or prevent future environmental contamination may be capitalized. Other environmental costs are expensed when incurred. For the years ended December 31, 2021, 2022 and 2023, our sustainability-related capital expenditures (including our environmental expenditures and investments in alternative fuels and cementitious materials) were $103 million, $170.8 million and 150 million, respectively. We also regularly incur capital expenditures that have an environmental component or that are impacted by environmental regulations. However, we do not keep separate accounts for such mixed capital and environmental expenditures.
International Climate Regime
The UNFCCC entered into force on March 21, 1994. It has now been ratified by 198 countries. The aim of the UNFCCC is preventing dangerous human interference with the climate system. The Kyoto Protocol to the UNFCCC set legally binding emission reduction targets for industrialized countries (including countries in the EU) during two separate “commitment periods,” both of which as of December 31, 2023 have expired.
In order to be able to maintain the international climate protection process after 2020, a new climate agreement was required. This resulted in the adoption of an agreement known as the Paris Agreement in 2015, which is a separate instrument under the UNFCCC. Parties to the Paris Agreement agree to limit global warming to well below 2°C and pursue efforts to limit it to 1.5°C. Under the Paris Agreement, each party must submit a “Nationally Determined Contribution” or “NDC,” which is, broadly speaking, a climate action plan to cut emissions and adapt to climate impacts. Parties to the Paris Agreement are free to choose how to implement their NDCs domestically, including what legislation to put in place. NDCs are required to be updated every five years. Some of the legislation we summarize below reflects legislation that has been or is being put in place at least in part in order to allow compliance with NDCs.
As of December 31, 2023, it is uncertain if NDCs will lead to the implementation of any further regulations, and if any such implementation would have a material adverse impact on our results of operations, liquidity, and financial condition.
Mexico
We were one of the first industrial groups in Mexico to sign an agreement with the Mexican Ministry of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales) (“SEMARNAT”) to carry out voluntary environmental audits in our 15 Mexican cement plants under a government-run program. In 2001, the Mexican Environmental Protection Agency (Procuraduría Federal de Protección al Ambiente) (“PROFEPA”), which is part of SEMARNAT, completed the audit of our cement plants and awarded each of them a Clean Industry Certificate (Certificado de Industria Limpia) (“CIC”) certifying that our cement plants are in full compliance with applicable environmental laws. The CICs are subject to renewal every two years. As of December 31, 2023, our operating cement plants in Mexico had CICs or were in the process of renewing them.
For almost three decades, the technology for co-processing used alternative fuels into an energy source has been employed in our cement plants in Mexico. By the end of 2019, all our operating cement plants in Mexico were using alternative fuels. Overall, 42.9% of the total fuel used in our operating cement plants in Mexico during 2023 was comprised of alternative fuels. In January 2021, a modification to the General Waste Law was published in the Official Mexican Gazette (Diario Oficial de la Federación) to include co-processing as part of the industrial process, providing that authorizations granted by the SEMARNAT under federal licenses will remove the need for authorizations at the State level.
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In 2021, 2022, and 2023 our operations in Mexico invested $27.76 million, $43.79 million, and $24.54 million respectively, in the acquisition of environmental protection equipment and the implementation of the integrated management system (ISO 9001, 14001, and 4500), for a total of $252.57 million since 1999 as of December 31, 2023. The audit to obtain the renewal of the ISO 14001:2015 certification took place during 2023, and all our operating cement plants in Mexico obtained the renewal of the ISO 14001:2015 certification for environmental management systems, which is valid until February 2027.
Emissions Control and Raw Materials Extraction
On June 6, 2012, the General Law on Climate Change (Ley General de Cambio Climático) (the “Climate Change Law”) was published in the Official Mexican Gazette. The Climate Change Law establishes a legal framework to regulate policies for climate change mitigation and adaptation. Important provisions of the Climate Change Law require the development of secondary legislation and depend on the publication of subsequent implementing regulations. For instance, the Climate Change Law provides, among other things, for (i) the elaboration of a registry of the emissions that are generated by fixed sources, (ii) companies to report their emissions, if required, and (iii) the application of fines to those companies that fail to report or that report false information. In this regard, on October 29, 2014, the Regulations to the General Law on Climate Change Regarding the National Registry of Emissions (Reglamento de la Ley General de Cambio Climático en Materia del Registro Nacional de Emisiones) (the “Regulations”) became effective. As of December 31, 2023, Cemex has been granted the positive opinions on greenhouse gas (“GHG”) emission by a certified and approved third party for all its required plants and has reported them to the PROFEPA. The purpose of the Regulations is to govern the Climate Change Law regarding the National Registry of Emissions, identifying the sectors and subsectors, which include among others, the cement industry, that must file the corresponding reports before the National Registry of Emissions. We had previously reported our direct and indirect CO2 emissions to SEMARNAT under a voluntary scheme. The Climate Change Law also allows for the establishment of specific GHG reduction targets in accordance with the respective contribution of each economic sector to the national GHG emissions. A Special Tax on Production and Services (Impuesto Especial Sobre Producción y Servicios) on the sale and import of fossil fuels was included in the tax reform that became effective on January 1, 2014. As of December 31, 2023, petcoke, a primary fuel widely used in our kilns in Mexico is taxed at a rate of Ps 24.6014 per ton (U.S. $1.45 per ton as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00).
On October 1, 2019, SEMARNAT published the basis for a trial emissions trading program (Programa de prueba del Sistema de Comercio de Emisiones). The trial program set forth an initial 24-month pilot phase for the adoption of the program that started on January 1, 2020 and concluded on December 31, 2021, and was followed by a 12-month period to transition to the operative stage, which ended on December 31, 2022. The trial program did not have any economic consequences for the participants. During a conference on climate change, the Mexican government presented the contribution determinations, increasing the national GHG reduction goal from 22% to 35% in 2030, with respect to its baseline. As of December 31, 2023, the Mexican Emissions Trading System (Sistema de Comercio de Emisiones) (“Mexican ETS”) is expected to enter its Phase I starting at some point during 2024 and to conclude on December 31, 2026, followed by its Phase II that is expected to last from January 1, 2027 to December 31, 2030. As of December 31, 2023, the operating rules of the Mexican ETS for Phase I are under review by the SEMARNAT and are expected to be issued in June 2024. Additionally, as of December 31, 2023, each of the participating sectors’ growth projection factors, including the cement industry, were still being drafted by the National Institute of Ecology and Climate Change (Instituto Nacional de Ecología y Cambio Climático). Each participating sector’s free allocation of allowances for Phase I are expected to be calculated according to its corresponding growth projection factor. Once finalized, these projection factors and the respective free allocations, if any, are expected to be published by the SEMARNAT. As of December 31, 2023, we are unable to determine if Phase I of the Mexican ETS will have a material adverse impact on our results of operations, liquidity, and financial condition.
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As of December 31, 2023, taxes on the extraction of raw materials and/or GHG emissions (the “Ecological Taxes”) are in effect in 15 states, from which seven of those states’ Ecological Taxes have a direct impact on Cemex’s operations: Quintana Roo, Nuevo León, Querétaro, Yucatán, Estado de Mexico, San Luis Potosí, and Coahuila. In these states, the Ecological Taxes on the extraction of raw materials range from 0.11 Units of Measurement and Update (Unidad de Medida y Actualización) (“UMA”) per m3 of material to 1.5 UMAs per m3 of material; and Ecological Taxes on CO2e emissions range from Ps 43 per ton of CO2e (U.S. $2.53 per ton of CO2e as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00) to 5.6 UMAs or Ps 580.94 per ton of CO2e (U.S. $34.23 per ton of CO2e as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00). As of December 31, 2023, an UMA equals Ps 103.74 (U.S. $6.11 as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00). As of December 31, 2023, Cemex has filed constitutional challenges against the Ecological Taxes in (i) Quintana Roo, which was resolved in Cemex’s favor, however the final implications of the resolution are yet to be determined by the court resolving the case; (ii) Coahuila, which was resolved in Cemex’s favor and thus, Cemex is not bound to pay the state’s Ecological Taxes; and (iii) Yucatán, which is yet to be resolved. As of December 31, 2023, Cemex, in the states where it would still be allowed to, expects to file constitutional challenges against the Ecological Taxes where constitutional challenges have not yet been filed. If Cemex is unable to obtain favorable resolutions relating to the constitutional challenges in the states where they are yet to be resolved and the states where constitutional challenges are expected to be filed, as of December 31, 2023, we expect that the aggregate impact of the Ecological Taxes could have an adverse impact on our results of operations, liquidity, and financial condition, which could even be material depending on the volume of raw materials that are extracted and/or the levels of GHG emissions, if any; however, notwithstanding these adverse effects, this development is not expected to adversely affect our operations and commercial relationships with clients or suppliers or our ability to meet our financial obligations.
Energy Procurement
On August 12, 2014, a package of energy reform legislation became law in Mexico. The then newly enacted energy reform legislation, which included nine new laws, as well as amendments to existing laws, implemented the December 2013 constitutional energy reform and established a new legal framework for Mexico’s energy industry. One of the new laws that was enacted is the Electric Industry Law (Ley de la Industria Eléctrica) (the “Electric Industry Law”), which establishes a legal framework for electricity-related activities in Mexico and structurally changes the national electric industry, creating a wholesale energy market in which companies can acquire power and associated products, directly from privately owned suppliers, as opposed to only acquiring energy from the Federal Electricity Commission (Comisión Federal de Electricidad) (“CFE”). On October 31, 2014, certain rules and regulations related to the energy reform legislation, including the regulations of the Electric Industry Law, were published. As part of the Electric Industry Law, a system for tradable clean energy certificates was created and certain clean energy procurement obligations were imposed on consumers. The clean energy procurement obligations for 2018 to 2024 were announced by the Mexican Energy Regulatory Commission (Comisión Reguladora de Energía) (“CRE”) at 5%, 5.8%, 7.4%, 10.9%, 13.9%, 13.9%, and 13.9%, respectively. Further increases to this requirement are expected for future years. Cemex’s operations in Mexico have ongoing commitments to procure power from renewable projects operating under the “self-supply” framework of the former Electric Energy Public Service Law, and the energy supplied under these contracts is exempted from the clean energy obligation. Nonetheless, since 2018, from time to time, we have acquired clean energy certificates in an immaterial amount to comply with the clean energy obligations for the fraction of energy supply that does not come from clean generators. Over time, according to the penalty levels set by the CRE, non-compliance with the clean energy procurement obligations could have a material adverse impact on our business or operations in Mexico, but as of December 31, 2023, we are not able to assess if any such impact would in turn have a material adverse impact on our results of operations, liquidity, and financial condition.
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On September 8, 2015, the Electricity Market Rules (Bases del Mercado Eléctrico) (the “Rules”) were published in the Official Mexican Gazette and became effective on September 9, 2015. The Rules, which are an important step forward in the implementation of the reforms enacted regarding Mexico’s energy industry, contain the design and operation principles of the different components of the wholesale electricity market (the “Electricity Market.”) and, together with the Electric Industry Law and several administrative provisions and guidelines issued by CRE, regulate the possibility for consumers to enter into supply agreements with CFE or with private suppliers participating in the Electricity Market. As of December 31, 2023, we are authorized participants in the Electricity Market. Additionally, Cemex participated as a buyer in the third long-term power auction organized in 2017 by CENACE, through the clearinghouse in charge of the agreements awarded through the auctions, and was awarded a 20-year contract for 16,129 clean energy certificates per year for compliance starting in 2020 and 14.9 GWh/a of electric power.
During 2016, a new electrical standards code for the national grid’s operation was issued in Mexico (Código de Red) (the “Code”). The Code establishes new standards for electrical operation and safety that begun to be enforced in 2019 against consumers connected to the national grid, including Cemex and generators. On December 31, 2021, the CRE published a resolution in the Official Mexican Gazette through which it issued a revised version of the Code (the “2.0 Code”). The 2.0 Code came into force as of January 1, 2022, and among other things, provides (i) the technical requirements applicable to load centers that are connected, or intend to connect, to the National Electric System at medium or high tension, in order to guarantee the efficiency, quality, reliability, continuity, safety and sustainability of the system, (ii) the obligation for renewable power plants to participate in primary frequency control, (iii) a procedure to execute root cause assessments of disturbances in the National Electric System and (iv) a new procedure to reduce the generation of electric power upon the occurrence of extraordinary conditions in the National Electric System. As of December 31, 2023, we do not foresee that compliance with the 2.0 Code would require material investments across our operating assets in Mexico.
On May 28, 2020, during an extraordinary meeting, the CRE approved two resolutions which call for increases to the transmission charges payable to the CFE by all electric power generators, with renewable and conventional power plants, operating under grandfathered interconnection agreements (“Grandfathered Generators”) which are subject to the laws and regulations that were applicable before the Mexican energy reform of 2013 to 2014 (the “CRE Resolutions”). Under the CRE Resolutions, these new wheeling charges for the transmission service constitute an exponential and immediate increase for Grandfathered Generators and were applied by CFE as of July 2020. While the entities legally obliged to pay for those transmission costs are Grandfathered Generators, the end-users must hold a minority participation in the Grandfathered Generators from whom they receive the power supply. Thus, depending on the structure agreed in the corresponding power supply agreements (which could consist of pass-through provisions for such transmission costs), end-users under the grandfathered “self-supply” scheme, including Cemex, may run the risk of transmission costs and be obligated to pay the relevant grandfathered projects for said incremental costs. In the case of the three wind farms in Mexico owned by Grandfathered Generators, in which Cemex has a minority participation and with which Cemex has entered into long-term arrangements to receive power under the “self-supply” framework, the charges for transmission payable to CFE associated with the wind farms increased by four to six times. Furthermore, we expect the transmission charges to increase by about 80% in the case of the pet coke-fired self-supply thermal power plant in Tamuin, Mexico, owned by another Grandfathered Generator in which Cemex has a minority participation and with which Cemex has also entered into a long-term arrangement to receive power.
As of December 31, 2023, the Grandfathered Generators that supply electric energy to our operations in Mexico have all obtained injunctions against the applicable CRE Resolutions and two of them have obtained favorable resolutions in their constitutional challenges, nullifying all the provisions and effects of the CRE Resolutions. These favorable resolutions are final and definitive as no further recourse is available. We are closely monitoring the progress of the remainder of the constitutional challenges filed by the other Grandfathered Generators that supply electric energy to
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our operations in Mexico, as certain arrangements with the Grandfather Generators regarding wheeling charges are structured under a pass-through mechanism, which are typical of these types of “self-supply” projects, expose Cemex to the increases called for by the CRE Resolutions and would entail an increase in the electricity prices for our plants in Mexico. On August 28, 2020, we filed a constitutional challenge against the CRE Resolution applicable to Grandfathered Generators operating conventional power plants and we were granted an injunction against such CRE Resolution, though as of December 31, 2023, no final ruling on the appeal filed by the CRE against such injunction had been issued. As of December 31, 2023, we cannot assess with certainty the outcome of the legal challenges presented against the CRE Resolutions, or the impact that an adverse resolution on those, or the withdrawal thereof by both Cemex and the Grandfathered Generator who owns the conventional power plant that supplies electric energy to our operations in Mexico, could have on our business, operations, and contractual obligations in Mexico.
On March 9, 2021, a decree amending several key provisions of the Electric Industry Law was published in the Official Mexican Gazette (the “Energy Industry Law Reform”). The Energy Industry Law Reform, among other consequences, (i) strengthens CFE’s powers in Mexico’s energy sector and grants its hydropower and conventional power plants preferential grid dispatch over privately-owned plants and priority on the use of transmission and distribution infrastructure over power plants owned by private parties relegating the current position private suppliers hold in the dispatch order; (ii) changes the economic dispatch in the Electricity Market from variable production costs to total unit costs; (iii) restricts the access to the national grid and general distribution network infrastructure by establishing new discretionary rules and restrictions on open access for interconnection requests to the national grid; (iv) subjects applications for power generation permits to new requirements for meeting certain planning criteria discretionarily established by the Mexican Ministry of Energy (Secretaría de Energía, the “SENER”); (v) changes the methodology to determine the granting of clean energy certificates, allowing plants built before the publication of the Electric Industry Law to issue certificates; and (vi) allows the CRE to (x) unilaterally and retroactively revoke any power generation permits granted to Grandfathered Generators, if found to have been obtained fraudulently, and (y) allows CFE to renegotiate power purchase agreements entered with independent power producers, both of which are subject to the laws and regulations that were applicable before the Mexican energy reform of 2014. Shortly thereafter, federal judges granted injunctions under constitutional challenges filed by several private generators (including the Grandfathered Generators that supply electric energy to our operations in Mexico) and other participants in the Electricity Market affected by the amendments, temporarily suspending the effects of the Energy Industry Law Reform not only with respect to the parties that filed the constitutional challenges, but also on a general basis for all participants in the Electricity Market, though SENER filed appeals to challenge such rulings. By the end of the third quarter of 2021, several injunctions granted on a general basis had been revised by Federal Circuit Courts of Appeals to limit their protective effects exclusively to private generators that filed constitutional challenges against the Energy Industry Law Reform, including the Grandfathered Generators that supply electric energy to our operations in Mexico. On April 8, 2021, a group of Senators filed an unconstitutionality claim (acción de inconstitucionalidad) (the “Unconstitutionality Claim”) against the Energy Industry Law Reform. Moreover, on April 22, 2021, Mexico’s antitrust regulator (Comisión Federal de Competencia Económica) (“COFECE”) filed a legal controversy claim with the Mexican Supreme Court arguing that the Energy Industry Law Reform adversely affects the competitive nature of Mexico’s energy market. Although on April 7, 2022, the Mexican Supreme Court dismissed the Unconstitutionality Claim as it did not reach the required votes to declare the unconstitutionality of any of the contested provisions of the Energy Industry Law Reform, it laid out several arguments in its decision that could form the basis for future resolutions to ongoing constitutional challenges in favor of declaring the unconstitutionality of the different provisions of such reforms. Additionally, COFECE’s controversy claim was dismissed by the Supreme Court on April 18, 2022. The Mexican Supreme Court’s dismissal of the Unconstitutionality Claim and COFECE’s controversy does not revoke the injunctions granted against the enforcement of the Energy Industry Law Reform (including those granted to the Grandfathered Generators that supply electric energy to our operations in Mexico), and as of December 31, 2023, some of those injunctions are still in force, thus, the Energy Industry Law Reform will remain suspended until the last
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of those injunctions has been revoked or all claims have been resolved in favor of its constitutionality. As of December 31, 2023, we cannot anticipate the impact that the Energy Industry Law Reform could have on our business, operations, and contractual obligations in Mexico if the contested provisions contained in the Energy Industry Law Reform are deemed constitutional in final decisions to be issued on the injunctions granted to Grandfathered Generators that supply electric energy to our operations in Mexico, nor can we anticipate the impact that such reform could have on our business, operations and contractual obligations in Mexico. However, if the Energy Industry Law Reform were to limit the dispatch of renewable energy generators or impose new costs or charges to the renewable electric energy industry, and/or cause new regulatory burdens for participants in Mexico’s wholesale Electricity Market, we could have an adverse effect on our business, operations and contractual obligations in Mexico, and our plans to reduce the use of fossil fuels and our CO2 reduction commitments could be affected.
On May 21, 2021, SENER published in the Official Mexican Gazette the “Decree by means of which several provisions of the Hydrocarbons Law are added and amended” (Decreto por el que se reforman y adicionan diversas disposiciones de la Ley de Hidrocarburos or the “Hydrocarbons Law Reform”), imposing additional burdens to private parties who carry out activities related to petroleum, petroleum derivates and natural gas, to the benefit of CFE and PEMEX, and could potentially affect end-users, such as Cemex. The Hydrocarbons Law Reform entered into force on May 5, 2021, among other things, (i) increases requirements for obtaining new permits, (ii) imposes new conditions on existing permits and (iii) imposes new grounds for revocation of permits. We have not yet determined if the Hydrocarbons Law Reform could have a material adverse impact on our results of operations, liquidity, or financial condition. Although several federal judges had originally issued injunctions against the Hydrocarbons Law Reform, which prevented its application on a general basis, as of December 31, 2023, some of the decisions of the federal judges granting such injunctions have been reversed by Federal Circuit Courts of Appeals, which have lifted some of the injunctions and dismissed some constitutional challenges filed by private parties against the Hydrocarbons Law Reform. However, the legal effects of the amendments introduced by the Hydrocarbons Law Reform will continue to be suspended until Federal Circuit Courts of Appeals revoke the last of the injunctions granted on a general basis.
On October 23, 2023, a presidential decree was published in the Official Mexican Gazette establishing measures to combat the illicit fuel market related to the import of goods regulated by SENER. As a result of this presidential decree, an import permit from SENER is now required to import petcoke. On November 13, 2023, we were granted a 60-day provisional import permit and on December 15, 2023, we filed a request with SENER to obtain a five-year import permit, which is expected to be granted during the first quarter of 2024.
United States
Our operating subsidiaries in the United States are subject to a wide range of U.S. federal, state and local laws, regulations and ordinances dealing with the protection of human health and the environment that are strictly enforced and can lead to significant penalties for noncompliance. These laws regulate, among other things, water discharges, noise, and air emissions, including dust, as well as the handling, use and disposal of hazardous and non-hazardous waste materials. U.S. laws and regulations expose us to the risk of substantial environmental costs and liabilities for environmental contamination, including contamination associated with divested assets and past activities and, in some cases, the acts and omissions of the previous owners or operators of a property or facility. Those laws may result in liable parties sharing the costs of cleaning up releases to the environment of designated hazardous substances or they may result in a single liable party bearing all the costs of cleanup, even if more than one party contributed to the contamination. We therefore may have to conduct environmental remediation associated with the disposal or release of hazardous substances at our various operating facilities, or at sites in the United States to which we sent hazardous waste for disposal. As of December 31, 2023, we believe that our current procedures and practices for handling and managing materials are generally consistent with industry standards and legal and regulatory requirements, and also believe that we take appropriate precautions designed to protect employees and others from harmful exposure to hazardous materials.
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As of December 31, 2023, Cemex, Inc. and its subsidiaries had accrued liabilities specifically relating to environmental matters in the aggregate amount of U.S. $44.7 million. The environmental matters relate to (i) the disposal of various materials, in accordance with past industry practice, that might be categorized as hazardous substances or waste and (ii) the cleanup of hazardous substances or waste at sites used or operated by Cemex, Inc. and its subsidiaries including discontinued operations, either individually or jointly with other parties. Most of these matters are in the preliminary stages, and a final resolution might take several years. For accrual purposes, Cemex, Inc. and its subsidiaries consider that it is probable that a liability has been incurred and the amount of the liability is reasonably estimable, whether or not claims have been asserted, and without giving effect to any possible future recoveries. The ultimate cost that might be incurred to resolve these environmental issues cannot be assured until all environmental studies, investigations, remediation work, and negotiations with, or litigation against, potential sources of recovery have been completed. Actual cost therefore may be greater than or less than the amounts accrued. But based on the information developed as of December 31, 2023, Cemex, Inc. does not believe it will be required to spend significant sums on these matters in excess of the amounts previously recorded.
In 2007, the EPA launched a CAA enforcement initiative against the U.S. cement industry. The primary goal of the initiative was to assess the industry’s historic compliance with the CAA’s New Source Review program and to reduce emissions from the industry through the installation of add-on controls. We actively engaged with the EPA on its investigations, which involved multiple of our facilities in the United States, and entered into four settlements involving a total of U.S. $6.1 million in civil penalties and a commitment to incur certain capital expenditures for pollution control equipment at our Victorville, California; Fairborn, Ohio (divested on February 10, 2017); Lyons, Colorado; Knoxville, Tennessee; Louisville, Kentucky (divested on March 6, 2020); Demopolis, Alabama; Odessa, Texas (divested on November 18, 2016); and New Braunfels, Texas plants. Based on our past experience with such matters and currently available information, as of December 31, 2023, we believe any further proceedings should not have a material adverse impact on our results of operations, liquidity, and financial condition.
In 2002, Cemex Construction Materials Florida, LLC (formerly Rinker Materials of Florida, Inc.) (“Cemex Florida”), a subsidiary of Cemex, Inc., was granted a federal quarry permit and was the beneficiary of another federal quarry permit for the Lake Belt area in South Florida. The permit held by Cemex Florida covered its SCL and FEC quarries. Cemex Florida’s Kendall Krome quarry is operated under the permit of which it was a beneficiary. The FEC quarry is the largest of Cemex Florida’s quarries measured by volume of aggregates mined and sold. Cemex Florida’s Miami cement mill is located at the SCL quarry and is supplied by that quarry, while the FEC and Kendall Krome quarries have supplied aggregates to Cemex and third-party users. Environmental groups challenged those permits in court, which resulted in their withdrawal. In response to that litigation, the Army Corps of Engineers (“Corps”) conducted a multi-year review that ended with the issuance of new federal quarry permits for the FEC and SCL quarries. Excavation of new aggregates was stopped at the FEC and SCL quarries from January 20, 2009, until new permits were issued. Furthermore, permits to extend the areas available to mine at the FEC and SCL quarries were received on May 7, 2020, and July 22, 2020, respectively. The Corps later concluded that the wetlands at the Kendall Krome quarry are not subject to the jurisdiction of the Clean Water Act. Therefore, Clean Water Act permits are not required to continue mining at the Kendall Krome site. If Cemex Florida is unable to maintain the new Lake Belt permits, to the extent available, Cemex Florida would need to source aggregates from other locations in Florida or import aggregates. This would likely affect operating income from our operations in Florida. As of December 31, 2023, any adverse impacts on our Florida operations arising from the cessation or significant restriction of quarrying operations in the Lake Belt area could also have a material adverse impact on our results of operations, liquidity, and financial condition.
Our operations in the United States are subject to a number of federal and state laws and regulations addressing climate change. On the federal side, EPA has promulgated a series of regulations pertaining to emissions of GHG from industrial sources. EPA issued the Mandatory Reporting of GHGs Rule, effective December 29, 2009, which
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requires certain covered sectors, including cement manufacturing, with GHG emissions above an established threshold to inventory and report their GHG emissions annually on a facility-by-facility basis. In 2010, EPA issued a final rule that establishes GHG thresholds for the New Source Review Prevention of Significant Deterioration (“PSD”) and Title V Operating Permit programs (“Title V”). The rule “tailors” the requirements of these CAA permitting programs to limit which facilities will be required to obtain PSD and Title V permits for GHG emissions. Cement production facilities are included within the categories of facilities required to obtain permits, provided that their GHG emissions exceed the thresholds in the tailoring rule. The PSD program requires new major sources of regulated pollutants and major modifications at existing major sources (in areas where the air quality meets any national ambient air standard) to secure pre-construction permits that establish, among other things, limits on pollutants based on Best Available Control Technology (“BACT”).
According to EPA’s rules, stationary sources, such as cement manufacturing, which are already regulated under the PSD program for non-GHG pollutants, need to apply for a PSD permit for any GHG emissions increases above 75,000 tons/year of CO2e. Therefore, new cement plants and existing plants undergoing modification which are major sources for non-GHG pollutants regulated under the CAA need to acquire a PSD permit for construction or modification activities that increase CO2e by 75,000 or more tons/year, and would be subject to emissions limits based on BACT controls. Furthermore, any new source that emits 100,000 tons/year of CO2e or any existing source that emits 100,000 tons/year of CO2e and undergoes modifications that would increase CO2e emissions by at least 75,000 tons/year, must comply with PSD obligations. Complying with these PSD permitting requirements can involve significant costs and delay. As of December 31, 2023, the costs of future GHG-related regulation of our facilities through these efforts or others could have a material economic impact on our U.S. operations and the U.S. cement manufacturing industry, which in turn could have a material adverse impact in our results of operations, liquidity, and financial condition.
With respect to state efforts to address climate change, in 2006, the State of California adopted the Global Warming Solutions Act (“Assembly Bill 32” or “AB32”) setting into law a goal to reduce the State’s carbon dioxide emissions to 1990 levels by 2020. As part of the measures derived from AB32, the California Air Resources Board (“CARB”) developed a cap-and-trade program, enforced from 2013, that covers most industrial sources of GHG emissions in the State, including cement production facilities. The program involves allocating a number of allowances free of charge to covered installations, which must subsequently surrender back to the regulator a number of allowances or qualified offset credits matching their verified emissions during the compliance period. Based on the free allowances received, our Victorville cement plant met all of its compliance obligations for the second compliance period (2015-2017) without a material impact on its operating costs; and also met all of its compliance obligations for the third compliance period (2018-2020) without a material impact on its operating costs. Furthermore, as of December 31, 2023, for our operations in California, we are actively pursuing initiatives to substitute fossil fuels for lower carbon fuels, improve our energy efficiency and utilize renewable power in an effort to economically reduce our direct and indirect GHG emission intensities. However, even with these ongoing efforts and the expected distribution of free allowances, as of December 31, 2023, the measures corresponding to future compliance periods of AB32, which may eventually require us to purchase emission allowances at increased prices due to their reduced availability, and the resulting overall costs of complying with a cap-and-trade program, could have an impact on our operations in California, which in turn could have an adverse impact on the results of operations, liquidity, and financial condition of our operations in the United States, and consequently on us.
In 2007, CARB approved a regulation that requires California equipment owners/operators to reduce diesel particulate and nitrogen oxide emissions from in-use off-road diesel equipment and to meet progressively more restrictive emission targets. In 2008, CARB approved a similar regulation for in-use on-road diesel equipment. The emission targets require us to retrofit our California-based equipment with diesel emission control devices or replace equipment with new engine technology in accordance with certain deadlines. As of December 31, 2023, compliance with the CARB regulations has resulted in equipment related expenses or capital investments, including overhauling engines
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and purchases of new equipment related to the CARB regulations, in excess of U.S. $110.8 million. As of December 31, 2023, we estimate that we may continue to incur substantial expenditures to comply with these requirements.
In 2019, Colorado adopted the Climate Action Plan to Reduce Pollution (House Bill 19-1261) (“CCAP”). The CCAP sets into law a goal to reduce the state’s GHG pollution levels by 26% by 2025, 50% by 2030 and 90% by 2050 compared to 2005 levels. Rulemaking to implement CCAP is now ongoing by the Colorado Department of Public Health and Environment, Air Pollution Control Division, and the resulting rules and regulations could result in requirements for additional emissions control technology and other changes in operating processes for cement manufacturers. Further, on October 22, 2021, the Colorado Air Quality Control Commission passed the Greenhouse Gas Emissions and Energy Management for Manufacturing in Colorado rule (the “GEMM”). The GEMM became effective on December 15, 2021. The GEMM intends to reduce air pollution, save energy, and improve air quality in communities near emitting facilities. It requires specific facilities in the state that produce 50,000 tons or more in GHG emissions, including our construction materials facility in Lyons, to, among other things, prepare and submit to the Air Pollution Control Division an energy and GHG audit demonstrating that they are using GHG Best Available Control Technologies and Energy Best Management Practices. If the audit shows a facility is using GHG Best Available Control Technologies and Energy Best Management Practices, it will still be required to reduce its GHG emissions by 5%. On the other hand, if a facility’s audit shows it is not using such best controls to save energy and reduce GHG emissions, it will need to reduce the same amount of emissions that those best controls would achieve, plus reduce an additional 5% in total GHG emissions. Additionally, in July 2021, Colorado adopted the Environmental Justice Act (House Bill 21-1266) (the “EJA”), which requires Colorado’s manufacturing sector as a whole to reduce GHG emissions 20% by 2030, based on 2015 reported emissions. The APCD submitted a proposal for the EJA (or GEMM Phase 2) to the Air Quality Control Commission in September 2023, and the rule was adopted on October 20, 2023. We are complying with GEMM Phase 1 and are analyzing the new regulations proposed to implement the EJA, which became effective on December 15, 2023.
Europe
European Union
In the EU, the cement sector is subject to a range of environmental laws of the EU and of individual Member States. The key EU laws are discussed in more detail below. More broadly, the European Climate Law sets a legally binding target of net zero GHG emissions for the EU by 2050. EU institutions and the Member States are bound to take the necessary measures at EU and Member State level to meet the target, considering the importance of promoting fairness and solidarity among Member States. It also sets a 2030 climate target of at least 55% reduction of net emissions of GHG in comparison to 1990.
EU Industrial Permits and Emissions Controls
The Industrial Emissions Directive (2010/75/EU) (“IED”) is the main EU instrument regulating pollutant emissions from industrial installations. Under the IED, operators of industrial installations, including cement plants, are required to obtain an integrated permit from the relevant permitting authority in the Member States. These permits contain emission limit values and other conditions based on the application of a legal and technical concept called “Best Available Techniques” (“BAT”).
In order to define BAT and the BAT-associated environmental performance at EU level, the European Commission organizes an exchange of information with experts from Member States, industry and environmental organizations. The European Commission adopts and publicizes BAT Reference Documents (“BREFs”) for the industry sectors covered by the IED. A key element of the BREFs are the conclusions on BAT (“BATC”), which are used as a
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reference for setting permit conditions. The IED allows competent authorities some flexibility to set less strict emission limit values. This is possible only in specific cases where an assessment shows that achieving the emission levels associated with BAT described in the BATC would lead to disproportionately higher costs compared to the environmental benefits due to the geographical location or the local environmental conditions or the technical characteristics of the installation. The competent authority shall always document its justification for granting such derogations.
In April 2013, pursuant to European Commission Decision No. 2013/163/EU, the European Commission published BATC under the IED for production of cement, lime, and magnesium oxide, together with specific emission levels. This document sets out an extensive list of technical requirements for most aspects of the cement manufacturing process in the EU, with a view to prevention and minimization of all polluting emissions. Under the IED, permitting authorities must review and, if necessary, update permit conditions within four years of the European Commission publishing decisions on BATC for a particular activity.
The European Commission proposed a revision of the IED with the aim of stimulating a deep agro-industrial transformation towards zero pollution through the use of breakthrough technologies. As of December 31, 2023, a provisional political agreement has been reached on the revision of the IED, pending formal adoption by the European Parliament and the EU Council, wherein industrial minerals are not included within the scope of the revised IED. However, subject to review and legislative proposal by the European Commission, the scope may be extended to industrial minerals.
As of December 31, 2023, a total of five BREFs of the existing 33 BREFs plus two REFs are being rewritten or revised. As of December 31, 2023, this has the potential to require our operations in Europe to be adapted to conform to the latest BAT, which in turn could impact our operations.
As of December 31, 2023, we believe that our operations in EU Member States will be impacted given the change in regulatory approach heralded by the legislation. As of December 31, 2023, we are not able to assess the degree of impact that the future BAT requirements that come into effect under the IED will have on our operations in EU Member States.
EU Emissions Trading
The EU established an emissions trading system (“EU ETS”) by means of Directive 2003/87/EC, creating a mechanism that imposes a market-determined price on the emission of certain GHGs, including CO2. Operators of ground-based installations and aircraft operators are required to surrender an allowance in respect of each ton of CO2 of their emissions during a calendar year. The EU ETS applies to a broad range of installations/operators in the industrial, electricity generation, and intra-EU aviation sectors. It implements a ‘cap-and-trade’ approach, in which the total number of allowances available (the “cap”) decreases over time. Operators receive a free allocation of allowances (pursuant to industry-wide benchmarks) or buy allowances from centralized auctions or from third parties. The allowances are freely tradable. Failure to surrender allowances is subject to significant monetary penalties of €100 (plus indexation) for each ton of CO2 emitted in respect of which allowances were not surrendered, in addition to the operator having to surrender the relevant number of allowances. As of December 31, 2023, our qualifying operations in the EU, including our clinker production plants, are subject to the EU ETS.
The EU ETS is divided into phases. For the current EU ETS Phase IV (2021 to 2030), the EU-wide overall cap on emission allowances was initially to be reduced (by way of what is known as the linear reduction factor) by 2.2% annually from 2021. A Market Stability Reserve (“MSR”) has been introduced to address supply and demand imbalances in the EU ETS which have led to price fluctuations.
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EU policymakers have traditionally seen the free allocation of allowances as a principal way to reduce the risk of carbon leakage—that is either, increased imports from countries that do not have climate change control, or the risk that energy-intensive industries, facing higher costs because of the EU ETS, will move their facilities beyond the EU’s borders to these countries, thus resulting in a leakage of CO2 emissions without any environmental benefits.
A list of EU ETS sectors deemed to be at significant risk of carbon leakage is periodically adopted by the European Commission, following agreement by EU Member States and the European Parliament. The main factors taken into account in determining whether a sector is at significant risk of carbon leakage include the extent to which direct and indirect costs induced by the implementation of the EU ETS would increase production cost, calculated as a proportion of the gross value added and the sector’s trade intensity with non-EU countries (imports and exports). This list has historically included the cement production sector.
The cement industry is included in the list of sectors at significant risk of carbon leakage for Phase IV of the EU ETS; and therefore receives, and should continue to receive, free allocation until the end of 2025. We have discussed the interaction of free allocation of allowances and the EU CBAM (as defined below).
Revision of the EU ETS
In June 2023 legislation came into effect which provides for a number of reforms of the EU ETS. The revised EU ETS will come into effect on January 1, 2024. GHG emissions in the EU ETS sectors will now be cut by 62% by 2030 compared to 2005 levels. There will be a one-off reduction to the EU-wide quantity of allowances available of 90 Mt CO2e in 2024 and 27 Mt CO2e in 2026. The Phase IV linear reduction factor will be increased from 2.2% to 4.3% from 2024-2027 and to 4.4% from 2028-2030.
Free allocation of allowances to operators, including those in the cement industry, will be phased out over a nine-year period from 2026 until 2034, as follows: 2026: 2.5%, 2027: 5%, 2028: 10%, 2029: 22.5%, 2030: 48.5%, 2031: 61%, 2032: 73.5%, 2033: 86%, 2034: 100%. For sectors that produce goods covered by the EU CBAM (as defined below), the reduction of free allocation will be implemented by a gradual reduction while the EU CBAM is phased in from 2026 to zero free allocation in 2034 and onwards.
Maritime sector emissions will be included in the EU ETS, with the obligation to surrender allowances rising from 40% of verified emissions in 2024 to 100% by 2026. All emissions from intra-EU voyages and within EU ports will be covered by the EU ETS, and 50% of the emissions for journeys to or from a non-EU country. By the end of 2026, the European Commission will also assess whether to introduce emissions from municipal waste incineration into the EU ETS from 2028. Furthermore, the MSR has been strengthened.
As of December 31, 2023, unless Cemex is able to ensure new clean technologies and decarbonization processes are developed and implemented, even after considering market pricing dynamics and the implementation of mitigation measures to reduce emissions in our operations, the phasing out of free allocation of allowances under the EU ETS for the cement industry and other changes to the EU ETS are expected to have an adverse impact on our operations and results of operations, liquidity, and financial condition. However, as of December 31, 2023, we expect that the aggregate amount of allowances that will be annually allocated for free to Cemex in Phase IV, due to unused surplus from previous phases, should be sufficient for our operations in Europe until at least the end of 2025. If any emission allowances would need to be purchased, such emission allowances would likely be purchased at increased prices due to market volatility and changes to the EU ETS. As of December 31, 2023, we are not able to predict the effect of the changes described above and are not able to assess if their approval and implementation would have a material adverse impact on our results of operations, liquidity, and financial condition.
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EU CBAM
In order to help address the problem of carbon leakage (explained above), the EU has implemented a Regulation establishing a Carbon Border Adjustment Mechanism (“EU CBAM”) ((EU) 2023/956). The EU CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen as well as indirect emissions under certain conditions.
During the transitional phase, which is now in effect until January 1, 2026, importers are required to report on a quarterly basis the total verified GHG emissions embedded in goods imported in a given calendar year, detailing direct and indirect emissions as well as any carbon price effectively paid in a third country. By December 31, 2024, importers must have an ‘authorized EU CBAM declarant’ status to qualify for the import of in-scope goods.
Once the permanent system enters into force on January 1, 2026, importers will need to declare each year the quantity of goods imported into the EU in the preceding year and their embedded GHG. They will then surrender the corresponding number of EU CBAM certificates. The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in €/ton of CO2 emitted. The phasing-out of free allocation under the EU ETS will take place in parallel with the phasing-in of EU CBAM in the period 2026-2034. We expect that by 2030, this phasing out will reduce our free allocations under the EU ETS by approximately 4 million European Union Allowances (EUAs), each equivalent to one ton of CO2e. However, as of December 31, 2023, due to market pricing dynamics and the implementation of mitigation measures to reduce emissions in our operations, we do not expect a material adverse impact on our operations, results of operations, liquidity, and financial condition.
EU Taxonomy
The EU has established a classification system that sets out a list of environmentally sustainable economic activities under Regulation (EU) 2020/852 (the “EU Taxonomy”). Its primary use is to support the mandatory disclosure of sustainable investments and assets by investors, banks, and corporates in the EU. It will also be used for determining whether activities are eligible for green bonds use of proceeds criteria under the EU Green Bond Standard. Technical Screening Criteria developed under the EU Taxonomy set out the standards that certain activities in the cement sector must achieve in order to be categorized as “environmentally sustainable.” As of December 31, 2023, Cemex is not required to report under the EU Taxonomy. Nonetheless, Cemex voluntarily provides certain information in accordance with the EU Taxonomy. Though it is too early to determine at this stage, in addition to imposing certain reporting obligations, the classification of a company’s activities under the EU Taxonomy could, among other things, influence the Cemex’s ability to access funds for certain projects, the financial markets, or financial products.
UK Permitting
Existing EU BATC, which aim to prevent or reduce emissions and impacts on the environment, continue to have effect in the United Kingdom. The United Kingdom no longer needs to meet the requirements of any new EU BATC, except for Northern Ireland (“NI”) where the NI Protocol sets out the sectors remaining under EU IED. The UK Government will lead the development of the UK BATC, with the premise to maintain competitive regulation and future alignment or equivalence to that of the EU BATC. UK BATC will be determined through an evidence-based approach with industry, regulators, and non-governmental organizations. UK BATC will be published as statutory instruments and used as the basis for permit conditions for industry. The UK BATC system will take between one to three years to create a set of BATC depending on the complexity of the industrial sector. The order of BATC to be reviewed will be announced in advance to give interested parties an opportunity to express their views. The first four industry sectors to establish BATC groups will be ferrous metal processing—galvanizing, ferrous metals processing—forming, textiles, and waste gas treatment in the chemicals sector. As of December 31, 2023, we are not able to assess the degree of impact that any future BATC requirements that come into effect under the UK permit requirements will have on our operations in the United Kingdom.
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UK ETS
As of January 1, 2021, an independent emissions trading system in the United Kingdom (the “UK ETS”) replaced the EU ETS in the United Kingdom (other than in respect of NI electricity generation). With some exceptions, the UK ETS is similar to the EU ETS and provides continuity after the transition from the EU ETS. Among these exceptions are the following: (i) a tighter annual cap than under the EU ETS, at 5% below the Phase IV EU ETS cap; and (ii) greater fines to apply, as a charge of GBP100 would be imposed for each ton of emissions not covered by allowances, which is higher than the €100 fine under the EU ETS. The UK cap is set to be revised in 2024 to fully align with a net-zero trajectory. Further, the UK ETS does not reflect the recent amendments to Phase IV of the EU ETS described above.
In December 2023, the UK Government released two consultations. The first consultation is called “UK Emissions Trading Scheme: Free Allocation Review.” Ahead of the next allowances allocation period in 2026, the UK Government is consulting on different options for changes to the allocation methodology in respect of free allowances, including the approach to accounting for activity, benchmarking, the way carbon leakage risk is assessed, additional aspects of methodology such as the consideration of decarbonization technologies and conditionality and technical proposals to improve operability and deliverability of the scheme. The second consultation is called “UK Emissions Trading Scheme: future markets policy.” The UK Government is reviewing emission trading systems markets policy to ensure that it remains fit for purpose and is effective in managing the risks faced by an established and maturing scheme. In particular, the UK Government is seeking views on whether to implement a quantity-triggered Supply Adjustment Mechanism to address the risk of demand shift with long-term impacts in the market, whether to retain an Auction Reserve Price whether to retain the Cost Containment Mechanism (“CCM”), which is triggered if current prices are elevated for a sustained period relative to a historic average and the design of the CCM.
As of December 31, 2023, although the UK ETS provides continuity after the transition from the EU ETS, it is not possible to predict with certainty how Cemex in the United Kingdom will be affected by the UK ETS. As in Phase IV of the EU ETS and given the expected tighter caps and expected revision in 2024, the aggregate amount of allowances allocated to Cemex under the UK ETS may not be sufficient for our operations in the UK; and, therefore, Cemex may require to purchase emission allowances at some point in time. It may be necessary to purchase these emission allowances at increased prices due to potential insufficient liquidity and increased price volatility in the UK ETS compared to the EU ETS. All of this could have a material impact on our results of operations, liquidity, and financial condition.
UK CBAM
The UK Government announced in December 2023 that it will implement a UK Carbon Border Adjustment Mechanism (“UK CBAM”) by 2027. The liability applied by the UK CBAM will depend on the GHG intensity of the imported good and the gap between the carbon price applied in the country of origin (if any) and the carbon price that would have been applied had the good been produced in the United Kingdom. The UK CBAM liability will lie directly with the importer of imported products within scope of the UK CBAM on the basis of emissions embodied in imported goods. Unlike the EU CBAM, the system will not involve the purchase or trading of emissions certificates. Further details on the design and delivery of a UK CBAM will be subject to consultation in 2024, but it will initially apply to the most emissions intensive industrial goods imported to the United Kingdom from the aluminum, cement, ceramics, fertilizer, glass, hydrogen, iron and steel sectors. As of December 31, 2023, we do not expect a material adverse impact due to market prices dynamics and the implementation of mitigation measures to reduce emissions in our operations.
Great Britain Landfills
In Great Britain, future expenditure on closed and current landfill sites has been assessed and quantified over the period in which the sites are considered to have the potential to cause environmental harm, generally consistent with
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the regulatory view of up to 60 years from the date of closure. The assessed expenditure relates to the costs of monitoring the sites and the installation, repair, and renewal of environmental infrastructure. The costs have been quantified on a net present value basis in the amount of £163,288,190.74 (U.S. $207.94 million as of December 31, 2023, based on an exchange rate of £0.79 to U.S. $1.00) as of December 31, 2023, and we made an accounting provision for this amount.
Philippines Environmental Class Action
On September 20, 2018, a landslide occurred in Sitio Sindulan, Barangay Tina-an, Naga City, Cebu, Philippines (the “Landslide”), a site located within an area covered by mining rights of ALQC.
We are an indirect minority shareholder in ALQC, the principal raw material supplier of one of our subsidiaries in the Philippines, APO.
On November 19, 2018, CHP and APO were served summons concerning an environmental class action lawsuit filed by 40 individuals and one legal entity (on behalf of 8,000 individuals allegedly affected by the Landslide) at the Regional Trial Court of Talisay, Cebu (the “Cebu Court”), against CHP, ALQC, APO, the Mines and Geosciences Bureau of the Department of Environment and Natural Resources, the City Government of Naga, and the Province of Cebu, for “Restitution of Damage of the Natural and Human Environment, Application for the Issuance of Environmental Protection Order against Quarry Operations in Cebu Island with Prayer for Temporary Protection Order, Writ of Continuing Mandamus for Determination of the Carrying Capacity of Cebu Island and Rehabilitation and Restoration of the Damaged Ecosystems.”
In the complaint, among other allegations, plaintiffs claim that the Landslide occurred as a result of the defendants’ gross negligence; and seek, among other relief, (i) monetary damages in the amount of 4.3 billion Philippine Pesos (U.S. $77.63 million as of December 31, 2023, based on an exchange rate of 55.39 Philippine Pesos to U.S. $1.00), (ii) the establishment of a 500 million Philippine Pesos (U.S. $9.02 million as of December 31, 2023, based on an exchange rate of 55.39 Philippine Pesos to U.S. $1.00) rehabilitation fund, and (iii) the issuance of a Temporary Environment Protection Order against ALQC aiming to prevent ALQC from performing further quarrying activities while the case is still pending.
As of December 31, 2023, among other defenses and based on a report by the Mines and Geosciences Bureau of the Department of Environment and Natural Resources, CHP, APO and ALQC (individually, each a “Private Defendant” and collectively, the “Private Defendants”) deny liability and hold the position that the Landslide occurred due to natural causes.
In an order dated August 16, 2019, the Cebu Court denied plaintiffs’ Application for Temporary Environment Protection Order. Plaintiffs moved for reconsideration, but the Cebu Court also denied plaintiffs’ motion in an order dated September 30, 2019. Plaintiffs did not appeal this ruling, which became final as of December 5, 2020.
Likewise, in a separate order also dated September 30, 2019, the Cebu Court partially granted the affirmative defenses raised by Private Defendants in their respective answers, and ruled, among others, that the subject case against CHP and APO is dismissed for failure to state a cause of action. The Cebu Court also ruled that: (i) the 22 plaintiffs who failed to sign the verification and certification against forum shopping are dropped as party-plaintiffs; (ii) the subject case is not a proper class suit, and that the remaining 17 plaintiffs can only sue for their respective claims, but not as representatives of the more than 8,000 alleged victims of the landslide incident; (iii) plaintiffs’ cause of action against ALQC for violation of Section 19(a) of Republic Act No. 10121 is dismissed; (iv) there is a misjoinder of causes of action between the environmental suit and the damage suit; and (v) the damage suit of the remaining plaintiffs will proceed separately upon payment of the required docket fees within 30 days from receipt of order,
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otherwise, the case for damages will be dismissed. A motion for reconsideration was filed by the plaintiffs on November 26, 2019. During the hearing of the plaintiffs’ motion for reconsideration on September 11, 2020, the Province of Cebu was officially dropped as a defendant in the case. In another order dated November 17, 2021, the Cebu Court denied the plaintiffs’ motion for reconsideration and also granted the motions of the Mines and Geosciences Bureau and the City Government of Naga, dismissing the case against them. On January 31, 2022, the plaintiffs filed a notice of appeal with the Cebu Court indicating their intention to appeal the Cebu Court’s latest order with the Court of Appeals. Defendants (including government defendants) opposed the plaintiff’s appeal. On April 28, 2022, the Cebu Court rejected the plaintiff’s appeal for being filed out of time and instructed the entry of judgment and issuance of the corresponding certificate of finality. The plaintiffs did not file a motion for reconsideration, thus, on May 4, 2023, the Cebu Court issued a certificate of finality confirming the dismissal. Consequently, this certificate of finality deems the Cebu Court’s order dated September 30, 2019 partially granting Private Defendants’ affirmative defenses as final and executory, and dismisses the case against APO, CHP, and all public defendants, and the damage claims against ALQC.
As of December 31, 2023, only ALQC remains as a private defendant of the case regarding the environmental aspect of ALQC’s supposed violation of the Philippine Mining Act which purportedly caused damage to the environment and allegedly made ALQC liable for clean-up and rehabilitation. At this stage of the overall proceedings and considering all possible defenses that could be available, while we cannot assess with certainty the likelihood of an adverse result in the overall proceedings, we believe a final adverse resolution in the overall proceeding is not probable, and, if adversely resolved, we believe a final adverse resolution should not have a material adverse impact on our results of operations, liquidity, and financial condition.
Tariffs
The following is a discussion of tariffs on imported cement in some of the countries and regions in which we operate.
Mexico
Mexican tariffs on imported goods vary by product and have historically been as high as 100%. Over the years, import tariffs have been substantially reduced and currently range from none at all for raw materials to over 20% for finished products. As a result of North American Free Trade Agreement (“NAFTA”), starting January 1, 1998, the tariff on cement imported into Mexico from the United States or Canada was eliminated. A new agreement signed on November 30, 2019, called the United States-Mexico-Canada Agreement (“USMCA”), and which supersedes NAFTA, entered into force on July 1, 2020. The USMCA does not have any impact on tariffs on cement imported from the United States or Canada into Mexico.
While the lack of existence or reduction in tariffs could lead to increased competition from imports in the markets in Mexico in which we operate, it is possible that other factors, such as the cost of transportation incurred from most producers outside Mexico to central Mexico, traditionally the region of highest demand in Mexico, could be seen as a barrier to enter certain regions in Mexico in which we operate.
United States
In general, and aside from any other restrictions or prohibitions, as of December 31, 2023, any cement imported into the United States from Cuba and North Korea is subject to custom duties depending on the specific type of cement. Imports into the United States from Cuba and North Korea are generally prohibited due to the U.S. import/export controls and economic sanctions. In order to import cement and other products into the United States from Cuba or North Korea, an importer would be required to obtain a license from the U.S. government or otherwise establish the existence of a license exception.
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On September 18, 2018, the United States Trade Representative released a list of U.S. $200 billion worth of Chinese imports that were to be subject to additional tariffs. This list included cement, clinker, slag cement, and granulated slag from the manufacture of iron or steel. These additional tariffs were effective starting September 24, 2018 and initially were in the amount of 10%. The United States was expected to increase the additional tariffs to 25% starting January 1, 2019, but this increase was postponed for 90 days starting on December 1, 2018, to allow time for the United States and China to negotiate their trade disputes. Accordingly, absent a resolution of the trade disputes, the rate of additional duty for the products covered by the September 2018 tariff action increased to 25% on May 10, 2019. On August 23, 2019, the United States announced that the current 25% import tariff would be increased to 30% by October 1, 2019. On September 11, 2019, the United States announced that implementation of this increase would be delayed to October 15, 2019, however, the implementation of this increase has not yet occurred as of December 31, 2023, and the tariff remains at 25%.
Also, as of December 31, 2023, cement imports from countries other than Cuba, China and North Korea into the United States are currently duty free, however, certain individuals and entities on U.S. government lists of specially designated nationals and prohibited parties, may be subject to U.S. import/export controls and other sanctions that prohibit transactions (including import transactions) with such persons without a license.
Europe
EU Member States are subject to the uniform EU commercial policy. There is no tariff on cement imported into a country that is a member of the EU from another member country or on cement exported from an EU country to another member country. As of December 31, 2023, for cement imported into a member country from a non-member country, the tariff was 1.7% of the customs value. Any country with preferential treatment with the EU is subject to the same tariffs as members of the EU. Most Eastern European producers exporting cement into EU countries currently pay no tariff.
United Kingdom
Following the United Kingdom’s exit from the European Union Single Market and Customs Union in early 2021, the United Kingdom is no longer required to abide by the European Union’s Common External Tariff and has introduced its own UK Global Tariff schedule (the “UKGT”), which determines duties and tariffs on goods on a Most Favoured Nation basis in line with World Trade Organization principles. Pursuant to the UKGT, tariffs of 1.7% to 2.7% have been removed on over 40 construction products, including portland cement, marble, granite, various other types of building stone and plaster boards.
The United Kingdom has also entered into a trade agreement with the European Union, known as the EU-UK Trade and Cooperation Agreement, which provides for continued trade without the imposition of tariffs and quotas.
Tax Matters
Mexico
On February 1, 2022, one of our subsidiaries in Mexico was notified of a tax assessment (oficio de observaciones) issued by the Mexican Tax Administration Service (Servicio de Administración Tributaria) (“SAT”), specifying that Ps 1,093 million (U.S. $64.40 million as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00) in taxes were due as a result of certain rejected deductions, reclassification of deductions as depreciations and omitted valued-added tax payments corresponding to fiscal year 2016. On July 13, 2023, the SAT reduced its claim of taxes due to Ps 945 million (U.S. $55.68 million as of December 31, 2023, based on an exchange rate of Ps 16.97 to U.S. $1.00).
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In September 2023, we filed a motion requesting the SAT to reconsider the determinations made in the tax assessment (oficio de observaciones). As of December 31, 2023, we expect the SAT to take between six months and a year to issue a resolution with respect to this motion. As of December 31, 2023, we cannot assess with certainty the likelihood of an adverse result in this proceeding; but, if adversely resolved, we believe an adverse resolution should not have a material adverse impact on our results of operations, liquidity, and financial condition.
United States
The United States Internal Revenue Service (“IRS”) has concluded its audits for the years 2014 through 2019. The final findings did not alter the originally filed Cemex returns in the United States, which had no reserves set aside for any potential tax issues.
Colombia
On April 6, 2018, the Colombian Tax Authority (Dirección de Impuestos y Aduanas Nacionales, the “DIAN”) notified Cemex Colombia of a proceeding notice in which the DIAN rejected certain deductions made by Cemex Colombia in its 2012 year-end income tax return. The DIAN assessed an increase in taxes to be paid by Cemex Colombia in the amount of 124.79 billion Colombian Pesos (U.S. $32.37 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) and imposed a penalty in the amount of 124.79 billion Colombian Pesos (U.S. $32.37 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). On June 22, 2018, Cemex Colombia responded to the proceeding notice; and, on December 28, 2018, Cemex Colombia was notified of the issuance of an official liquidation confirming the information in the proceeding notice. Cemex Colombia filed an appeal for reconsideration on February 21, 2019 within the legal term. On January 8, 2020, Cemex Colombia was notified that the DIAN had, in response to the appeal filed by Cemex Colombia, confirmed the DIAN’s assessment that Cemex Colombia is required to pay increased taxes and corresponding penalties, as previously notified on April 6, 2018. On July 1, 2020, Cemex Colombia filed an appeal against the aforementioned resolution in the Administrative Court of Cundinamarca. The Administrative Court of Cundinamarca admitted the appeal on September 20, 2021. No amounts are required to be paid by Cemex Colombia until all available recourses have been filed and concluded. Additionally, on March 10, 2020, the DIAN issued a complementary administrative act “statement of objections” (pliego de cargos), in which the authority claims the payment of the credit balance that was originated in the tax declaration of the aforementioned year and that was offset by Cemex Colombia with taxes from subsequent years. Cemex Colombia filed its response on June 2, 2020. On October 25, 2021, the DIAN issued a resolution in relation to the “statement of objections” (pliego de cargos) confirming the imposed penalty due to inadmissible compensation. The aforementioned penalty comprises 56.82 billion Colombian Pesos (U.S. $14.74 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) of the 124.79 billion Colombian Pesos (U.S. $32.37 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) increase in taxes to be paid by Cemex Colombia assessed in 2018. Cemex Colombia filed the appeal before the Administrative Court of Cundinamarca on December 16, 2021. As of December 31, 2023, the Administrative Court of Cundinamarca has not scheduled a hearing date for the proceeding. Notwithstanding this pending resolution, as of December 31, 2023, Cemex considers that an adverse resolution after conclusion of all available defense procedures is not probable. However, it is difficult to assess with certainty the likelihood of an adverse result in the proceeding. If this proceeding is adversely resolved, Cemex believes this could have a material adverse impact on the operating results, liquidity, or financial position of Cemex.
On September 5, 2018, the DIAN notified Cemex Colombia of a proceeding notice in which the DIAN rejected certain deductions taken by Cemex Colombia in its 2011 year-end income tax return. The DIAN assessed an increase in taxes to be paid by Cemex Colombia in the amount of 85.17 billion Colombian Pesos (U.S. $22.09 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) and imposed a penalty
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in the amount of 85.17 billion Colombian Pesos (U.S. $22.09 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). On November 30, 2018, Cemex Colombia responded to the proceeding notice. On May 15, 2019, Cemex Colombia was notified of the issuance of a tax assessment maintaining the initial rejection of the deductions taken by Cemex Colombia in its 2011 year-end income tax return. Cemex Colombia filed an appeal on July 11, 2019. On July 6, 2020, Cemex Colombia was notified about a resolution confirming the official liquidation. On October 22, 2020, Cemex Colombia filed an appeal against such resolution in the Administrative Court of Cundinamarca. If a final adverse resolution to Cemex Colombia is reached in this matter, in addition to any amounts to be paid in confirmation of the official liquidation, Cemex Colombia would, as of the payment date, be required to pay interest on the amounts that would be declared due as of the dates they would have had to be paid. The Administrative Court of Cundinamarca admitted the appeal on September 13, 2021. As of December 31, 2023, at this stage of the proceeding and considering all possible defenses available, while we cannot assess with certainty the likelihood of an adverse result in this special proceeding, we believe a final adverse resolution to this special proceeding is not probable. However, if adversely resolved, we believe such adverse resolution could have a material adverse impact on our results of operations, liquidity, and financial condition.
Furthermore, on June 8, 2020, the DIAN issued a complementary administrative act “statement of objections” (pliego de cargos), in which the authority claims the payment of the credit balance that was originated in the tax declaration of the aforementioned year and that was offset by Cemex Colombia with taxes from subsequent years. On December 17, 2020, Cemex Colombia announced that the DIAN had archived such “statement of objections” (pliego de cargos), which means the DIAN issued an administrative act by which it closed the complementary statement of charges that had been issued within the income tax process for the fiscal year 2011 earlier in 2020. With the aforementioned administrative act, as of December 31, 2023, the complementary procedure within the income tax process for the fiscal year 2011 is concluded, since the value of 2011 is included within the complementary process for the fiscal year 2012, and this complementary proceeding should not. have a material adverse impact on our results of operations, liquidity, and financial condition.
Spain
Tax Assessment for the years 2006 to 2009
On July 7, 2011, the tax authorities in Spain notified Cemex España of a tax audit process in Spain covering the tax years from and including 2006 to 2009. The tax authorities in Spain have challenged part of the tax losses reported by Cemex España for such years. Cemex España has been formally notified of fines in the aggregate amount of €456 million (U.S. $503.37 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) resulting from the July 7, 2011 tax audit process in Spain. On April 22, 2014, Cemex España filed appeals against such fines before the Tribunal Económico Administrativo Central (“TEAC”). On September 20, 2017, Cemex España was notified by the TEAC about an adverse resolution to such appeals. Cemex España filed a recourse against such resolution on November 6, 2017 before the National Court (Audiencia Nacional) and applied for the suspension of the payment of the fines. The National Court (Audiencia Nacional) admitted the recourse; and, on January 31, 2018, it notified Cemex España of the granting of the suspension of the payment, subject to the provision of guarantees on or before April 2, 2018. In this regard, Cemex España provided the respective guarantees in the form of a combination of a liability insurance policy and a mortgage of several assets in Spain owned by its Spanish subsidiary Cemex España Operaciones, S.L.U. On November 6, 2018, the National Court (Audiencia Nacional) confirmed the acceptance of the guarantees by the Spanish Tax Office, which suspended the obligation to effect the payment until the recourses are definitively resolved. On November 30, 2021, the National Court (Audiencia Nacional) issued a judgment rejecting the appeal filed by Cemex España against the resolution of the TEAC, confirming the imposed fines. This adverse judgment was notified to Cemex España on November 30, 2021. On February 25, 2022, Cemex filed with the Spanish Supreme Court a request for a cassation appeal against the judgment issued by the National Court (Audiencia
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Nacional) to be admitted, as pursuant to Spanish procedural law, the appellant is required to file a request for admission of the cassation appeal before filing the cassation appeal if admitted. On October 13, 2022, the Supreme Court decided not to admit the cassation appeal and Cemex España subsequently filed a motion (incidente de nulidad) seeking the annulment of the decision, alleging the violation of its constitutional rights. On January 18, 2023, the Spanish Supreme Court, reversed its decision and resolved to admit the filing of Cemex España’s cassation appeal. Cemex filed the cassation appeal before the Spanish Supreme Court on March 27, 2023.
On November 17, 2023, Cemex España was formally notified that the cassation appeal filed before the Spanish Supreme Court was not resolved in Cemex España’s favor. As a result, Cemex España will have to pay fines in the aggregate amount of €456 million (U.S. $503.37 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00). The part of the tax losses challenged by the tax authorities for the subject matter years were not utilized by Cemex España; and, since 2012, were not carried in the financial statements of Cemex España. Cemex recorded an income tax expense and accrued liabilities of €456 million (U.S. $503.37 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) based on estimates, in the fourth quarter of 2023; and, even though no date has been set for the payment of the fines, Cemex expects to pay them in the first half of 2024. Cemex has liquidity sources available to pay the fines.
As of December 31, 2023, Cemex España strongly disagrees with the cassation appeal resolution and is evaluating next steps, including the potential filing of an appeal to the Constitutional Court in Spain. Notwithstanding these adverse financial effects, this development is not expected to adversely affect our operations and commercial relationships with clients or suppliers or our ability to meet our financial obligations.
Tax Assessment for the years 2010 to 2014
On March 26, 2021, the tax authorities in Spain notified Cemex España of an assessment for income taxes in an amount of €48 million (U.S. $52.98 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) plus late interest, derived from a tax audit process covering the tax years 2010 to 2014. This assessment was appealed before the TEAC on April 26, 2021. In order for the suspension of the payment of the tax assessment to be granted, Cemex España provided a payment guarantee which was approved by the Spanish Tax authorities on May 12, 2021.
On November 30, 2021, the tax authorities in Spain notified Cemex España of a penalty for an approximate amount of €68 million (U.S. $75.06 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) derived from the tax audit process covering the same period from 2010 to 2014. This assessment was appealed before the TEAC on December 31, 2021. Until this appeal is resolved, no payment will be due and Cemex España is not required to furnish a guarantee for the filing of the appeal.
On December 11, 2023, Cemex España was notified by the TEAC about a partially favorable resolution to the April 26, 2021 and December 31, 2021 appeals, reducing both the income taxes due from €48 million (U.S. $52.98 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) to €21 million (U.S. $23.18 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00), and the penalty from €68 million (U.S. $75.06 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) to €67 million (U.S. $73.96 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00), respectively.
In light of the unfavorable ruling discussed above of the tax assessment for the years 2006 to 2009, Cemex recorded an additional tax expense charge and accrued a liability of €105 million (U.S. $117 million as of December 31, 2023, based on an exchange rate of €0.90 to U.S. $1.00), based on estimates, in the fourth quarter of 2023 in connection
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with this tax assessment. Notwithstanding these adverse financial effects, this development is not expected to adversely affect our operations and commercial relationships with clients or suppliers or our ability to meet our financial obligations.
Other Legal Proceedings
Colombian Construction Claims
On August 5, 2005, the Urban Development Institute (Instituto de Desarrollo Urbano) (“UDI”), and an individual filed a lawsuit in the Fourth Anti-Corruption Court of Bogotá (Fiscalía Cuarta Anticorrupción de Bogotá) against a subsidiary of Cemex Colombia claiming that it was liable, along with the other members of the Asociación Colombiana de Productores de Concreto (“ASOCRETO”), an association formed by the ready-mix concrete producers in Colombia, for the premature distress of the concrete slabs of the Autopista Norte trunk line of the TransMilenio bus rapid transit system of Bogotá in which ready-mix concrete and flowable fill supplied by Cemex Colombia and other ASOCRETO members was used. The plaintiffs alleged that the base material supplied for the road construction failed to meet the quality standards offered by Cemex Colombia and the other ASOCRETO members and/or that they provided insufficient or inaccurate information in connection with the product. The plaintiffs were seeking the repair of the concrete slabs in a manner which guarantees their service during the 20-year period for which they were originally designed, and estimate that the cost of such repair could have been 100 billion Colombian Pesos (U.S. $25.94 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). The lawsuit was filed within the context of a criminal investigation against a former director and two officers of the UDI, the contractor, the inspector and two ASOCRETO officers. On January 21, 2008, a court issued an order, sequestering the El Tunjuelo quarry, as security for payment of a possible future money judgment against Cemex Colombia. The court determined that in order to lift this attachment and prevent further attachments, Cemex Colombia was required to deposit 337.8 billion Colombian Pesos (U.S. $87.62 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) in cash instead of posting an insurance policy to secure such recovery. Cemex Colombia appealed this decision and the Superior Court of Bogotá (Tribunal Superior de Bogotá) allowed Cemex to present an insurance policy in the amount of 20 billion Colombian Pesos (U.S. $5.18 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). Cemex gave the aforementioned security, and, on July 27, 2009, the court lifted the attachment on the quarry.
On October 10, 2012 the court issued a first instance judgment pursuant to which the accusation made against the ASOCRETO officers was nullified. The judgment also convicted a former UDI director, the contractor’s legal representatives and the inspector to a prison term of 85 months and a fine of 32 million Colombian Pesos (U.S. $8,301.08 as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). As a consequence, of the nullification, the judge ordered a restart of the proceeding against the ASOCRETO officers. The UDI and other parties to the legal proceeding appealed the first instance judgment and on August 30, 2013 the Superior Court of Bogotá resolved to reduce the prison term imposed to the former UDI director and the UDI officers to 60 months and imposed a fine equivalent to 8.8 million Colombian Pesos (U.S. $2,282.80 as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). Additionally, the UDI officers were sentenced to severally pay the amount of 108 billion Colombian Pesos (U.S. $28.01 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00) for the purported damages in the concrete slabs of the TransMilenio bus rapid transit system. Additionally, the Superior Court of Bogotá overturned the penalty imposed to the contractor’s legal representatives and inspector because the criminal action against them was barred due to the passage of time. Furthermore, the Superior Court of Bogotá revoked the annulment in favor of the ASOCRETO officers and ordered the first instance judge to render a judgment regarding the ASOCRETO officers’ liability or lack thereof. On June 25, 2014, the Supreme Court of Colombia’s Penal Cassation Chamber (Sala de Casación Penal de la Corte Suprema de Justicia de Colombia) dismissed the cassation claim filed by the former UDI
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director and the UDI officers against the Superior Court of Bogotá’s judgment. Dismissal of the cassation claim has no effect on Cemex Colombia’s or the ASOCRETO officers’ interests in these proceedings. On January 21, 2015, the Penal Circuit Court of Bogotá issued a resolution agreeing with the arguments presented by Cemex Colombia regarding the application of the statute of limitations to the criminal investigation against the ASOCRETO officers and acknowledging that the ASOCRETO officers were not public officers, and as a consequence, finalizing the process against the ASOCRETO officers and the civil responsibility claim against Cemex Colombia. On July 28, 2015, the Superior Court of Bogotá upheld this resolution and as such the action brought against Cemex Colombia for the premature distress of the concrete slabs of the Autopista Norte trunk line has ended.
Related to the premature distress of the concrete slabs of the Autopista Norte trunk line of the TransMilenio bus rapid transit system six legal actions were brought against Cemex Colombia. The Cundinamarca Administrative Court (Tribunal Administrativo de Cundinamarca) nullified five of these actions and, as of December 31, 2023, only one remains outstanding. On June 17, 2019, an administrative court, in the first instance, ruled against Cemex Colombia and other concrete producers, because the judge found that there was a violation of consumer rights, for alleged faults in the roads. Consequently, the judge ordered Cemex Colombia to issue a public statement acknowledging the alleged violation and a commit to not incur such violation in the future. This first instance decision did not contemplate any economic consequence for Cemex Colombia. Cemex Colombia, jointly with thirteen of the defendants, filed an appeal before the Cundinamarca Administrative Court. At this stage of the proceedings, as of December 31, 2023, regarding the remaining pending action filed before the Cundinamarca Administrative Court, if adversely resolved, we do not expect that such adverse resolution should have a material adverse impact on our results of operations, liquidity, and financial condition.
Egypt Share Purchase Agreement
Between 2011 and 2014, a series of lawsuits seeking, among other things, the annulment of the share purchase agreement entered into by and between Cemex and state-owned Metallurgical Industries Company (the “Holding Company”) in November 1999 pursuant to which Cemex acquired a controlling interest in ACC (the “Share Purchase Agreement”), were filed by different plaintiffs in Egypt. The resolution of these proceedings depended on the determination of the constitutionality of the Presidential Decree on Law 32 of 2014 (“Law 32/2014”), which regulates legal actions to challenge agreements entered into by the Egyptian State (including its ministries, departments, special budget entities, local administrative units, authorities and state-participated companies) and third parties and provides, among other matters, that only the parties to such agreements, which include the Share Purchase Agreement, have legal standing to challenge their validity. On February 14, 2023, the High Constitutional Court upheld the constitutionality of Law 32/2014; and, consequently, all lawsuits seeking the annulment of the Share Purchase Agreement were dismissed. As of December 31, 2023, these proceedings are considered closed and will not have a material adverse impact on our results of operations, liquidity, and financial condition.
Maceo, Colombia—Legal Proceedings in Colombia
On August 28, 2012, Cemex Colombia entered into a memorandum of understanding (the “MOU”) with CI Calizas y Minerales S.A. (“CI Calizas”) to acquire land, a mining concession, an environmental license, free trade zone benefits and related assets necessary to carry out the construction by Cemex Colombia of a new integrated cement plant in the Antioquia department near the municipality of Maceo, Colombia (the “Maceo Project”). In connection with the MOU, CI Calizas was represented by a non-governmental individual (the “Representative”).
After the execution of the MOU, one of CI Calizas’ former shareholders was linked to a domain extinction by the Colombian Attorney General’s Office (the “Attorney General’s Office”) that, among other measures, suspended CI Calizas’ ability to transfer certain assets to Cemex Colombia as required by the MOU (the “Affected Assets”). To
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protect its interests in the Affected Assets, Cemex Colombia joined the domain extinction proceeding and cooperated with the Attorney General’s Office. Cemex Colombia also requested the dismissal of the domain extinction against the Affected Assets. On May 2, 2016, in order to collect further evidence, the Attorney General’s Office denied Cemex Colombia’s request for the dismissal of the domain extinction proceeding. The domain extinction is in its evidence stage and we expect that the Attorney General’s Office’s final decision as to whether it will proceed with the domain extinction with respect to the Affected Assets could take up to 15 years.
In July 2013, Cemex Colombia entered into a five-year lease agreement (the “Lease Agreement”) with a depository that had been designated by the Colombian National Narcotics Directorate (Dirección Nacional de Estupefacientes) with respect to the Affected Assets. The Lease Agreement, along with an accompanying governmental mandate, authorized Cemex Colombia to continue the work necessary for the construction and operation of the Maceo Project during the domain extinction proceeding. The Lease Agreement expired on July 15, 2018. Notwithstanding the expiration of the Lease Agreement, Cemex Colombia was entitled to continue using the Affected Assets pursuant to the terms of the accompanying mandate.
On April 12, 2019, Cemex Colombia reached a conciliatory agreement with the Colombian Administrator of Special Assets (Sociedad de Activos Especiales S.A.S) (the “SAE”), CI Calizas and Zona Franca Especial Cementera Del Magdalena Medio SAS (“ZOMAM”) before the Public Prosecutor´s Office (Procuraduría General de la Nación) and signed a contract of Mining Operation, Manufacturing and Delivery Services and Leasing of Properties for Cement Production (the “New Lease Agreement”), allowing Cemex Colombia to operate the Maceo Plant. Cemex Colombia, under the terms of the New Lease Agreement, will lease the land portion of the Affected Assets for a term of 21 years, that can be extended by another 10 years. The New Lease Agreement will remain in full force and effect regardless of the outcome following the domain extinction proceeding over the Affected Assets unless the criminal judge grants Cemex Colombia (and one of its subsidiaries) the ownership rights related to the Affected Assets. In such case, the New Lease Agreement will be terminated given that Cemex Colombia and its subsidiary would be the owners of the Affected Assets and the New Lease Agreement would no longer be required to operate and manage them.
As of December 31, 2023, it is expected that the Maceo Plant will begin operating once the construction of the access road to the Maceo Plant is completed, for which certain permits are yet to be obtained.
Assuming that Cemex Colombia conducted itself in good faith and considering that its investments in the Maceo Project were incurred with the consent of the SAE and CI Calizas under the Lease Agreement and the accompanying mandate, we believe the value of such investments is protected by Colombian law. Colombian law provides that, if a person builds on another person’s property with the knowledge of such other person, the person that built on the property shall be compensated with the value of what was built or otherwise be transferred the property in the event the owner of the property decides to recover possession. We also believe that, during the term of the New Lease Agreement, Cemex Colombia may use the Affected Assets in order to operate the Maceo Project. In the event that Cemex Colombia’s right to the Affected Assets is extinguished in favor of the government of Colombia, which we believe is unlikely, the SAE may decide not to sell the Affected Assets to Cemex Colombia. In either case, under Colombian law, Cemex Colombia would be entitled to compensation for the value of the investments made in the Maceo Project. On November 18, 2021, Cemex filed a Letter of Intent requesting that the SAE commence the process of selling of ZOMAM, in which Cemex is interested in participating. If the SAE initiates the process, the sale will be carried out under objective parameters prescribed by law that apply to valuing entities undergoing domain extinction proceedings. As of December 31, 2023, the SAE has not responded to this request. As of December 31, 2023, at this stage of the proceedings, we believe that the likelihood of an adverse result in this matter is not probable but we are not able to assess the likelihood of Cemex Colombia receiving an adverse decision relating to the domain extinction proceedings or if the ownership of the assets subject to the MOU will be extinguished in favor of the Republic of Colombia. However, as of December 31, 2023, we believe that an adverse resolution in which Cemex
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Colombia is not compensated for the value of its investments in the Maceo Project could have a material adverse effect on our results of operations, liquidity, or financial condition.
On December 30, 2013, Cemex Colombia and the Representative entered into a different memorandum of understanding (the “Land MOU”), pursuant to which the Representative would represent Cemex Colombia in the acquisition of lands adjacent to the Maceo Project. In connection with the Maceo Project, Cemex Colombia conveyed to the Representative 43.8 billion Colombian Pesos, including cash payments and interest, (U.S. $11.36 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to U.S. $1.00). Due to the domain extinction proceeding against the Affected Assets described above, the acquisition of the Affected Assets was not finalized.
On September 23, 2016, CLH disclosed that it had identified irregularities in the process for the purchase of the land related to the Maceo Project and submitted a criminal complaint with the Attorney General’s Office. Further, on December 20, 2016, CLH enhanced such filing with additional information and findings obtained as of such date. On June 12, 2018, the Attorney General’s Office formally charged two former officers of the Company and the Representative. One of the former officers of the Company entered into a plea bargain and cooperation agreement with the Attorney General’s Office, which was approved by the Colombian criminal court in April of 2019. The hearings for the other two individuals were held throughout 2022, and on March 29, 2023, they were found guilty by the first instance judge. The other former officer was found guilty of unfair administration, illicit enrichment, and forgery of private documents, and was sentenced to 15 years in prison and a penalty of approximately $7.4 million. The Representative was found guilty of illicit enrichment, forgery of private documents, and money laundering, and sentenced to 21 years in prison and a penalty of approximately $7.6 million. Both individuals filed an appeal against the ruling on March 29, 2023 with the Criminal Superior Court of Bogotá (Sala Penal del Tribunal Superior del Distrito de Bogotá). On October 5, 2023, the Criminal Superior Court of Bogotá confirmed the decision of the first instance judge, save for the criminal offense of forgery of private documents, since the statute of limitations for such crime had expired on December 12, 2022. Therefore, the prison sentences for both individuals were reduced to 13 years for the former officer and 19 years for the Representative, however their respective penalties were kept the same. On October 9, 2023, and on October 12, 2023, the former officer and the Representative, respectively, filed an extraordinary cassation appeal against the Criminal Superior Court of Bogotá ruling. The Criminal Superior Court of Bogotá admitted both extraordinary cassation appeals, and thus, the docket of the proceeding is going to be submitted to the Colombian Supreme Court. As of December 31, 2023, the pending admission of the proceeding with the Colombian Supreme Court is expected to be resolved in the next six to twelve months.
On September 23, 2016, CLH and Cemex Colombia terminated the employment of the Vice President of Planning of CLH, who was also Cemex Colombia’s Director of Planning, and the Legal Counsel of CLH, who was also the General Counsel of Cemex Colombia. In addition, effective September 23, 2016, the Chief Executive Officer of CLH, who was also the President of Cemex Colombia, resigned from both positions. On October 4, 2016, in order to strengthen levels of leadership, management and corporate governance practices, the Board of Directors of CLH resolved to split the roles of Chairman of the Board of Directors of CLH, Chief Executive Officer of CLH and President of Cemex Colombia, and appointed a new Chairman of the Board of Directors of CLH, a new Chief Executive Officer of CLH, a new President of Cemex Colombia and a new Vice President of Planning of CLH and Cemex Colombia. A new legal counsel for CLH and Cemex Colombia was also appointed during the fourth quarter of 2016.
Additionally, pursuant to the requirements of Cemex, S.A.B. de C.V.’s and CLH’s audit committees, Cemex Colombia retained external counsel to assist CLH and Cemex Colombia to collaborate as necessary with the Attorney General’s Office, as well as to assist on other related matters. A forensic investigator in Colombia was also engaged.
The Attorney General’s Office is investigating the irregularities in connection with the transactions conducted pursuant to the MOU and the Land MOU, as well as other matters regarding our business in Colombia. Such investigations are
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running their due course but have not been concluded, and, as such, we cannot predict what actions, if any, the Attorney General’s Office may implement. Any actions by the Attorney General’s Office and any actions taken by us in response to the aforementioned irregularities regarding the Maceo Project, including, but not limited to, the termination of employment and resignation of the aforementioned executives and further investigations in Colombia, could have a material adverse effect on our results of operations, liquidity or financial condition.
On December 7, 2020, CLH, acting as a shareholder of Cemex Colombia, filed a lawsuit before the Colombian Business Superintendency (Superintendencia de Sociedades de Colombia) requesting a determination of inefficacy and subsequent declaration of invalidity and nonexistence of the capitalization in kind made by Cemex Colombia to ZOMAM on December 11, 2015. The lawsuit is based on the argument that commercial law requirements applicable to a capitalization process were not complied with at the time of the capitalization. On January 29, 2021, CLH reformed the lawsuit in order to include Cemex Colombia as plaintiff along with CLH. The reformed lawsuit was admitted on May 5, 2021. On December 6, 2022, the Colombian Business Superintendency denied the claims of the lawsuit, and therefore, on December 13, 2022, CLH and Cemex Colombia filed an appeal for this decision to be reviewed. In March 2023, the court reviewing the appeal issued a ruling that confirmed the decision made by the Colombian Business Superintendency. Cemex Colombia and CLH filed a clarification and addition request, which only means to provide further detail on the decision and is not meant to modify the ruling. Such request was denied on June 1, 2023, and thus, on June 8, 2023, Cemex Colombia and CLH filed an extraordinary cassation appeal, which if admitted would be resolved by the Colombian Supreme Court. On June 30, 2023, the cassation appeal was admitted by the court reviewing CLH’s and Cemex Colombia’s appeal. Thus, the docket of the proceeding was sent to the Colombian Supreme Court, which in turn accepted the extraordinary cassation appeal on August 24, 2023. The cassation lawsuit was timely filed on October 13, 2023. Both the December 2022 and the March 2023 rulings clearly stated that the capitalization was legal and complied with applicable laws, thus, if confirmed in final instance by the Colombian Supreme Court, it would have no significant impact as it would recognize Cemex Colombia as the shareholder of ZOMAM. If a favorable final resolution is obtained, the aforementioned capitalization would be reversed and the assets contributed to ZOMAM, which had an approximate value of U.S. $43 million, would revert to Cemex Colombia in exchange for the shares in ZOMAM that had been issued as a result of this capitalization. These effects would only be reflected in Cemex Colombia’s financial statements if a final favorable resolution is obtained. Given ZOMAM’s consolidation, no effects in our consolidated financial statements would arise from a potential favorable resolution.
Investigations related to ongoing matters in Colombia and certain other countries
As discussed in “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Other Legal Proceedings—Maceo, Colombia – Legal Proceedings in Colombia,” internal audits and investigations by Cemex, S.A.B. de C.V. and CLH had raised questions about payments relating to the Maceo Project. The payments made to the Representative in connection with the Maceo Project did not adhere to Cemex, S.A.B. de C.V.’s and CLH’s internal controls. As announced on September 23, 2016, the CLH and Cemex Colombia officers responsible for the implementation and execution of the above-referenced payments were terminated and the then Chief Executive Officer of CLH resigned. In December 2016, Cemex, S.A.B. de C.V. received subpoenas from the SEC seeking information to determine whether there have been any violations of the U.S. Foreign Corrupt Practices Act stemming from the Maceo Project. We had previously disclosed that it was possible that the DOJ and other investigatory entities in other jurisdictions could also open investigations into this matter. In this regard, on March 12, 2018, the DOJ issued a grand jury subpoena to Cemex, S.A.B. de C.V. relating to its operations in Colombia and other jurisdictions. These subpoenas do not mean that the SEC or DOJ have concluded that Cemex, S.A.B. de C.V. or any of its affiliates violated the law. Cemex, S.A.B. de C.V. has cooperated fully, and during 2020 produced to the SEC and DOJ all requested information and documentation and intends to continue to cooperate fully with the SEC, the DOJ, the
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Attorney General’s Office and any other investigatory entity in Colombia or in any other country. As of December 31, 2023, Cemex, S.A.B. de C.V. is unable to predict the duration, scope, or outcome of the SEC or DOJ investigations, or any other investigation that may arise in Colombia or in any other country, or, because of the current status of the SEC and DOJ investigations, the potential sanctions which could be imposed on Cemex, S.A.B. de C.V., or if such sanctions, if any, would have a material adverse impact on Cemex, S.A.B. de C.V.’s consolidated results of operations, liquidity or financial position.
Maceo, Colombia-Operational Matters
On October 27, 2016, CLH decided to postpone the commencement of operations of the Maceo Plant. This decision was mainly due to the fact that Cemex Colombia had not received the permits required to finalize road access to such cement plant. The only existing access to the Maceo Plant cannot guarantee safety or operations and could limit the capacity to transport products from the cement plant. As of December 31, 2022, the process to obtain the permits required to finalize the road access to the Maceo Plant is ongoing. Cemex Colombia has provided all of the information the authorities have requested in order to grant such permits, but Cemex Colombia is not able to assess if and when such permits will be received.
On May 21, 2021, Cemex Colombia and ZOMAM submitted a new request to expand the free trade zone that covers the Maceo Project in order to commission a new clinker line at such cement plant. On June 15, 2022, the corresponding authority issued the resolution by means of which the requested extension was granted, expanding the zone by 144,712.24 m2, for a total of 336,438.24 m2.
Cemex Colombia determined that the area covered by the environmental license related to the Maceo Project partially overlapped with a District of Integrated Management (Distrito de Manejo Integrado) (“DIM”), which could limit the granting of the environmental license modification. On October 9, 2017, Cemex Colombia filed a petition with the Regional Autonomous Corporation of Antioquia (“Corantioquia”) to subtract from the DIM the zoning area covered by the environmental license related to the construction by Cemex Colombia of the Maceo Project, in order to avoid any overlap between them.
On September 3, 2019, Cemex Colombia was notified of a favorable decision issued by the Corantioquia Board of Directors to approve subtracting from the DIM an area of 169.2 hectares of the municipality of Maceo. Cemex Colombia will be responsible for managing the execution of the environmental compensations requested by the Corantioquia Board of Directors, reaffirming its commitment to generate development, employment and community welfare, by preserving the ecosystem and the environment.
The mining concession and the environmental license related to the Maceo Project were held by different legal entities, which is contrary to typical procedure in Colombia. CI Calizas assigned the mining concession and the environmental license to Central de Mezclas S.A. (“Central de Mezclas”), a subsidiary of Cemex Colombia, in October 2012 and December 2013, respectively. However, in December 2013, the mining concession was assigned back to CI Calizas as a result of the revocation of such mining concession by the Mining Secretariat (Secretaría de Minas) of Antioquia. During the second half of 2016, Corantioquia, the regional environmental agency with jurisdiction over the Maceo Project, requested authorization and consent from Central de Mezclas to reverse the assignment of the environmental license back to CI Calizas.
On February 22, 2018, Central de Mezclas granted such authorization. Cemex Colombia had previously requested a modification to the environmental license to 950,000 tons of cement per annum, which Corantioquia denied. On July 17, 2020, Cemex Colombia submitted a new request to modify the environmental license to expand its production to 950,000 tons of cement per annum as initially planned. On February 2, 2021, Corantioquia issued a resolution authorizing CI Calizas’ request to modify the environmental license and CI Calizas challenged such determination to
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further clarify the details and extent of the license. Following this challenge, on February 12, 2021, Corantioquia resolved to modify the environmental license, allowing the extraction of up to 990,000 tons of minerals (clay and limestone) and up to 1,500,000 metric tons of cement annually. On October 22, 2021, a request for amendment of the environmental license of Maceo Plant was filed, by means of which Cemex Colombia requested to increase the scope of the production of exploding annually up to 1,300,000 tons of clay and limestone, among other requests.
On August 29, 2020, Cemex Colombia received a favorable opinion from Corantioquia and the relevant municipality, which deems the industrial and mining use of the land where the Maceo Project is located as suitable. Further requirements are still in process of being fulfilled.
Regarding the permits to complete the construction of various sections of the access road: (i) on November 10, 2020, the Mayor’s Office of Maceo issued the Road Infrastructure Intervention authorization and (ii) on December 11, 2020, the Mayor´s Office issued a decree declaring that the road project is of public utility. Therefore, we can now seek the necessary approvals to obtain the permits to acquire the required properties and build the remainder of the road. Additionally, in accordance with the Colombian Infrastructure Law (Ley de Infraestructura), it is also necessary to obtain the authorization from each of the owners of the land adjacent to the road. As of December 31, 2023, Cemex Colombia cannot determine with certainty the date when the access road will be completed.
Cemex Colombia and Central de Mezclas plan to continue to work on solving the issues causing the postponement of the commissioning of the Maceo Plant in order to capture, as soon as reasonably possible, the full operating benefits of this facility in Colombia. Cemex Colombia believes some of these issues could be related to the domain extinction proceeding against the Affected Assets. As of December 31, 2023, we do not expect to suffer a material adverse impact to our results of operations, liquidity, or financial condition as a result of the Maceo Plant not being commissioned to operate pending resolution of these issues.
Quarry matter in France
One of our subsidiaries in France, Cemex Granulats Rhône Méditerranée (“Cemex Granulats”), is a party to a contract executed in 1990 (the “Quarry Contract”) with SCI La Quinoniere (“SCI”), pursuant to which Cemex Granulats has drilling rights to extract reserves and conduct quarry remediation at a quarry in the Rhone region of France. In 2012, SCI filed a claim against Cemex Granulats for breach of the Quarry Contract, requesting the rescission of the Quarry Contract and damages plus interest, totaling an aggregate amount of €55 million (U.S. $60.71 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00), resulting from Cemex Granulats having partially filled the quarry allegedly in breach of the terms of the Quarry Contract. On May 18, 2016, Cemex Granulats was notified about an adverse judgment in this matter by the corresponding court in Lyon, France, primarily ordering the rescission of the Quarry Contract and damages plus interest, totaling an aggregate amount of €55 million (U.S. $60.71 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00). This judgment is not enforceable. Cemex Granulats filed the notice of appeal with the appeal court in Lyon, France. SCI updated its claim for damages to an approximate aggregate amount of €67 million (U.S. $73.96 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00). The judgment of the appeal court was notified to Cemex Granulats on March 13, 2018. It overrules the first instance judgment but orders the rescission of the Quarry Contract. It also appoints a judicial expert to (i) determine the volume of both excavated materials and backfilling materials and (ii) give their opinion on the potential damages suffered by SCI. This judgment is enforceable. Cemex Granulats has filed the notice of appeal with the Court of Cassation. A decision dismissing Cemex Granulats’ appeal was handed down on May 23, 2019, and the Court of Cassation declared that Cemex Granulats breached the Quarry Contract. In connection with this matter, judicial experts were appointed by the Lyon Court of Appeals to (i) determine the volume of both excavated materials and backfilling materials at issue and (ii) provide their assessment of the potential damages suffered by SCI. On November 25, 2020, the judicial expert appointed by the Lyon Court of Appeals issued
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his final report, concluding that the volume of excavated materials and external backfilling materials were calculated at 3.04 million cubic meters and 1.41 million cubic meters, respectively. Based on these volumes, the expert calculated the loss of profits at €0.65 million (U.S. $0.71 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) and the cost of excavation of the external backfilling materials at €12.35 million (U.S. $13.63 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00). However, the judicial expert clearly states that in his opinion the damages suffered by SCI can only be set based on the loss of profits. SCI, within the proceedings on the merits of this case that have resumed before the Lyon Court of Appeals following the end of the expertise phase, has updated the amount of its claims to €27 million (U.S. $29.80 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00) on the grounds of the excavation of the external backfilling materials. The decision handed down by the Court on November 23, 2022, is in favor of Cemex Granulats, since the Court confirmed the final report of the expert, ruling that the damages of the SCI shall (i) be based on the loss of profits, and (ii) be set at €0.65 million (U.S. $0.71 million as of December 31, 2023, based on an exchange rate of €0.91 to U.S. $1.00). SCI filed a notice of appeal before the Court of Cassation on February 20, 2023 and submitted its brief complementing the appeal on June 5, 2023. On September 22, 2023, we filed our brief in response. The Court of Cassation’s decision is expected to be issued around mid-2024. At this stage of the proceedings, as of December 31, 2023, we are not able to determine the final amount that we would pay in relation to this matter, but we expect that any amounts to be paid should not have a material adverse impact on our results of operations, liquidity, and financial condition.
UK Claim for compensation pursuant to a Compulsory Purchase Order
On June 29, 2023, Cemex UK Operations Limited filed a claim with the Lands Tribunal seeking compensation from the UK Secretary of State following the compulsory acquisition of Cemex’s leasehold interest in land and buildings at Washwood Heath, Birmingham, where Cemex operated railway sleeper, aggregates, and asphalt businesses. The land was acquired in connection with the construction and operation of a high-speed rail line between London and the West Midlands. Cemex’s claim comprises the market value of its leasehold interests in its former site, disturbance losses, including loss of profits suffered as a result of the compulsory acquisition, professional fees and statutory loss payments. In June 2022, Cemex received an initial partial compensation for the land. As of December 31, 2023, we cannot assess with certainty the outcome of this claim; however, we believe an adverse resolution would not have a material adverse impact on our results of operations, liquidity, and financial condition.
General
As of December 31, 2023, we are involved in various legal and administrative proceedings as well as investigations in some of the jurisdictions where we operate involving, but not limited to, investigations from authorities, regulators, product warranty claims, commercial claims, criminal claims, environmental and climate-related claims, claims regarding the procurement and supply of products and services, patent and copyright infringement claims, claims and disputes regarding the transportation of goods and services, indemnification claims relating to divestments and acquisitions and similar types of claims brought against us that have arisen in the ordinary course of business, some of which we have determined do not merit disclosure based on the stage in which any such investigation is at the time of this report, and that we would disclose once the investigation has finalized and based on the results of any such investigation. In addition, the administrative authorities in the countries in which we operate perform periodic audits on our operations. At times, as a result of those audits, visits and requests for information, we may receive notices to remedy (i.e., pay a fine, pay a penalty, pay an interest, modify tax returns, adjust social security payments, cover balances, etc.) certain discrepancies found in the audits, visits and requests for information, some of which we have determined do not merit disclosure based on either the stage in which any audit is at the time of this report and/or because we believe the corresponding remedy would not have a material adverse effect on our operations, financial position, and results of operations, or that we would disclose once the audit has finalized and based on the results of
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any such audit, if the results would have a material adverse effect on our operations, financial position, and results of operations. Also, as of December 31, 2023, we have been made aware of claims that have been filed against us that have been either dismissed or rejected that lead to a recourse, appeal or legal action under the applicable legislation has been filed by the party that presented the claim, and in relation to which, consequently, we have not been formally notified, and that are not included in this report. We, and different organizations or associations to which we belong, also receive various information requests from various governmental and administrative authorities when such authorities are conducting periodic or general reviews of the markets in which we operate. We believe we have made adequate provisions to cover both current and contemplated general and specific litigation risks, and we believe these matters will be resolved without any significant effect on our operations, financial position, and results of operations. We are sometimes able to make and disclose reasonable estimates of the expected loss or range of possible loss, as well as disclose any provision accrued for such loss. However, for a limited number of ongoing legal proceedings, we may not be able to make a reasonable estimate of the expected loss or range of possible loss or may be able to do so but believe that disclosure of such information on a case-by-case basis would seriously prejudice our position in the ongoing legal proceedings or in any related settlement discussions. Accordingly, in these cases, we have disclosed qualitative information with respect to the nature and characteristics of the contingency but have not disclosed the estimate of the range of potential loss.
Cautionary Statement Regarding Forward-Looking Statements
This annual report contains, and the reports we will file or furnish in the future may contain, forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We intend these forward-looking statements to be covered by the “safe harbor” provisions for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, these statements can be identified by the use of forward-looking words such as “will,” “may,” “assume,” “might,” “should,” “could,” “continue,” “would,” “can,” “consider,” “anticipate,” “estimate,” “expect,” “envision,” “plan,” “believe,” “foresee,” “predict,” “potential,” “target,” “strategy,” “intend,” “aimed,” or other forward-looking words. These forward-looking statements reflect, as of the date such forward-looking statements are made, unless otherwise indicated, our expectations and projections about future events based on our knowledge of present facts and circumstances, and assumptions about future events. These forward-looking statements and information are necessarily subject to risks, uncertainties, and assumptions, including but not limited to statements related to our plans, objectives, and expectations (financial or otherwise). Although we believe that our expectations are reasonable, we can give no assurance that these expectations will prove to be correct, and actual results may vary materially from historical results or results anticipated by forward-looking statements due to various factors. Some of the risks, uncertainties, assumptions, and other important factors that could cause results to differ, or that otherwise could have an impact on us or our consolidated entities, include, but are not limited to:
| • | changes in general economic, political and social conditions, including new governments, elections, changes in inflation, interest and foreign exchange rates, employment levels, population growth, consumer confidence, and the liquidity of the financial and capital markets in Mexico or other countries in which we operate; |
| • | the cyclical activity of the construction sector and reduced construction activity in our end markets; |
| • | our exposure to sectors that impact our and our clients’ businesses, particularly those operating in the commercial and residential construction sectors, and the infrastructure and energy sectors; |
| • | volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; |
| • | changes in spending levels for residential and commercial construction; |
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| • | the availability of short-term credit lines or working capital facilities, which can assist us in connection with market cycles; |
| • | any impact of not maintaining investment grade debt rating or not obtaining investment grade debt ratings from additional rating agencies on our cost of capital and on the cost of the products and services we purchase; |
| • | availability of raw materials and related fluctuating prices of raw materials, as well as of goods and services in general, in particular increases in prices as a result of inflation; |
| • | our ability to maintain and expand our distribution network and maintain favorable relationships with third parties who supply us with equipment and essential suppliers; |
| • | competition in the markets in which we offer our products and services; |
| • | the impact of environmental cleanup costs and other remedial actions, and other liabilities relating to existing and/or divested businesses; |
| • | our ability to secure and permit aggregates reserves in strategically located areas; |
| • | the timing and amount of federal, state, and local funding for infrastructure; |
| • | changes in our effective tax rate; |
| • | our ability to implement technologies that reduce CO2 emissions and comply with related carbon emissions regulations in place in the jurisdictions where we have operations; |
| • | the legal and regulatory environment, including environmental, energy, tax, antitrust, human rights and labor welfare, and acquisition-related rules and regulations; |
| • | the effects of currency fluctuations on our results of operations and financial conditions; |
| • | our ability to satisfy our obligations under our material debt agreements, the indentures that govern our outstanding notes, and our other debt instruments and financial obligations, including our subordinated notes with no fixed maturity and other financial obligations; |
| • | adverse legal or regulatory proceedings or disputes, such as class actions or enforcement or other proceedings brought by government and regulatory agencies; |
| • | our ability to protect our reputation; |
| • | our ability to consummate asset sales, fully integrate newly acquired businesses, achieve cost-savings from our cost-reduction initiatives, implement our pricing initiatives for our products, and generally meet our business strategy’s goals; |
| • | the increasing reliance on information technology infrastructure for our sales, invoicing, procurement, financial statements, and other processes that can adversely affect our sales and operations in the event that the infrastructure does not work as intended, experiences technical difficulties, or is subjected to invasion, disruption, or damage caused by circumstances beyond our control, including cyber-attacks, catastrophic events, power outages, natural disasters, computer system or network failures, or other security breaches; |
| • | climate change, in particular reflected in weather conditions, including but not limited to excessive rain and snow, and disasters such as earthquakes and floods, that could affect our facilities or the markets in which we offer our products and services or from where we source our raw materials; |
| • | trade barriers, including tariffs or import taxes and changes in existing trade policies or changes to, or withdrawals from, free trade agreements, including the United States-Mexico-Canada Agreement; |
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| • | availability and cost of trucks, railcars, barges, and ships, as well as their licensed operators and drivers, for transport of our materials; |
| • | labor shortages and constraints; |
| • | our ability to hire, effectively compensate and retain our key personnel and maintain satisfactory labor relations; |
| • | our ability to detect and prevent money laundering, terrorism financing and corruption, as well as other illegal activities; |
| • | terrorist and organized criminal activities, social unrest, as well as geopolitical events, such as hostilities, war, and armed conflicts, including the current war between Russia and Ukraine and conflicts in the Middle East; |
| • | the impact of pandemics, epidemics, or outbreaks of infectious diseases and the response of governments and other third parties, which could adversely affect, among other matters, the ability of our operating facilities to operate at full or any capacity, supply chains, international operations, availability of liquidity, investor confidence and consumer spending, as well as the availability of, and demand for, our products and services; |
| • | changes in the economy that affect demand for consumer goods, consequently affecting demand for our products and services; |
| • | the depth and duration of an economic slowdown or recession, instability in the business landscape and lack of availability of credit; |
| • | declarations of insolvency or bankruptcy, or becoming subject to similar proceedings; |
| • | natural disasters and other unforeseen events (including global health hazards such as COVID-19); |
| • | our ability to implement our “Future in Action” climate action program and achieve our sustainability goals and objectives; and |
| • | the other risks and uncertainties described under “Item 3—Key Information—Risk Factors” and elsewhere in this annual report. |
Many factors could cause our expectations, expected results, and/or projections expressed in this annual report not being reached and/or not producing the expected benefits and/or results, as any such benefits or results are subject to uncertainties, costs, performance, and rate of implementation of technologies, some of which are not yet proven, among other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from historical results, performance, or achievements and/or results, performance, or achievements expressly or implicitly anticipated by the forward-looking statements, or otherwise could have an impact on us or our consolidated entities. Forward-looking statements should not be considered guarantees of future performance, nor the results or developments are indicative of results or developments in subsequent periods. Actual results of our operations and the development of market conditions in which we operate, or other circumstances or assumptions that may materialize, may differ materially from those described in, or suggested by, the forward-looking statements contained herein. Any or all of our forward-looking statements may turn out to be inaccurate and the factors identified above are not exhaustive. Accordingly, readers should not place undue reliance on forward-looking statements, as such forward-looking statements speak only as of the date on which they are made. The forward-looking statements contained in this annual report are made as of the date of this annual report and are subject to change without notice, and except to the extent legally required, we expressly disclaim any obligation or undertaking to update or revise any forward-looking statements in this annual report, whether to reflect any change in our expectations regarding those forward-looking statements, any change in events, conditions, or circumstances on which any such statement is based, or otherwise. Readers should review future reports filed or furnished by us with the SEC.
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This annual report contains statistical data regarding, but not limited to, the production, distribution, marketing, and sale of cement, ready-mix concrete, clinker, aggregates, and Urbanization Solutions. Unless the context indicates otherwise, all references to pricing initiatives and price increases or decreases refer to Cemex’s prices for its products. We generated some of this data internally, and some was obtained from independent industry publications and reports, available as of the date of this annual report, that we believe to be reliable sources. We have not independently verified this nor sought the consent of any organizations to refer to their reports in this annual report.
This annual report includes certain non-IFRS financial measures that differ from financial information presented by Cemex in accordance with IFRS in its financial statements and reports containing financial information. These non-IFRS financial measures include “Operating EBITDA (operating earnings before other expenses, net plus depreciation and amortization)” and “Operating EBITDA Margin” (Operating EBITDA for the period divided into our revenues as reported in our financial statements). We consider the closest financial measure to Operating EBITDA in our financial statements under IFRS to be the line item of “Operating earnings before other expenses, net,” as Operating EBITDA adds depreciation and amortization to this line item. Our Operating EBITDA Margin is calculated by dividing our Operating EBITDA for the period by our revenues as reported in our financial statements. We believe there is no close IFRS financial measure to compare Operating EBITDA Margin. These non-IFRS financial measures are designed to complement and should not be considered superior to financial measures calculated in accordance with IFRS. Although Operating EBITDA and Operating EBITDA Margin are not measures of operating performance, an alternative to cash flows or a measure of financial position under IFRS, Operating EBITDA is the key financial measure used by Cemex’s management to review operating performance and profitability, for decision-making purposes and to allocate resources. Moreover, our Operating EBITDA is a measure used by Cemex’s creditors to review our ability to internally fund capital expenditures, service or incur debt and comply with financial covenants under our financing agreements. Furthermore, Cemex’s management regularly reviews our Operating EBITDA Margin by reportable segment and on a consolidated basis as a measure of performance and profitability. These non-IFRS financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Non-IFRS financial measures presented in this annual report are being provided for informative purposes only and shall not be construed as investment, financial, or other advice.
The information, statements, and opinions contained in this annual report do not constitute a public offer under any applicable legislation, an offer to sell, or solicitation of any offer to buy any securities or financial instruments, or any advice or recommendation with respect to such securities or other financial instruments.
Cautionary Statement Regarding Environmental, Social, and Governance (“ESG”) and Sustainability-Related Data, Metrics, and Methodologies
This annual report includes non-financial metrics, estimates, or other information that are subject to significant uncertainties, which may include the methodology, collection, and verification of data, various estimates, and assumptions, and/or underlying data that is obtained from third parties, some of which cannot be independently verified.
The preparation of certain information contained in this annual report requires the application of a number of key judgments, assumptions, and estimates, including with respect to sustainability. The reported measures in this annual report reflect good faith estimates, assumptions, and judgments at the given point in time. There is a risk that these judgments, estimates, or assumptions may subsequently prove to be incorrect and/or may need to be restated or changed. Reporting on sustainability-related matters is not yet subject to the same recognized or accepted reporting or accounting principles and rules as traditional financial reporting. Accordingly, there is a lack of commonly accepted reporting practices for us to follow, and ESG measures between organizations may not be comparable. In addition, the underlying data, systems, and controls that support non-financial reporting are generally considerably less
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sophisticated than the systems and internal controls for financial reporting and rely on manual processes. This may result in non-comparable information between organizations and/or between reporting periods within organizations as methodologies develop. The further development of accounting and/or reporting standards could materially impact the performance metrics, data points, and targets contained in this annual report, and the reader may not be able to compare performance metrics, data points, or targets between reporting periods on a direct like-for-like basis.
There is currently no single globally recognized or accepted, consistent or comparable set of definitions or standards (legal, regulatory, or otherwise), nor widespread cross-market consensus, of (a) what constitutes, a “green,” “social,” “sustainable,” or any other similarly-labelled activity, product, or asset; (b) the precise attributes required for a particular activity, product, or asset to be defined as “green,” “social,” “sustainable” or any other similar label; or (c) climate and sustainable activities and their classification and reporting.
Therefore, there is little certainty, and no assurance or representation can be given, that our activities, products, or assets and/or reporting of such activities, products, or assets will meet any present or future expectations or requirements for describing or classifying such activities, products, or assets as “green,” “social,” “sustainable,” or any other similar label. We expect policies, regulatory requirements, standards, and definitions to continuously develop and evolve over time.
Cautionary Statement Regarding Forward-Looking ESG or Sustainability Statements
Certain sections in this annual report contain ESG- or sustainability-related forward-looking statements, such as aims, ambitions, estimates, forecasts, plans, projections, targets, and other metrics, including but not limited to: climate and emissions, Business and Human Rights (BHR), corporate governance, R&D and partnerships, development of products and services that intend to address sustainability-related concerns and sustainability related targets/ambitions when finalized. There are many significant uncertainties, assumptions, judgements, opinions, estimates, forecasts and statements made of future expectations underlying these forward-looking statements which could cause actual results, performance, outcomes or events to differ materially from those expressed or implied in these forward-looking statements, which include, but are not limited to:
| • | the extent and pace of climate change, including the timing and manifestation of physical and transition risks; |
| • | the macroeconomic environment; |
| • | uncertainty around future climate-related policy, including the timely implementation and integration of adequate government policies; |
| • | the effectiveness of actions of governments, legislators, regulators, businesses, investors, customers, and other stakeholders to mitigate the impact of climate and sustainability-related risks; |
| • | changes in customer behavior and demand, changes in the available technology for mitigation; |
| • | the roll-out of low carbon infrastructure; |
| • | the availability of accurate, verifiable, reliable, consistent, and comparable climate-related data; |
| • | lack of transparency and comparability of climate-related forward-looking methodologies; |
| • | variation in approaches and outcomes, as variations in methodologies may lead to under or overestimates and consequently present exaggerated indication of climate-related risk; and |
| • | reliance on assumptions and future uncertainty (calculations of forward-looking metrics are complex and require many methodological choices and assumptions). |
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Accordingly, undue reliance should not be placed on these statements. Furthermore, changing national and international standards, industry and scientific practices, regulatory requirements, and market expectations regarding climate change, which remain under continuous development, are subject to different interpretations.
There can be no assurance that these standards, practices, requirements, and expectations will not be interpreted differently than our understanding when defining sustainability-related ambitions and targets or change in a manner that substantially increases the cost or effort for us to achieve such ambitions and targets.
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Item 5—OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Overview
The following discussion and analysis should be read in conjunction with, and are qualified in their entirety by reference to, Cemex S.A.B. de C.V.’s audited consolidated financial statements as of December 31, 2022 and 2023, and for each of the three years ended December 31, 2021, 2022, and 2023 included elsewhere in this annual report. Our financial statements have been prepared in accordance with IFRS as issued by IASB.
As previously described, Cemex S.A.B. de C.V.’s audited consolidated financial statements as of December 31, 2022 and 2023, and for each of the three years ended December 31, 2021, 2022, and 2023 included elsewhere in this annual report include our presentation of several incurred and projected sales of assets as discontinued operations, as applicable. As of December 31, 2023, there are no significant assets held for sale.
The regulations of the SEC do not require foreign private issuers that prepare their financial statements based on IFRS to reconcile such financial statements to U.S. GAAP.
Our export sales from one reportable operating segment to another are important to evaluate the performance, market dynamics and assets’ utilization of each reportable segment on a stand-alone basis. Surplus of installed capacity or attractive export prices existing in a reportable operating segment give rise to the opportunity for exports to another operating segments to the extent there is available infrastructure for exports, such as maritime or land terminals. Accordingly, the percentage changes in cement sales volumes described in this annual report for our operations in a particular country or region include the number of tons of cement and/or the number of cubic meters of ready-mix concrete sold to our operations in other countries and regions. Moreover, the revenues financial information presented in this annual report for our operations in each country or region includes the Dollar amounts and percentage variations of the year in comparison to the previous year, as applicable, of both revenues to external customers, which summarizes our consolidated revenues as reported in the financial statements, as well as revenues including sales of cement and ready-mix concrete to our operations in other countries and regions, which have been eliminated in the preparation of Cemex S.A.B. de C.V.’s audited consolidated financial statements as of and for the year ended December 31, 2023 included elsewhere in this annual report.
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The following table sets forth selected financial information of revenues before intragroup transactions, eliminations resulting from consolidation (export sales from one country to another as described above) and revenues to external customers for each of the three years ended December 31, 2021, 2022, and 2023 by geographic reportable segment.
| Revenues including intragroup transactions For the Year Ended December 31,(1) |
Less: Intragroup Transactions For the Year Ended December 31,(2) |
External Revenues For the Year Ended December 31,(1) |
||||||||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||||||||||||||||||||||||||||
| Mexico |
3,466 | 3,842 | 5,060 | (142 | ) | (200 | ) | (205 | ) | 3,324 | 3,642 | 4,855 | ||||||||||||||||||||||||
| United States |
4,359 | 5,038 | 5,338 | (4 | ) | (4 | ) | — | 4,355 | 5,034 | 5,338 | |||||||||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||||||||||||||
| United Kingdom |
940 | 982 | 992 | — | — | — | 940 | 982 | 992 | |||||||||||||||||||||||||||
| France |
863 | 781 | 842 | — | — | — | 863 | 781 | 842 | |||||||||||||||||||||||||||
| Germany |
472 | 485 | 497 | (43 | ) | (46 | ) | (50 | ) | 429 | 439 | 447 | ||||||||||||||||||||||||
| Poland |
405 | 419 | 467 | (6 | ) | (4 | ) | (1 | ) | 399 | 415 | 466 | ||||||||||||||||||||||||
| Spain |
359 | 382 | 449 | (25 | ) | (36 | ) | (38 | ) | 334 | 346 | 411 | ||||||||||||||||||||||||
| Philippines |
424 | 379 | 312 | — | — | — | 424 | 379 | 312 | |||||||||||||||||||||||||||
| Israel |
785 | 840 | 794 | — | — | — | 785 | 840 | 794 | |||||||||||||||||||||||||||
| Rest of EMEAA |
618 | 707 | 770 | (5 | ) | (1 | ) | (4 | ) | 613 | 706 | 766 | ||||||||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||||||||||||||
| Colombia |
437 | 429 | 458 | — | — | — | 437 | 429 | 458 | |||||||||||||||||||||||||||
| Panama |
121 | 149 | 158 | (23 | ) | (34 | ) | (26 | ) | 98 | 115 | 132 | ||||||||||||||||||||||||
| Caribbean TCL |
280 | 302 | 329 | (7 | ) | (8 | ) | (12 | ) | 273 | 294 | 317 | ||||||||||||||||||||||||
| Dominican Republic |
299 | 348 | 378 | (8 | ) | (6 | ) | (18 | ) | 291 | 342 | 360 | ||||||||||||||||||||||||
| Rest of SCA&C |
465 | 394 | 414 | (21 | ) | (1 | ) | — | 444 | 393 | 414 | |||||||||||||||||||||||||
| Reportable segments |
— | — | — | — | — | — | 14,009 | 15,137 | 16,904 | |||||||||||||||||||||||||||
| Other activities(3) |
370 | 440 | 484 | — | — | — | 370 | 440 | 484 | |||||||||||||||||||||||||||
| Consolidated amounts |
14,379 | 15,577 | 17,388 | |||||||||||||||||||||||||||||||||
| (1) | For the reported periods, Cemex presents and discusses revenues before and after sales between reportable segments to allow readers a better understanding of market dynamics related to exports and utilization of installed capacity of Cemex’s reportable segments on a stand-alone basis. |
| (2) | Our operating reportable segments’ intragroup transactions refer to export sales between reportable segments. See our discussion of revenues by reportable segments in our Results of Operations section beginning on page 46 of this Annual Report for a description of the main origins and destinations of the Company’s exports transactions between reportable segments. |
| (3) | Our “Other activities” revenues line item refers mainly to: our Trading Unit (“Trading”). |
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The following table sets forth selected consolidated financial information of total assets as of December 31, 2022 and 2023, as well as selected financial information of revenues before intragroup transactions, external revenues, and operating earnings before other expenses, net for each of the three years ended December 31, 2021, 2022, and 2023 by reportable segment expressed as a percentage of our total consolidated group, as applicable. We operate in countries and regions with economies in different stages of development and structural reform and with different levels of fluctuation in exchange rates, inflation and interest rates. These economic factors may affect our results of operations, liquidity, and financial condition, depending upon the depreciation or appreciation of the exchange rate of each country and region in which we operate compared to the Dollar and Euro and the rate of inflation of each of these countries and regions. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Indebtedness and Certain Other Obligations—We have to service part of our debt and other financial obligations denominated in Dollars and Euros with revenues generated in Mexican Pesos or other currencies, as we do not generate sufficient revenue in Dollars and Euros from our operations to service all our debt and other financial obligations denominated in Dollars and Euros. This could adversely affect our ability to service our obligations in the event of a devaluation of the Mexican Peso, or any of the other currencies of the countries in which we operate, compared to the Dollar and Euro. In addition, our consolidated reported results and outstanding indebtedness are significantly affected by fluctuations in exchange rates between the Dollar (our reporting currency) vis-à-vis the Mexican Peso and other significant currencies within our operations.”
| Revenues including intragroup transactions For the Year Ended December 31,(1) |
External Revenues For the Year Ended December 31,(2) |
Operating Earnings Before Other Expenses, Net For the Year Ended December 31, |
Total Assets at December 31, |
|||||||||||||||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2022 | 2023 | ||||||||||||||||||||||||||||||||||
| Mexico |
22 | % | 21 | % | 25 | % | 23 | % | 23 | % | 28 | % | 58 | % | 62 | % | 60 | % | 15 | % | 19 | % | ||||||||||||||||||||||
| United States |
27 | % | 27 | % | 26 | % | 30 | % | 32 | % | 31 | % | 18 | % | 20 | % | 26 | % | 48 | % | 46 | % | ||||||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||||||||||||||||||||||
| United Kingdom |
6 | % | 5 | % | 5 | % | 7 | % | 6 | % | 6 | % | 4 | % | 9 | % | 6 | % | 5 | % | 5 | % | ||||||||||||||||||||||
| France |
5 | % | 4 | % | 4 | % | 6 | % | 5 | % | 5 | % | 3 | % | 1 | % | — | 4 | % | 3 | % | |||||||||||||||||||||||
| Germany |
3 | % | 3 | % | 2 | % | 3 | % | 3 | % | 3 | % | 2 | % | 1 | % | — | 2 | % | 2 | % | |||||||||||||||||||||||
| Poland |
3 | % | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | 2 | % | 1 | % | 1 | % | ||||||||||||||||||||||
| Spain |
2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | (2 | )% | (1 | )% | 2 | % | 2 | % | 2 | % | ||||||||||||||||||||||
| Philippines |
3 | % | 2 | % | 2 | % | 3 | % | 2 | % | 2 | % | 4 | % | 3 | % | — | 3 | % | 3 | % | |||||||||||||||||||||||
| Israel |
5 | % | 5 | % | 4 | % | 5 | % | 5 | % | 5 | % | 4 | % | 4 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||||||
| Rest of EMEAA |
4 | % | 4 | % | 4 | % | 4 | % | 5 | % | 3 | % | 2 | % | 3 | % | 5 | % | 3 | % | 3 | % | ||||||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||||||||||||||||||||||
| Colombia |
3 | % | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % | 4 | % | 2 | % | 2 | % | 3 | % | 4 | % | ||||||||||||||||||||||
| Panama |
1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||
| Caribbean TCL |
2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 3 | % | 4 | % | 3 | % | 2 | % | 2 | % | ||||||||||||||||||||||
| Dominican Republic |
2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 7 | % | 8 | % | 6 | % | 1 | % | 1 | % | ||||||||||||||||||||||
| Rest of SCA&C |
3 | % | 2 | % | 2 | % | 3 | % | 3 | % | 2 | % | 6 | % | 5 | % | 4 | % | 1 | % | 1 | % | ||||||||||||||||||||||
| Reportable segments |
— | — | — | 97 | % | 97 | % | 98 | % | 117 | % | 125 | % | 120 | % | 94 | % | 96 | % | |||||||||||||||||||||||||
| Other activities(3) |
— | — | — | 3 | % | 3 | % | 2 | % | (17 | )% | (25 | )% | (20 | )% | 6 | % | 4 | % | |||||||||||||||||||||||||
| Assets held for sale |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Total consolidated |
14,379 | 15,577 | 17,388 | 1,719 | 1,561 | 2,114 | 26,447 | 28,433 | ||||||||||||||||||||||||||||||||||||
| (1) | Represent the percentage integration by reportable operating segments based on aggregate combined revenues before eliminations resulting from consolidation. |
| (2) | Represent the percentage integration by reportable operating segments based on the consolidated amount of revenues as reported in the financial statements. |
| (3) | Our “Operating Earnings Before Other Expenses, Net” related to our “Other activities” line item includes our corporate expense, which in Dollar terms during the reported periods remained relatively flat; nonetheless, the integration percentage significantly changes year-over-year considering the total consolidated amount of “Operating Earnings Before Other Expenses, Net.” |
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Critical Accounting Estimates
The preparation of financial statements in accordance with IFRS requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the period. These assumptions are reviewed on an ongoing basis using available information. Actual results could differ from these estimates.
The main items subject to significant estimates and assumptions by our management include lease accounting, impairment tests of long-lived assets, recognition of deferred income tax assets, the measurement of financial instruments at fair value, the assets and liabilities related to employee benefits, as well as the analyses of contingent liabilities. Significant judgment by our management is required to appropriately assess the amounts of these assets and liabilities.
As of December 31, 2022 and 2023, and for the years ended December 31, 2021, 2022, and 2023, identified below are the accounting policies we have applied under IFRS that are critical to understanding our overall financial reporting.
Deferred Income Taxes
Our operations are subject to taxation in many different jurisdictions throughout the world. The effects reflected in the statement of operations for income taxes include the amounts incurred during the period and the amounts of deferred income taxes, determined according to the income tax law applicable to each subsidiary, reflecting uncertainty in income tax treatments, if any. Consolidated deferred income taxes represent the addition of the amounts determined in each subsidiary by applying the enacted statutory income tax rate to the total temporary differences resulting from comparing the book and taxable values of assets and liabilities, considering tax loss carryforwards and other recoverable tax credits, to the extent that it is probable that future taxable profits will be available against which they can be utilized. The measurement of deferred income taxes at the reporting period reflects the tax consequences that follow the manner in which we expect to recover or settle the carrying amount of its assets and liabilities. Deferred income taxes for the period represent the difference between balances of deferred income taxes at the beginning and the end of the period. Deferred income tax assets and liabilities relating to different tax jurisdictions are not offset. According to IFRS, all items charged or credited directly in stockholders’ equity or as part of other comprehensive income or loss for the period are recognized net of their current and deferred income tax effects. The effect of a change in enacted statutory tax rates is recognized in the period in which the change is officially enacted. Our worldwide tax position is highly complex and subject to numerous laws that require interpretation and application and that are not consistent among the countries in which we operate. Significant judgment is required to appropriately assess the amounts of tax assets and liabilities.
Deferred tax assets, mainly related to tax loss carryforwards, are reviewed at each reporting date and are reduced when it is not deemed probable that the related tax benefit will be realized, considering the aggregate amount of self-determined tax loss carryforwards that we believe will not be rejected by the tax authorities based on available evidence and the likelihood of recovering them prior to their expiration through an analysis of estimated future taxable income. If it is probable that the tax authorities would reject a self-determined deferred tax asset, we would decrease such asset. When it is considered that a deferred tax asset will not be recovered before its expiration, we would not recognize such deferred tax asset. Both situations would result in additional income tax expense for the period in which such determination is made. In order to determine whether it is probable that deferred tax assets will ultimately be recovered, we take into consideration all available positive and negative evidence, including factors such as market conditions, industry analysis, expansion plans, projected taxable income, carryforward periods, current tax structure, potential changes or adjustments in tax structure, tax planning strategies and future reversals of existing
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temporary differences. Likewise, we analyze our actual results versus our estimates, and adjust, as necessary, our tax asset valuations. If actual results vary from our estimates, the deferred tax asset and/or valuations may be affected, in which case, necessary adjustments will be made based on relevant information in our statement of income for such period.
Based on IFRIC 23, Uncertainty over income tax treatments, the income tax effects from an uncertain tax position are recognized when it is probable that the position will be sustained based on its technical merits and assuming that the tax authorities will examine each position and have full knowledge of all relevant information. The probability of each position has been considered on its own, regardless of its relation to any other broader tax settlement. The probability threshold represents a positive assertion by management that we are entitled to the economic benefits of a tax position. If it is improbable for a tax position to be sustained, no benefits of the position are recognized. Our policy is to recognize interest and penalties related to unrecognized tax benefits as part of the income tax in the consolidated statements of income.
Our overall tax strategy is to structure our worldwide operations to reduce or defer the payment of income taxes on a consolidated basis. Many of the activities we undertake in pursuing this tax reduction strategy are highly complex and involve interpretations of tax laws and regulations in multiple jurisdictions and are subject to review by the relevant taxing authorities. It is possible that the taxing authorities could challenge our application of these regulations to our operations and transactions. The taxing authorities in the past have challenged interpretations that we have made and have assessed additional taxes. Although we have, from time to time, paid some of these additional assessments, including the tax assessment assessed by tax authorities in Spain, we believe that these assessments have, in most cases, not been material and that we have been successful in sustaining our positions. No assurance can be given, however, that we will continue to be as successful as we have been in the past or that pending appeals of current tax assessments will be judged in our favor. For more information, see “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Tax Matters—Spain.”
Our current and deferred income tax amounts included in our consolidated statements of income are highly variable and are subject, among other factors, to the amounts of taxable income determined in each jurisdiction in which we operate. Such amounts of taxable income depend on factors such as sale volumes and prices, costs and expenses, exchange rates fluctuations and interest on debt, among others, as well as on the estimated tax assets at the end of the period due to the expected future generation of taxable gains in each jurisdiction. See our discussion of operations included in “Item 5—Operating and Financial Review and Prospects.”
Financial Instruments
Financial assets are classified as “Held to collect” and measured at amortized cost when they are not designated as at fair value through profit or loss and meet both of the following conditions: (a) are held within a business model whose objective is to hold assets to collect contractual cash flows and (b) its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Amortized cost represents the net present value of the consideration receivable or payable as of the transaction date. This classification of financial assets comprises the following captions:
| • | Cash and cash equivalents; |
| • | Trade accounts receivable, other current accounts receivable and other current assets. Due to their short-term nature, we initially recognize these assets at the original invoiced or transaction amount minus expected credit losses, as explained below; |
| • | Trade accounts receivable sold under securitization programs, in which certain residual interest in the trade accounts receivable sold in case of recovery failure and continued involvement in such assets is maintained, do not qualify for derecognition and are maintained in the statement of financial position; and |
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| • | Investments and non-current accounts receivable. Subsequent changes in effects from amortized cost are recognized in the income statement as part of “Financial income and other items, net.” |
Certain strategic investments are measured at fair value through other comprehensive income within “Other equity reserves.” We do not maintain financial assets “Held to collect and sell” whose business model has the objective the collection of contractual cash flows and the sale of those financial assets.
The financial assets that are not classified as “Held to collect” or that do not have strategic characteristics fall into the residual category of held at fair value through the income statement as part of “Financial income and other items, net.”
Debt instruments and other financial obligations are classified as “Loans” and measured at amortized cost. Interest accrued on financial instruments is recognized within “Other accounts payable and accrued expenses” against financial expense. During the reported periods, we did not have financial liabilities voluntarily recognized at fair value or associated with fair value hedge strategies with derivative financial instruments.
Derivative financial instruments are recognized as assets or liabilities in the statement of financial position at their estimated fair values, and the changes in such fair values are recognized in the income statement within “Financial income and other items, net” for the period in which they occur, except in the case of hedging instruments as described below.
(a) Derivative financial instruments
In compliance with the guidelines established by our Risk Management Committee and the restrictions in our debt agreements and our hedging strategy, we use derivative financial instruments with the objectives of: (i) changing the risk profile or fixing the price of fuels; (ii) foreign exchange hedging; (iii) hedging forecasted transactions; (iv) changing the risk of changes in market interest rates; and (v) accomplishing other corporate objectives.
Derivative financial instruments are recognized as assets or liabilities in the balance sheet at their estimated fair values, and changes in such fair values are recognized in the statements of income within “Financial income and other items, net” for the period in which they occur, except for changes in the fair value of derivative instruments associated with cash flow hedges, in which case, such changes in fair value are recognized in stockholders’ equity, and are reclassified to earnings as the interest expense of the related debt is accrued, in the case of interest rate swaps, or when the underlying products are consumed in the case of contracts on the price of raw materials, fuel and commodities. Likewise, in hedges of the net investment in foreign subsidiaries, changes in fair value are recognized in stockholders’ equity as part of the foreign currency translation result, which reversal to earnings would take place upon disposal of the foreign investment. During the reported periods, we have not designated any derivative instruments in fair value hedges. Derivative instruments are negotiated with institutions with significant financial capacity; therefore, we believe the risk of nonperformance of the obligations agreed to by such counterparties to be minimal. See note 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included herein.
The estimated fair value under IFRS represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, considering the counterparty’s credit risk in the valuation, that is, an exit price or a market-based measurement.
In connection with hedge accounting under IFRS 9, Financial Instruments: classification and measurement (“IFRS 9”), among other changes, there is a relief for entities in performing: (a) the retrospective effectiveness test at inception of the hedging relationship and (b) the requirement to maintain a prospective effectiveness ratio between 0.8 and 1.25 at
each reporting date for purposes of sustaining the hedging designation, both requirements under International Accounting Standard (“IAS”) 39, Financial instruments: recognition and measurement (“IAS 39”). Under IFRS 9, a
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hedging relationship can be established to the extent the entity considers, based on the analysis of the overall characteristics of the hedging and hedged items, that the hedge will be highly effective in the future and the hedge relationship at inception is aligned with the entity’s reported risk management strategy. IFRS 9 maintains the same hedge accounting categories of cash flow hedge, fair value hedge and hedge of a net investment established in IAS 39, as well as the requirement of recognizing the ineffective portion of a cash flow hedge immediately in the statement of operations.
The concept of exit value is premised on the existence of a market and market participants for the specific asset or liability. When there is no market and/or market participants willing to make a market, IFRS establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1, as defined below, measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3, as defined below, measurements). The three levels of the fair value hierarchy are as follows:
| • | Level 1 – represents quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at the measurement date. A quoted price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available. |
| • | Level 2 – are inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly, and are used mainly to determine the fair value of securities, investments or loans that are not actively traded. Level 2 inputs included equity prices, certain interest rates and yield curves, implied volatility and credit spreads, among others, as well as inputs extrapolated from other observable inputs. In the absence of Level 1 inputs, we determined fair values by iteration of the applicable Level 2 inputs, the number of securities and/or the other relevant terms of the contract, as applicable. |
| • | Level 3 – inputs are unobservable inputs for the asset or liability. We use unobservable inputs to determine fair values, to the extent there are no Level 1 or Level 2 inputs, in valuation models such as Black-Scholes, binomial, discounted cash flows or multiples of Operating EBITDA, including risk assumptions consistent with what market participants would use to arrive at fair value. |
Critical judgment and estimates by management are required to appropriately identify the corresponding level of fair value applicable to each derivative financing transaction, as well as to assess the amounts of the resulting assets and liabilities, mainly in respect of Level 2 and Level 3 fair values, in order to account for the effects of derivative financial instruments in the financial statements. See note 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
(b) Impairment of financial assets
Impairment losses of financial assets, including trade accounts receivable, are recognized using the Expected Credit Loss model (“ECL”) for the entire lifetime of such financial assets on initial recognition, and at each subsequent reporting period, even in the absence of a credit event or if a loss has not yet been incurred, considering for their measurement past events and current conditions, as well as reasonable and supportable forecasts affecting collectability. For purposes of the ECL model of trade accounts receivable, on a country-by-country basis, we segment our accounts receivable by type of client, homogeneous credit risk and days past due and determine for each segment an average rate of ECL, considering actual credit loss experience generally over the last 12 months and analyses of future delinquency, that is applied to the balance of the accounts receivable. The average ECL rate increases in each segment of days past due until the rate is 100% for the segment of 365 days or more past due.
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Impairment of Long-lived Assets and Goodwill
Our statement of financial position reflects significant amounts of long-lived assets (including property, machinery and equipment, goodwill, intangible assets of definite life and other investments) associated with our operations throughout the world. Many of these amounts have resulted from past acquisitions, which have required us to reflect these assets at their fair market values at the dates of acquisition. According to their characteristics and the specific accounting rules related to them, we assess the recoverability of our long-lived assets at least once a year, normally during the fourth quarter, as is the case for goodwill, or whenever events or circumstances arise that we believe trigger a requirement to review such carrying values, as is the case with property, machinery and equipment and intangible assets of definite life.
Property, machinery and equipment, assets for the right-of-use, intangible assets of definite life and other investments are tested for impairment upon the occurrence of factors such as the occurrence of internal or external indicators of impairment, such as changes in our operating business model or in technology that affects the asset, as well as expectations of lower operating results for each cash generating unit, in order to determine whether their carrying amounts may not be recovered. In such cases, an impairment loss is recorded in the statements of income for the period when such determination is made within “Other expenses, net.” The impairment loss of an asset results from the excess of the asset’s carrying amount over its recoverable amount, corresponding to the higher of the fair value of the asset, less costs to sell such asset, and the asset’s value in use, the latter represented by the net present value of estimated cash flows related to the use and eventual disposal of the asset.
During 2022 and 2023, we recognized non-cash impairment losses of fixed assets for an amount of $77 million and $36 million, respectively, mainly in connection with the closing and/or reduction of operations resulting from adjusting supply to current demand conditions, a change of operating model of certain assets as well as some equipment that remained idle for several periods. In 2022 and 2021, those impairment losses were associated mainly with certain negative effects of the COVID-19 pandemic, as a result of which we closed certain assets due to their estimated sales volumes and the Company’s ability to supply demand by achieving efficiencies in other operating assets. We expect such assets to remain closed for the foreseeable future. In addition, during 2023, 2022, and 2021 there were no reversal of impairment charges. Generally, for all reported periods, we conduct impairment tests on several CGUs considering certain triggering events, mainly: (a) the closing and/or reduction of operations of cement and ready-mix concrete plants resulting from adjusting the supply to current demand conditions; (b) change of operating model of certain assets or the transferring of installed capacity to more efficient plants; as well as (c) for certain equipment, remaining idle for several periods. Any resulting impairment losses are recognized within the line item of “Other expenses, net.” See note 15.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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During the years ended December 31, 2021, 2022, and 2023 the breakdown of impairment losses of fixed assets by country was as follows:
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (in millions of Dollars) | ||||||||||||
| Colombia |
$ | 10 | $ | — | $ | 8 | ||||||
| Caribbean TCL |
— | 14 | 7 | |||||||||
| France |
— | — | 6 | |||||||||
| United Kingdom |
5 | 10 | 5 | |||||||||
| United States |
18 | 26 | 3 | |||||||||
| Spain |
— | 23 | 2 | |||||||||
| Others |
10 | 4 | 5 | |||||||||
| $ | 43 | $ | 77 | $ | 36 | |||||||
See note 15.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
We do not have intangible assets of indefinite life other than goodwill. As mentioned above, goodwill is tested for impairment when required due to significant adverse changes or at least once a year, during the last quarter of such year or additionally on any interim date when impairment indicators exist, by means of determining the value in use of the group of CGUs to which goodwill balances have been allocated, which consists of the higher of such group of CGUs fair value, less cost to sell and its value in use, represented by the discounted amount of estimated future cash flows to be generated by such CGUs to which goodwill has been allocated. We determine discounted cash flows generally over periods of five years, plus a terminal value using risk-adjusted discount rates. If the value in use of a group of CGUs to which goodwill has been allocated is lower than its corresponding carrying amount, we determine the fair value of our reporting units using methodologies generally accepted in the market to determine the value of entities, such as multiples of Operating EBITDA and by reference to other market transactions, among others. We recognize an impairment loss of goodwill within “Other expenses, net,” if the recoverable amount is lower than the net book value of the group of CGUs to which goodwill has been allocated. Impairment charges recognized on goodwill are not reversed in subsequent periods.
In 2023, we did not recognize any goodwill impairment losses considering the rise in our projected cash flows, particularly due to the enhanced generation of Operating EBITDA in most of the countries where our goodwill balances are allocated. Additionally, the positive outlook for the upcoming years played a role in this determination. This was partially offset by the overall increase in applicable discount rates, which saw an average uptick of 120 basis points, or 1.2%, compared to 2022. See notes 7 and 16.2 to Cemex, S.A.B. de C.V.’s audited consolidated financial statements included elsewhere in this annual report.
In 2022, as part of the mandatory impairment test during the fourth quarter, we recognized within “Other expenses, net,” non-cash goodwill impairment losses for an aggregate amount of $365 million, of which $273 million correspond to the operating segment in the United States and $92 million correspond to the operating segment in Spain. See notes 7 and 16.2 to Cemex, S.A.B. de C.V.’s audited consolidated financial statements included elsewhere in this annual report. In both cases, the related book value of the operating segment exceeded the corresponding value in use. The impairment losses in 2022 are mainly related to the significant increase in the discount rates in comparison to 2021 and the resulting significant decrease in our projected cash flows in these segments considering the global high inflationary environment, which increased risk-free rates, and the material increase in the funding cost observed in the industry during the period. These negative effects more than offset the expected improvements in the estimated Operating EBITDA generation in both the United States and Spain.
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In 2021, we recognized within “Other expenses, net” in the income statement, non-cash goodwill impairment losses for an aggregate amount of $440 million, related to the operating segments in Spain of $317 million and in the UAE of $96 million, as well as $27 million related to Neoris due to reorganization. The impairment losses in Spain and UAE were due to disruptions in the supply chains, resulting in increased estimated production and transportation costs expected to persist in the mid-term. These factors significantly reduced the projected Operating EBITDA compared to the valuations determined as of December 31, 2020.
For the years ended December 31, 2021, 2022, and 2023, the reporting segments we presented in note 4.3 to our 2023 audited consolidated financial statements included elsewhere in this annual report represent our groups of CGUs to which goodwill has been allocated for purposes of testing goodwill for impairment. In arriving at this conclusion, we considered: (i) that after the acquisition, goodwill was allocated at the level of the reporting segment; (ii) that the operating components that comprise the reporting segment have similar economic characteristics; (iii) that the reporting segments are used by us to organize and evaluate its activities in its internal information system; (iv) the homogenous nature of the items produced and traded in each operative component, which are all used by the construction industry; (v) the vertical integration in the value chain of the products comprising each component; (vi) the type of clients, which are substantially similar in all components; (vii) the operative integration among components; and (viii) whether the compensation system of the specific country is based on the consolidated results of the reporting segment and not on the particular results of the components. In addition, the country level represents the lowest level within us at which goodwill is monitored for internal management purposes.
Significant judgment by management is required to appropriately assess the fair values and values in use of these assets. Impairment tests are significantly sensitive to, among other factors, the estimation of future prices of our products, the development of operating expenses, local and international economic trends in the construction industry, the long-term growth expectations in the different markets as well as the discount rates and the growth rates in perpetuity applied. For purposes of estimating future prices, we use, to the extent available, historical data plus the expected increase or decrease according to information issued by what we consider to be trusted external sources, such as national construction or cement producer chambers and/or in governmental economic expectations. Operating expenses are normally measured as a constant proportion of revenues, following past experience. However, such operating expenses are also reviewed considering external information sources in respect to inputs that behave according to international prices, such as gas and oil. We use specific pre-tax discount rates for each group of CGUs to which goodwill is allocated, which are applied to pre-tax cash flows. The discount rates are determined using the approach of the weighted average cost of capital formula. The amounts of estimated undiscounted cash flows are significantly sensitive to the growth rate in perpetuity applied. The higher the growth rate in perpetuity applied, the higher the amount obtained of undiscounted future cash flows by group of CGUs obtained. Moreover, the amounts of discounted estimated future cash flows are significantly sensitive to the weighted average cost of capital (discount rate) applied. The higher the discount rate applied, the lower the amount obtained of discounted estimated future cash flows by group of CGUs obtained. Additionally, we monitor the useful lives assigned to these long-lived assets for purposes of depreciation and amortization, when applicable. This determination is subjective and is integral to the determination of whether impairment has occurred.
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Pre-tax discount rates and long-term growth rates used to determine the discounted cash flows in the group of CGUs with the main goodwill balances in 2021, 2022, and 2023 were as follows:
| Discount rates | Long-term growth rate | |||||||||||||||||||||||
| Groups of CGUs |
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||||||||||||||||||
| United States |
7.2% | 9.1% | 10.1% | 2.0% | 2.0% | 2.0% | ||||||||||||||||||
| United Kingdom |
7.3% | 9.1% | 10.4% | 1.5% | 1.5% | 1.5% | ||||||||||||||||||
| France |
7.3% | 9.2% | 10.4% | 1.4% | 1.4% | 1.5% | ||||||||||||||||||
| Spain |
7.6% | 9.4% | 10.7% | 1.5% | 1.7% | 1.6% | ||||||||||||||||||
| Mexico |
8.4% | 10.3% | 11.6% | 1.0% | 1.1% | 1.0% | ||||||||||||||||||
| Colombia |
8.5% | 10.9% | 12.7% | 3.5% | 3.3% | 3.3% | ||||||||||||||||||
| Range of rates in other countries |
7.4% – 11.7% | 9.3% – 13.9% | 10.3% – 17.0% | 1.7% – 6.0% | 1.5% – 6.0% | 1.5% – 6.4% | ||||||||||||||||||
The discount rates used in our cash flow projections for determining the value in use of our operating segments to which goodwill has been allocated as of December 31, 2023, increased by a weighted average of 1.2% compared to 2022. This increase is mainly attributed to several factors: the increase in the risk-free rate associated with our segments, which changed from 3.58% in 2022 to 4.79% in 2023; and the reduction in the weight of debt which changed from 27% in 2022 to 22.5% in 2023. These increases were partially offset by the reduction in the public comparable companies’ stock volatility (beta) which changed from 1.08 in 2022 to 1.07 in 2023. In 2023, the funding cost observed in the industry remained unchanged at 6.7% compared to 2022, and other assumptions remained relatively flat in 2023 in comparison to 2022.
The discount rates used in our cash flow projections for determining the value in use of our operating segments to which goodwill has been allocated as of December 31, 2022, increased by a weighted average of 2.0% compared to 2021. This increase is mainly attributed to several factors: the increase in the risk-free rate associated with us, which changed from 1.82% in 2021 to 3.58% in 2022; the increase in industry funding costs, which changed from 4.1% in 2021 to 6.7% in 2022; and an average increase of approximately 1.7% in the cost of equity for 2022. Other variables remained relatively stable. In addition, as of December 31, 2022, we maintained certain reductions to the long-term growth rates used, mainly Mexico in 1.0% and Egypt in 2.85%.
As of December 31, 2023, except for the operating segment in the United States of which goodwill accounts for 80% of the corresponding consolidated goodwill balance, none of the other sensitivity analyses indicated a potential impairment risk in our operating segments. We continually monitor the evolution of the group of CGUs to which goodwill has been allocated that have presented relative goodwill impairment risk in any of the reported periods and, if the relevant economic variables and the related value in use would be negatively affected, it may result in a goodwill impairment loss in the future. The table below shows the additional effects of the sensitivity analyses to the charges recognized from the changes in assumptions as of December 31, 2023.
| Impairment effects from the sensitivity analyses to changes in assumptions as of December 31, 2023 |
||||||||||||||||
| Operating segment |
Impairment losses recognized |
Discount rate +1% |
Long-term growth rate -1% |
Multiples Operating EBITDA 10.9x |
||||||||||||
| United States |
$ | — | 357 | 64 | — | |||||||||||
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Employee Benefits
The costs associated with our employees’ benefits for: (i) defined benefit pension plans and (ii) other post-employment benefits, primarily comprised of health care benefits, life insurance and seniority premiums, granted by us and/or pursuant to applicable law, are recognized as services rendered, based on actuarial estimations of the
benefits’ present value with the advice of external actuaries. For certain pension plans, we have created irrevocable trust funds to cover future benefit payments (“plan assets”). These plan assets are valued at their estimated fair value at the statement of financial position date. The actuarial assumptions and accounting policy consider: (i) the use of nominal rates; (ii) a single rate is used for the determination of the expected return on plan assets and the discount of the benefits obligation to present value; (iii) a net interest is recognized on the net defined benefit liability (liability minus plan assets); and (iv) all actuarial gains and losses for the period, related to differences between the projected and real actuarial assumptions at the end of the period, as well as the difference between the expected and real return on plan assets, are recognized as part of “Other items of comprehensive income (loss), net” within stockholders’ equity.
The service cost, corresponding to the increase in the obligation for additional benefits earned by employees during the period, is recognized within operating costs and expenses. The net interest cost, resulting from the increase in obligations for changes in net present value and the change during the period in the estimated fair value of plan assets, is recognized within “Financial income and other items, net.”
The effects from modifications to the pension plans that affect the cost of past services are recognized within operating costs and expenses in the period in which such modifications become effective to the employees or without delay if changes are effective immediately. Likewise, the effects from curtailments and/or settlements of obligations occurring during the period, associated with events that significantly reduce the cost of future services and/or significantly reduce the population subject to pension benefits, respectively, are recognized within operating costs and expenses.
Contingent Liabilities
Obligations or losses resulting from past events are recognized as liabilities in the statement of financial position only when present legal or constructive obligations exist, are probable to result in an outflow of resources and the amount can be measured reliably. We do not recognize a provision when a loss is less than probable or when it is considered probable, but it is not possible to estimate the amount of the outflow. In such cases, the entity discloses contingent liability in the notes to the financial statements, unless the possibility of an outflow of resources is remote.
We conduct significant activities in all the countries we operate, and we are exposed to events that may create possible obligations that must be analyzed at each reporting period, in order to conclude whether we have a present obligation that could lead to an outflow of resources embodying economic benefits; or present obligations that do not meet the recognition criteria, according to IAS 37, Provisions, Contingent Liabilities and Contingent Assets.
We are involved in various legal proceedings that have arisen in the ordinary course of business. These proceedings include (1) antitrust proceedings; (2) product warranty claims; (3) claims for environmental damages; (4) indemnification claims relating to acquisitions or divestitures; (5) claims to revoke permits and/or concessions; (6) tax matters; and (7) other diverse civil, administrative, commercial and legal actions. Some of the cases require significant judgment and estimates from management to appropriately assess the likelihood of the outcomes and whether a present obligation exists. We maintain regional, country and centralized in-house legal departments which follow up on each of these cases and assist with the evaluation of the likelihood of the outcomes. In certain circumstances, external legal advice is also engaged.
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| PART I | ||||
We are sometimes able to make and disclose reasonable estimates of the expected loss or range of possible loss, as well as disclose any provision accrued for such loss. However, for a limited number of ongoing legal proceedings, we may not be able to make a reasonable estimate of the expected loss or range of possible loss or may be able to do so but believe that disclosure of such information on a case-by-case basis would seriously prejudice our position in the ongoing legal proceedings or in any related settlement discussions. Accordingly, in such cases, we disclose qualitative information with respect to the nature and characteristics of the contingency but do not disclose our estimate of the range of potential loss.
Results of Operations
Selected Consolidated Financial Information
The financial data set forth below as of December 31, 2022 and 2023, and for each of the three years ended December 31, 2021, 2022, and 2023 have been derived from, and should be read in conjunction with, and are qualified in their entirety by reference to, our 2023 audited consolidated financial statements included elsewhere in this annual report.
Our 2023 audited consolidated financial statements included elsewhere in this annual report have been prepared in accordance with IFRS, which differ in significant respects from U.S. GAAP. The regulations of the SEC do not require foreign private issuers that prepare their financial statements on the basis of IFRS (as issued by the IASB) to reconcile such financial statements to U.S. GAAP.
During 2023, we reported a controlling interest net income of $182 million, which was 79% lower than 2022. Despite better operating performance, net income for 2023 was lower due to a provision for a tax fine of $620 million related to a tax matter in Spain. This decrease was partially mitigated by 12% higher revenues in 2023 compared to 2022, attributable to a favorable price contribution in all our regions. This increase managed to offset the adverse effects of lower volumes and higher costs of sales. Our other expenses, net, decreased 43% from an expense of $467 million in 2022 to an expense of $265 million in 2023, which was mainly due to a recognition of non-cash goodwill impairment losses of $365 million in 2022, of which $273 million corresponded to our operating segment in the United States and $92 million corresponded to our operating segment in Spain. During 2023, we did not recognize any non-cash goodwill impairment losses.
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| PART I | ||||
Cemex, S.A.B. de C.V. and Subsidiaries
Selected Consolidated Financial Information
| As of and for the Year Ended December 31, |
||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (in millions of Dollars, except ratios and share and per share amounts) |
||||||||||||
| Statement of Operations Information: | ||||||||||||
| Revenues |
$ | 14,379 | $ | 15,577 | $ | 17,388 | ||||||
| Cost of sales(1) |
(9,743 | ) | (10,755 | ) | (11,527 | ) | ||||||
| Gross profit |
4,636 | 4,822 | 5,861 | |||||||||
| Operating expenses |
(2,917 | ) | (3,261 | ) | (3,747 | ) | ||||||
| Operating earnings before other expenses, net(2) |
1,719 | 1,561 | 2,114 | |||||||||
| Other expenses, net |
(82 | ) | (467 | ) | (265 | ) | ||||||
| Operating earnings(2) |
1,637 | 1,094 | 1,849 | |||||||||
| Financial items(3) |
(737 | ) | (354 | ) | (498 | ) | ||||||
| Share of profit of equity accounted investees |
54 | 30 | 98 | |||||||||
| Earnings before income tax |
954 | 770 | 1,449 | |||||||||
| Income tax |
(137 | ) | (209 | ) | (1,250 | ) | ||||||
| Discontinued operations(4) |
(39 | ) | 324 | — | ||||||||
| Non-controlling interest net income |
25 | 27 | 17 | |||||||||
| Controlling interest net income |
753 | 858 | 182 | |||||||||
| Basic earnings per share(5)(6) |
0.0171 | 0.0197 | 0.0042 | |||||||||
| Diluted earnings per share(5)(6) |
0.0168 | 0.0193 | 0.0041 | |||||||||
| Basic earnings per share from continuing operations(5)(6) |
0.0180 | 0.0123 | 0.0042 | |||||||||
| Diluted earnings per share from continuing operations(5)(6) |
0.0177 | 0.0120 | 0.0041 | |||||||||
| Number of shares outstanding(5)(7)(8) |
44,853 | 44,348 | 44,110 | |||||||||
| Statement of Financial Position Information: |
||||||||||||
| Cash and cash equivalents |
613 | 495 | 624 | |||||||||
| Assets held for sale and other current assets(9) |
272 | 183 | 191 | |||||||||
| Property, machinery and equipment, net and assets for the right-of-use, net(13) |
11,322 | 11,284 | 12,466 | |||||||||
| Other assets |
14,443 | 14,485 | 15,152 | |||||||||
| Total assets |
26,650 | 26,447 | 28,433 | |||||||||
| Current debt |
73 | 51 | 25 | |||||||||
| Other current liabilities |
5,307 | 5,495 | 6,761 | |||||||||
| Non-current debt |
7,306 | 6,920 | 6,203 | |||||||||
| Other non-current liabilities |
3,693 | 3,072 | 3,328 | |||||||||
| Total liabilities |
16,379 | 15,538 | 16,317 | |||||||||
| Non-controlling interest |
444 | 408 | 352 | |||||||||
| Total controlling interest |
9,827 | 10,501 | 11,764 | |||||||||
| Other Financial Information: |
||||||||||||
| Book value per share(5)(8)(11) |
0.2191 | 0.2368 | 0.2667 | |||||||||
| Operating EBITDA(12) |
2,839 | 2,681 | 3,347 | |||||||||
| Capital expenditures |
1,094 | 1,362 | 1,417 | |||||||||
| Depreciation and amortization of assets |
1,120 | 1,120 | 1,233 | |||||||||
| Cash flows provided by operating activities from continuing operations |
2,500 | 2,150 | 3,278 | |||||||||
| Basic earnings per CPO from continuing operations(5)(6) |
0.0540 | 0.0369 | 0.0126 | |||||||||
| Basic earnings per CPO(5)(6) |
0.0513 | 0.0591 | 0.0126 | |||||||||
| Total debt plus other financial obligations(13) |
9,157 | 8,825 | 8,164 | |||||||||
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| (1) | Cost of sales includes depreciation, amortization and depletion of assets involved in production, expenses related to storage in production plants, freight expenses of raw materials in plants and delivery expenses of our ready-mix concrete business. Our cost of sales excludes (i) expenses related to personnel and equipment comprising our selling network and those expenses related to warehousing at the points of sale and (ii) freight expenses of finished products from our producing plants to our points of sale and from our points of sale to our customers’ locations, which are all included as part of the line item titled “Operating expenses.” |
| (2) | In the statements of income, we include the line item titled “Operating earnings before other expenses, net” considering that it is a subtotal relevant for the determination of our “Operating EBITDA” as explained in note 2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. The line item of “Operating earnings before other expenses, net” allows for easy reconciliation of the amount in these financial statements under IFRS to the non-IFRS measure of Operating EBITDA by adding back depreciation and amortization. Under current IFRS, the inclusion of certain subtotals such as “Operating earnings before other expenses, net” and the display of the income statement varies significantly by industry and company according to specific needs. |
| (3) | Financial items include our financial expense and our financial income and other items, net, which includes net interest cost of pension liabilities, financial income, results from financial instruments, net (derivatives, fixed-income investments and other securities), foreign exchange results and effects of amortized cost on assets and liabilities and others, net. See notes 8.1 and 8.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (4) | Considering the disposal of entire reporting segments as well as the sale of significant businesses, our statements of income present as part of the single line item of “Discontinued operations,” net of income tax, the results of: (a) the digital solution business Neoris for the years ended December 31, 2021 and for the period from January 1 to October 25, 2022; (b) the operating segment in Costa Rica and El Salvador for the year 2021 and for the period from January 1 to August 31, 2022; (c) the white cement business held for sale in Spain for the period from January 1 to July 9, 2021; and (d) France assets related to Rhône-Alpes region for the period from January 1 to March 31, 2021. See note 4.2 in Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (5) | Cemex, S.A.B. de C.V.’s capital stock consists of Series A shares and Series B shares. Each CPO represents two Series A shares and one Series B share. As of December 31, 2023, 98.75% of Cemex, S.A.B. de C.V.’s outstanding share capital was represented by CPOs, with each ADS representing 10 CPOs. No CPOs were repurchased from March 25, 2021 to December 31, 2021 under the repurchase program authorized at Cemex, S.A.B. de C.V.’s Ordinary General Shareholders’ Meeting held on March 25, 2021. During 2022, under the repurchase programs authorized at Cemex, S.A.B. de C.V.’s Ordinary General Shareholders’ Meetings held on March 25, 2021 and March 24, 2022, Cemex, S.A.B. de C.V. repurchased 220.6 million CPOs, at a weighted average price in Mexican Pesos equivalent to $0.5026 per CPO, which was equivalent to an amount of $110.9 million. The shares repurchased under such repurchase programs were proposed and subsequently approved for cancellation at the Cemex, S.A.B. de C.V. Annual Ordinary General Shareholders’ Meeting held on March 23, 2023. No CPOs were repurchased in 2023 under the repurchase programs authorized at Cemex, S.A.B. de C.V.’s Ordinary General Shareholders’ Meetings held on March 24, 2022 and March 23, 2023. |
| (6) | Earnings per share is calculated based upon the weighted-average number of shares outstanding during the year, as described in note 23 to our 2023 audited consolidated financial statements included elsewhere in this annual report. Basic earnings per CPO is determined by multiplying the basic earnings per share for each period by three (the number of shares underlying each CPO). Basic earnings per CPO is presented solely for the convenience of the reader and does not represent a measure under IFRS. As shown in notes 4.2 and 23 to our 2023 audited consolidated financial statements included elsewhere in this annual report, and in connection with our discontinued operations mentioned above, for the year ended December 31, 2021, “Basic earnings per share” and “Diluted earnings per share” include $0.0180 and $0.0177, respectively, from “Continuing operations,” for the year ended December 31, 2022, “Basic earnings per share” and “Diluted earnings per share” include $0.0123 and $0.0120, respectively, from “Continuing operations” and for the year ended December 31, 2023, “Basic earnings per share” and “Diluted earnings per share” include $0.0042 and $0.0041, respectively, from “Continued operations.” In addition, for the year ended December 31, 2021, “Basic earnings per share” and “Diluted earnings per share” include ($0.0009) from “Discontinued operations,” and for the year ended December 31, 2022, “Basic earnings per share” and “Diluted earnings per share” include $0.0074 and $0.0073, respectively, from “Discontinued operations”. See note 23 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (7) | Cemex, S.A.B. de C.V. did not pay a dividend in fiscal years 2021, 2022, and 2023. No recapitalization of retained earnings or cash dividend was proposed for Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting held on March 25, 2021, March 24, 2022, and March 23, 2023. |
| (8) | Represents the weighted average number of shares diluted included in note 23 to our 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (9) | In 2021, includes assets held for sale in connection with the operating segments in Costa Rica and El Salvador for $77 million. Additionally, as for the years ended December 31, 2021, 2022, and 2023 included other assets held for sale for $64 million, $68 million, and $49 million respectively. |
| (10) | In June 2021, Cemex redeemed all series of its outstanding Perpetual Debentures, which until their redemption were recognized as equity. |
| (11) | Book value per share is calculated by dividing the total controlling interest by the number of shares outstanding. |
| (12) | “Operating EBITDA” equals operating earnings before other expenses, net, plus depreciation and amortization expenses. Although Operating EBITDA is not a measure of operating performance, an alternative to cash flows or a measure of financial position under IFRS, Operating EBITDA is the financial measure used by our chief executive officer to review operating performance and profitability, for decision making purposes and to allocate resources. Moreover, Operating EBITDA is a measure used by our creditors to review our ability to internally fund capital expenditures, to review our ability to service or incur debt and to comply with financial covenants under our financing agreements. See note 17.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. Our Operating EBITDA may not be comparable to similarly titled measures reported by other companies. Operating EBITDA is reconciled below to operating earnings before other expenses, net, as reported in the statements of income, and to cash flows provided by operating activities from continuing operations before financial expense, coupons on the Subordinated Notes and Perpetual Debentures (10) and income taxes, as reported in the statement of cash flows. Financial expense as reported in the statements of income does not include aggregate coupon payments of the Perpetual Debentures in 2021 and the Subordinated Notes in 2022 and 2023 of $41 million in 2021, $54 million in 2022, and $120 million in 2023 as described in notes 21.2 and 21.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (13) | From 2021 through 2023, other financial obligations include: (a) lease contracts as per IFRS 16; and (b) liabilities secured with accounts receivable. See notes 15.2 and 17.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
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| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (in millions of Dollars) | ||||||||||||
| Reconciliation of cash flows provided by operating activities from continuing operations to Operating EBITDA |
||||||||||||
| Cash flow provided by operating activities from continuing operations |
$ | 2,500 | $ | 2,150 | $ | 3,278 | ||||||
| Plus/minus: |
||||||||||||
| Changes in working capital excluding income taxes |
143 | 390 | (192 | ) | ||||||||
| Depreciation and amortization of assets |
(1,120 | ) | (1,120 | ) | (1,233 | ) | ||||||
| Other items, net |
196 | 141 | 261 | |||||||||
| Operating earnings before other expenses, net |
1,719 | 1,561 | 2,114 | |||||||||
| Plus: |
||||||||||||
| Depreciation and amortization of assets |
1,120 | 1,120 | 1,233 | |||||||||
| Operating EBITDA |
$ | 2,839 | $ | 2,681 | $ | 3,347 | ||||||
Consolidation of Our Results of Operations
Our 2023 audited consolidated financial statements included elsewhere in this annual report include all entities in which we hold a controlling interest or which we otherwise control. Control exists, and consolidation is required, only when we have all of the following: (a) the power, directly or indirectly, to direct the relevant activities of an entity; (b) the exposure to variable returns from our involvement with such entity; and (c) the ability to use our power over such entity to affect its returns.
Investments in associates when we have significant influence, which is generally presumed with a minimum equity interest of 20% and/or joint venture arrangements, in which we and other third-party investors have joint control and have rights to the net assets of the arrangements, are accounted for by the equity method. Under the equity method, after acquisition, the investment’s original cost is adjusted for the proportional interest in the associate’s equity and earnings.
All balances and transactions between the group subsidiaries have been eliminated in consolidation.
Discontinued Operations
Considering the disposal of entire reporting segments as well as the sale of significant businesses, our statements of income present as part of the single line item of “Discontinued operations” the results of operations, net of income tax, of the following transactions (as further described below): (a) Neoris operations for the year ended 2021 and for the period from January 1 to October 25, 2022; (b) Costa Rica and El Salvador operations for the year ended December 31, 2021 and for the period from January 1 to August 31, 2022; (c) the white cement business sold in Spain for the period from January 1 to July 9, 2021; and (d) the France assets related to the Rhône-Alpes region for the period from January 1 to March 31, 2021. See note 4.2 in Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Acquisition of Operations
The operating results of newly acquired businesses are consolidated in the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report beginning on the acquisition date. Therefore, all periods presented do not include operating results corresponding to newly acquired businesses before we assumed control.
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| PART I | ||||
Significant Transactions
For the years ended December 31, 2021, 2022, and 2023, our consolidated results reflect the following transactions:
| • | On November 1, 2023, through a subsidiary in Germany, for a total consideration of $13 million we completed the acquisition of Kiesel, a mortars and adhesives company in the construction industry based in Germany. Kiesel serves the German, French, Polish, and Czech markets, consisting of a production facility and five distribution locations. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we determined a goodwill of $5 million. |
| • | On May 11, 2023, through a subsidiary, we completed the purchase of the assets of Atlantic Minerals Limited in Newfoundland, Canada, consisting mainly of an aggregates quarry and maritime port operations for a price of $75 million. With this investment, we secured a new long-term aggregates reserve for our operations in Florida and the east coast of the United States, as well as a source for chemical-grade stone. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill. |
| • | On February 3, 2023, the Colombian Financial Superintendency (Superintendencia Financiera de Colombia) authorized Cemex España to commence the Delisting CLH Offer to acquire a minimum of one ordinary share and a maximum of 26,281,913 ordinary shares of CLH. The period to tender CLH shares under the Delisting CLH Offer concluded on February 28, 2023, with the final results of the Delisting CLH Offer being confirmed on March 3, 2023. As a result of the Delisting CLH Offer, we acquired 23,232,946 ordinary shares of CLH, increasing our interest to 99.46% of CLH (excluding shares owned by CLH) and delisted CLH’s shares from the Colombian Stock Exchange (Bolsa de Valores de Colombia). The registry of CLH’s shares in the National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) was canceled thereafter. The total consideration that we paid as a result of the acquisition of the validly tendered shares amounted to 4,735 Colombian Pesos per share, totaling 110,007,999,310 Colombian Pesos ($28.54 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to $1.00). |
| • | On January 25, 2023, in Manila, Philippines, CASEC filed a Tender Offer Report on Form 19-1 with the Securities and Exchange Commission of the Philippines and the Philippine Stock Exchange, pursuant to Rule 19 of the Securities Regulation Code of the Philippines, in connection with its intention to conduct the CHP Tender Offer to acquire a minimum of one and a maximum of 1,614,000,000 common shares of CHP. The tender offer period commenced on February 16, 2023 and lasted for a period of 20 business days, ending on March 16, 2023. Payment of the net proceeds of the validly tendered shares took place on March 30, 2023. As part of the CHP Tender Offer, CASEC acquired 1,614,000,000 common shares of CHP, resulting in CASEC owning 89.86% of the outstanding common shares of CHP. In the CHP Tender Offer, CASEC paid 1.30 Philippine Pesos per share, an equivalent of 2,098.20 million Philippine Pesos ($37.88 million as of December 31, 2023, based on an exchange rate of 55.39 Philippine Pesos to $1.00) for all the acquired shares. |
| • | On October 25, 2022, we created a partnership with Advent International (“Advent”). As part of the partnership, we sold to Advent a 65% stake in Neoris for a total consideration of $119 million. While surrendering control to Advent, we retain a 35% stake and remain as a key strategic partner and customer of Neoris. Our retained 35% stake in Neoris was remeasured at fair value at the date of loss of control and was subsequently accounted for under the equity method and presented in the line item “Investments in associates and joint ventures.” Neoris’ results for the year ended December 31, 2021 and for the period from January 1 to October 25, 2022 are reported in the statements of income, net of income tax, in the single line item “Discontinued operations,” including a gain on sale of $117 million in 2022, net of the reclassification of foreign currency translation effects accrued in equity until the date of loss of control. |
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| • | On August 31, 2022, we announced that we, through certain of our subsidiaries, concluded the sale agreed in December 2021 of our operations in Costa Rica and El Salvador to affiliates of Cementos Progreso Holdings, S.L. for a total consideration of $325 million, related to our aggregate controlling interest. The divested assets consisted of one fully integrated cement plant, one grinding station, seven ready-mix plants, one aggregate quarry, as well as one distribution center in Costa Rica and one distribution center in El Salvador. Our operations of these assets in Costa Rica and El Salvador for the year ended December 31, 2021 and for the period from January 1, 2022 to August 31, 2022 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2022 a gain on sale of $240 million, which includes the reclassification of foreign currency translation effects accrued in equity until the disposal date. |
| • | On July 11, 2022, through a subsidiary in Germany, we completed the acquisition of a 53% stake in the German aggregates company ProStein for a total consideration of $21 million. The investment expands our aggregates business in the region, and we estimate that it increases the life of the aggregates’ reserves for our operations in Central Europe for at least the next 25 years. The majority stake in ProStein’s assets adds a full range of fine and hard aggregates to our aggregates’ portfolio. In addition to supplying the greater Berlin area, the additional capacity can supply several urban centers in Poland and the Czech Republic. ProStein’s assets include six active hardstone plants and six CDEW recovery sites. During 2023, based on the valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill. |
| • | On December 10, 2021, through a subsidiary in Mexico, we acquired Broquers Ambiental, a sustainable waste management company for a total consideration of $13 million. Broquers Ambiental assets include a plant for solid waste treatment for its use as alternate fuel. During 2022, considering the fair values of the assets acquired and liabilities assumed, we determined goodwill of $4 million. |
| • | On July 9, 2021, we announced that we concluded the sale agreed in March 2019 of our white cement business, except for Mexico and the United States, to Çimsa Çimento Sanayi Ve Ticaret A.S¸ for a total consideration of $155 million. Assets sold included our Buñol cement plant in Spain and white cement customer list. Our operations of these assets in Spain for the period from January 1, 2021 to July 9, 2021 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2021 a loss on sale of $67 million net of the proportional allocation of goodwill of $41 million. |
| • | On March 31, 2021, we sold 24 concrete plants and one aggregates quarry in France to Holcim for an amount in Euros equivalent to $44 million. These assets were located in the Rhône-Alpes region in the Southeast of France, east of our operations in Lyon. The operations related to these assets for the three-month period ended March 31, 2021 are presented in our statements of income, net of income tax, as part of the single line item “Discontinued operations.” |
| • | On February 16, 2021, we announced that we acquired the ready-mix assets of Beck Readymix Concrete Co. LTD., including three ready-mix concrete plants and one portable plant to service the San Antonio, Texas metropolitan area and surrounding areas. |
See notes 4.1 and 4.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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| PART I | ||||
Consolidated Statements of Income Data
The following table sets forth our selected consolidated statements of income data for each of the years ended December 31, 2021, 2022, and 2023 expressed as a percentage of revenues.
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Revenues |
100 | % | 100 | % | 100 | % | ||||||
| Cost of sales |
(67.8 | ) | (69.0 | ) | (66.3 | ) | ||||||
| Gross profit |
32.2 | 31.0 | 33.7 | |||||||||
| Operating expenses |
(20.3 | ) | (21.0 | ) | (21.6 | ) | ||||||
| Operating earnings before other expenses, net |
11.9 | 10.0 | 12.1 | |||||||||
| Other expenses, net |
(0.6 | ) | (2.9 | ) | (1.5 | ) | ||||||
| Operating earnings |
11.3 | 7.1 | 10.6 | |||||||||
| Financial expense |
(4.0 | ) | (3.3 | ) | (3.1 | ) | ||||||
| Financial income and other items, net |
(1.1 | ) | 0.9 | 0.2 | ||||||||
| Share of profit on equity accounted investees |
0.4 | 0.2 | 0.6 | |||||||||
| Earnings before income tax |
6.6 | 4.9 | 8.3 | |||||||||
| Income tax |
(0.9 | ) | (1.3 | ) | (7.2 | ) | ||||||
| Net income from continuing operations |
5.7 | 3.6 | 1.1 | |||||||||
| Discontinued operations |
(0.3 | ) | 2.1 | — | ||||||||
| Consolidated net income |
5.4 | 5.7 | 1.1 | |||||||||
| Non-controlling interest net income |
0.2 | 0.2 | 0.1 | |||||||||
| Controlling interest net income |
5.2 | 5.5 | 1.0 | |||||||||
Key Components of Results of Operations
Revenues
Revenues are primarily comprised from the sale and distribution of cement, ready-mix concrete, aggregates, and Urbanization Solutions, which accounted for 97% of our consolidated external revenues for the three years ended December 31, 2021, 2022, and 2023. We recognized revenues at a point in time or overtime in the amount of the price, before tax on sales, expected to be received for goods and services supplied due to ordinary activities, as contractual performance obligations are fulfilled, and control of goods and services passes to the customer. Revenues are decreased by any trade discounts or volume rebates granted to customers. Transactions between related parties are eliminated in consolidation. Variable consideration is recognized when it is highly probable that a significant reversal in the amount of cumulative revenue recognized for the contract will not occur and is measured using the expected value or the most likely amount method, whichever is expected to better predict the amount based on the terms and conditions of the contract.
Cost of Sales
Cost of sales represents the production cost of inventories at the moment of sale, including raw materials and goods for resale, payroll related to the production phase, electricity, fuels, and other services, depreciation and amortization of assets involved in the production, maintenance, repairs and supplies, freight expenses of raw material in plants and delivery expenses of our ready-mix concrete business, among other production costs. Cost of sales does not include (i) expenses related to personnel, equipment and services involved in sales activities and storage of product at points of sales, which are included in administrative and selling expenses, and (iii) freight expenses of finished products between plants and points of sale and freight expenses between points of sales and the customers’ facilities, which
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are included as part of distribution expenses. Administrative and selling expenses and distribution expenses are included in operating expenses. As a percentage of revenues, cost of sales represented 67.8%, 69.0%, and 66.3% for the years ended December 31, 2021, 2022, and 2023, respectively.
Operating Expenses
Operating expenses comprise administrative and selling expenses and distribution and logistics expenses. Administrative expenses represent the expenses associated with personnel, services, and equipment, including depreciation and amortization related to managerial activities and back-office for our management. Sales expenses represent the expenses associated with personnel, services and equipment, including depreciation and amortization, involved specifically in sales activities. Distribution and logistics expenses refer to storage expenses at points of sales, including depreciation and amortization, as well as freight expenses of finished products between plants and points of sale and freight expenses between points of sales and the customers’ facilities. As a percentage of revenues, operating expenses represented 20.3%, 21.0%, and 21.6% for the years ended December 31, 2021, 2022, and 2023, respectively. The main operating expenses are comprised of transportation cost, payroll of personnel, depreciation and amortization of assets related to the operating expenses, as well as professional legal, accounting, and advisory services and maintenance, repairs, and supplies accounted for 96.4%, 96.1%, and 93.4% of consolidated operating expenses for the years ended December 31, 2021, 2022, and 2023, respectively.
Other Expenses, Net
The line item Other expenses, net consists primarily of revenues and expenses not directly related to our main activities or which are of nonrecurring nature, including impairment losses of long-lived assets, non-recurring sales of emission allowances, results on disposal of assets, which relates to sales of property plant and equipment, and restructuring costs, losses in connection with property damages and natural disasters and incremental costs and expenses related to COVID-19 pandemic, among others. For the years ended December 31, 2021, 2022, and 2023 Other expenses, net, amounted to $82 million, $467 million, and $265 million, respectively. In 2021 and 2022 it included impairment losses of goodwill of $440 million and $365 million, respectively, and in 2023, it included impairment losses of other intangible assets and property, machinery, and equipment of $43 million. As a percentage of revenues, Other expenses, net, represented 0.6%, 2.9%, and 1.5% for the years ended December 31, 2021, 2022, and 2023, respectively.
Financial income and other items, net
Financial income and other items, net, includes (i) effects of amortized cost on assets and liabilities and others, net; (ii) net interest cost of pension liabilities; (iii) results from financial instruments, net; (iv) foreign exchange results, comprising foreign exchange gains and losses in connection with the effects of foreign exchange fluctuations on our assets and liabilities denominated in currencies other than the Dollar; (v) financial income, which relates to income in connection with deposits and investments; and (vi) others. As a percentage of revenues, financial income, and other items, net, represented 1.1%, 0.9%, and 0.2% for the years ended December 31, 2021, 2022, and 2023 respectively.
Income Tax
Income tax comprises current income taxes net of deferred income taxes. For the years ended December 31, 2021, 2022, and 2023 our statutory income tax rate was 30%, 30%, and 30%, respectively. Our average effective tax rate equals the net amount of income tax revenue or expense divided by income or loss before income taxes, as these line items are reported in the income statement, was 14.4%, 27.1%, and 86.3%, for the years ended December 31,
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2021, 2022, and 2023 respectively. The effects reflected in the income statement for income taxes include the amounts incurred during the period and the amounts of deferred income taxes, determined according to the income tax law applicable to each subsidiary, reflecting uncertainty in income tax treatments. Consolidated deferred income taxes represent the addition of the amounts determined in each subsidiary by applying the enacted statutory income tax rate or substantively enacted by the end of the reporting period to the total temporary differences resulting from comparing the book and taxable values of assets and liabilities, considering tax assets such as loss carryforwards and other recoverable taxes, to the extent that it is probable that future taxable profits will be available against which they can be utilized. The measurement of deferred income taxes at the reporting period reflects the tax consequences that follow how we expect to recover or settle the carrying amount of its assets and liabilities. Deferred income taxes for the period represent the difference between balances of deferred income taxes at the beginning and the end of the period. Deferred income tax assets and liabilities relating to different tax jurisdictions are not offset. The effect of a change in enacted statutory tax rates is recognized in the period in which the change is officially enacted.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Summarized in the table below are the percentage (%) increases (+) and decreases (-) for the year ended December 31, 2023 compared to the year ended December 31, 2022 in our (i) domestic cement and ready-mix concrete sales volumes, which refer entirely to sales to external customers, (ii) export sales volumes of cement, which include both sales to external customers and intragroup export sales from one reportable operating segment to another, and (iii) domestic cement and ready-mix concrete average sales prices for each of our reportable operating segments.
Reportable operating segments represent the components of Cemex that engage in business activities from which we may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s top management to make decisions about resources to be allocated to the segments and assess their performance, and for which discrete financial information is available. Cemex discloses its segment information presenting fifteen reportable operating segments under IFRS 8. We operate geographically and by line of business on a regional basis. For the reported periods, our operations were organized in four geographical regions, each under the supervision of a regional president, as follows: 1) Mexico, 2) United States, 3) EMEAA, comprising 11 operating segments, of which four operating segments were aggregated into a single reportable operating segment as described below, and 4) SCA&C, comprising 12 operating segments, of which nine operating segments were aggregated into two reportable operating segments as described below. The accounting policies applied to determine the financial information by reporting segment are consistent with those described in note 28 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
As of December 31, 2023, considering similar regional and economic characteristics and materiality, such as: (a) the nature of the products and services, all related to construction materials and the construction industry, (b) the nature of the production processes, which are the same for cement, ready-mix concrete, aggregates, and Urbanization Solutions, (c) the type of customers for their products or services, in all cases construction materials distributors and wholesalers, governments and big construction firms, and (d) the methods used to distribute their products or provide their services, which are very similar among our geographies using both third-party transportation for cement and aggregates and our own mixers fleet for ready-mix, certain operating segments have been aggregated and presented as single reportable segments. These reportable segments are as follows: (i) the “Rest of EMEAA” refers to our operating segments and activities in the Czech Republic, Croatia, Egypt and the UAE; (ii) the “Rest of SCA&C” refers to our operating segments and activities in Puerto Rico, Nicaragua, Jamaica, the Caribbean and Guatemala, excluding the operations of TCL; and (iii) the “Caribbean TCL” refers to TCL’s operating segments mainly in Trinidad
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and Tobago, Jamaica, Guyana and Barbados. The line item “Other activities,” included to reconcile the total of reportable segments with the consolidated amounts from continuing operations, refers to the following: (1) our cement trade maritime operations, (2) Cemex, S.A.B. de C.V., (3) other corporate entities and finance subsidiaries and (4) other minor subsidiaries with different lines of business.
The table below and the other volume data presented by reportable operating segment in this “Item 5-Operating and Financial Review and Prospects-Results of Operations-Year Ended December 31, 2023 Compared to Year Ended December 31, 2022” section present Domestic Sales Volumes of cement and ready-mix concrete, consisting entirely of sales to external customers, as well as Export Sales Volumes of cement to both external customers and other operating segments, and Average Domestic Sales Prices in Local Currency of cement and ready-mix concrete, which refer to sales to external customers.
| Domestic Sales Volumes | Export Sales Volumes (Intragroup Transactions) |
Export Sales Volumes to External Customers |
Average Domestic Sales Prices in Local Currency(1) |
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| Reporting Segment |
Cement | Ready-Mix Concrete |
Cement | Cement | Cement | Ready-Mix Concrete |
||||||||||||||||||
| Mexico |
+3% | +7% | -10% | -5% | +11% | +25% | ||||||||||||||||||
| United States |
-13% | -10% | — | — | +14% | +19% | ||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||
| United Kingdom |
-16% | -9% | — | — | +19% | +13% | ||||||||||||||||||
| France |
— | -6% | — | — | — | +9% | ||||||||||||||||||
| Germany |
-24% | -25% | -23% | -99% | +31% | +19% | ||||||||||||||||||
| Poland |
-14% | -15% | -70% | +346% | +27% | +15% | ||||||||||||||||||
| Spain |
-7% | -3% | -28% | +25% | +23% | +20% | ||||||||||||||||||
| Philippines |
-13% | — | — | +11% | -4% | — | ||||||||||||||||||
| Israel |
— | -7% | — | — | — | +8% | ||||||||||||||||||
| Rest of EMEAA |
FLAT | -4% | -100% | +23% | +4% | +11% | ||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||
| Colombia |
-6% | -6% | — | — | +15% | +24% | ||||||||||||||||||
| Panama |
+5% | +22% | -59% | -14% | +3% | +5% | ||||||||||||||||||
| Caribbean TCL |
+2% | +42% | — | -22% | +8% | +3% | ||||||||||||||||||
| Dominican Republic |
-5% | +2% | +59% | +100% | +9% | +18% | ||||||||||||||||||
| Rest of SCA&C |
-3% | +18% | -100% | -56% | +4% | -4% | ||||||||||||||||||
| “—” | = Not Applicable |
| (1) | Represents the average change in domestic cement and ready-mix concrete prices in local currency terms. For the purpose of our Rest of EMEAA reportable segment, which comprises non-Euro segments, the weighted average variance in local currency is determined and presented in Euros at the exchange rates in effect as of the end of the reporting period. For the purpose of our Rest of SCA&C reportable segment, which comprises non-Dollar segments, the weighted average variance in local currency is presented in Dollar terms at the exchange rates in effect as of the end of the reporting period. Weighted average changes for the Rest of EMEAA and Rest of SCA&C reportable segments are based on total sales volumes in the respective segment. |
On a consolidated basis, our cement sales volumes decreased 6%, from 63.4 million tons in 2022 to 59.6 million tons in 2023, and our ready-mix concrete sales volumes decreased 6%, from 50.0 million cubic meters in 2022 to 47.1 cubic meters in 2023. Our revenues increased 12%, from $15,577 million in 2022 to $17,388 million in 2023, and our operating earnings before other expenses, net increased 35%, from $1,561 million in 2022 to $2,114 million in 2023. See the table below for a breakdown according to reporting segment.
The following tables present selected financial information for revenues of both external revenues and revenues including intragroup transactions, as well as operating earnings before other expenses, net and Operating EBITDA for each of our reporting segments for the years ended December 31, 2022 and 2023. Variations in revenues determined
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on the basis of Dollars include the appreciation or depreciation which occurred during the period between the local currencies of the countries in the regions vis-à-vis the Dollar; therefore, such variations differ substantially from those based solely on the countries’ local currencies.
As mentioned above, our “Operating EBITDA” is the financial measure used by our CEO and other management when assessing segment performance and profitability and deciding how to allocate resource, and our “Operating Earnings Before Other Expenses, Net” is the closest line item to Operating EBITDA presented in our statements of income under IFRS included elsewhere in this annual report and is a stepping stone for calculating Operating EBITDA by adding back depreciation and amortization.
| Reporting Segment |
Variation in Local Currency(1) |
Approximate Currency Fluctuations |
Variation in Dollars |
Revenues including intragroup transactions For the Years Ended |
Variation in Local Currency(1) |
Approximate Currency Fluctuations |
Variation in Dollars |
External Revenues For the Years Ended |
||||||||||||||||||||||||||||||||
| 2022 | 2023 | 2022 | 2023 | |||||||||||||||||||||||||||||||||||||
| Mexico |
+16% | +16% | +32% | 3,842 | 5,060 | +17% | +16% | +33% | $ | 3,642 | $ | 4,855 | ||||||||||||||||||||||||||||
| United States |
+6% | — | +6% | 5,038 | 5,338 | +6% | — | +6% | 5,034 | 5,338 | ||||||||||||||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||||||||||||||||||
| United Kingdom |
FLAT | +1% | +1% | 982 | 992 | FLAT | +1% | +1% | 982 | 992 | ||||||||||||||||||||||||||||||
| France |
+5% | +3% | +8% | 781 | 842 | +5% | +3% | +8% | 781 | 842 | ||||||||||||||||||||||||||||||
| Germany |
-1% | +3% | +2% | 485 | 447 | -2% | +4% | +2% | 439 | 447 | ||||||||||||||||||||||||||||||
| Poland |
+7% | +4% | +11% | 419 | 466 | +8% | +4% | +12% | 415 | 466 | ||||||||||||||||||||||||||||||
| Spain |
+14% | +4% | +18% | 382 | 411 | +15% | +4% | +19% | 346 | 411 | ||||||||||||||||||||||||||||||
| Philippines |
-16% | -2% | -18% | 379 | 312 | -16% | -2% | -18% | 379 | 312 | ||||||||||||||||||||||||||||||
| Israel |
+4% | -9% | -5% | 840 | 794 | +4% | -9% | -5% | 840 | 794 | ||||||||||||||||||||||||||||||
| Rest of EMEAA |
+5% | +4% | +9% | 707 | 766 | +5% | +4% | +9% | 706 | 766 | ||||||||||||||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||||||||||||||||||
| Colombia |
+6% | +1% | +7% | 429 | 458 | +6% | +1% | +7% | 429 | 458 | ||||||||||||||||||||||||||||||
| Panama |
+6% | — | +6% | 149 | 132 | +15% | — | +15% | 115 | 132 | ||||||||||||||||||||||||||||||
| Caribbean TCL |
+9% | FLAT | +9% | 302 | 317 | +8% | FLAT | +8% | 294 | 317 | ||||||||||||||||||||||||||||||
| Dominican Republic |
+11% | -2% | +9% | 348 | 360 | +8% | -3% | +5% | 342 | 360 | ||||||||||||||||||||||||||||||
| Rest of SCA&C |
+5% | — | +5% | 394 | 414 | +5% | — | +5% | 393 | 414 | ||||||||||||||||||||||||||||||
| Reportable Segments |
— | — | — | — | — | +12% | — | +12% | 15,137 | 16,904 | ||||||||||||||||||||||||||||||
| Other Activities |
— | — | — | — | — | +10% | — | +10% | 440 | 484 | ||||||||||||||||||||||||||||||
| Total Consolidated |
— | — | — | — | — | +12% | — | +12% | $ | 15,577 | $ | 17,388 | ||||||||||||||||||||||||||||
| “—” | = Not Applicable |
| (1) | Represents the variation in local currency terms. For the purposes of our Rest of EMEAA reportable segment, which comprises non-Euro segments, the weighted average variance in local currency is determined and presented in Euros at the exchange rates in effect as of the end of the reporting period. For the purposes of our Rest of SCA&C reportable segment, which comprises non-Dollar segments, the weighted average variance in local currency is presented in Dollar at the exchange rates in effect as of the end of the reporting period. |
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| Operating Earnings Before Other Expenses, Net(1) For the Year Ended December 31, |
Plus: Depreciation and amortization |
Operating EBITDA(2) For the Year Ended December 31, |
||||||||||||||||||||||
| Reporting Segment |
2022 | 2023 | 2022 | 2023 | 2022 | 2023 | ||||||||||||||||||
| Mexico |
$ | 961 | $ | 1,267 | $ | 172 | $ | 221 | $ | 1,133 | $ | 1,488 | ||||||||||||
| United States |
307 | 557 | 455 | 483 | 762 | 1,040 | ||||||||||||||||||
| EMEAA: |
||||||||||||||||||||||||
| United Kingdom |
135 | 121 | 60 | 72 | 195 | 193 | ||||||||||||||||||
| France |
13 | (1 | ) | 50 | 54 | 63 | 53 | |||||||||||||||||
| Germany |
12 | 5 | 28 | 32 | 40 | 37 | ||||||||||||||||||
| Poland |
42 | 48 | 22 | 24 | 64 | 72 | ||||||||||||||||||
| Spain |
(22 | ) | 40 | 28 | 31 | 6 | 71 | |||||||||||||||||
| Philippines |
47 | 2 | 37 | 32 | 84 | 34 | ||||||||||||||||||
| Israel |
66 | 57 | 46 | 33 | 112 | 90 | ||||||||||||||||||
| Rest of EMEAA |
61 | 99 | 55 | 48 | 116 | 147 | ||||||||||||||||||
| SCA&C: |
||||||||||||||||||||||||
| Colombia |
37 | 37 | 24 | 25 | 61 | 62 | ||||||||||||||||||
| Panama |
12 | 18 | 16 | 17 | 28 | 35 | ||||||||||||||||||
| Caribbean TCL |
57 | 58 | 17 | 20 | 74 | 78 | ||||||||||||||||||
| Dominican Republic |
125 | 130 | 8 | 9 | 133 | 139 | ||||||||||||||||||
| Rest of SCA&C |
77 | 77 | 13 | 13 | 90 | 90 | ||||||||||||||||||
| Reportable segments |
1,930 | 2,515 | 1,031 | 1,114 | 2,961 | 3,629 | ||||||||||||||||||
| Other activities |
(369 | ) | (401 | ) | 89 | 119 | (280 | ) | (282 | ) | ||||||||||||||
| Total consolidated |
$ | 1,561 | $ | 2,114 | $ | 1,120 | $ | 1,233 | $ | 2,681 | $ | 3,347 | ||||||||||||
| (1) | We include the line item titled “Operating earnings before other expenses, net” in our statements of income under IFRS considering that it is a subtotal relevant for the determination of our “Operating EBITDA” (Operating earnings before other expenses, net plus depreciation and amortization) as described in note 2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (2) | Operating EBITDA is the financial measure used by our chief executive officer to review operating performance and profitability, for decision-making purposes and to allocate resources. Moreover, Operating EBITDA is a measure used by our creditors to review our ability to internally fund capital expenditures, to review our ability to service or incur debt and to comply with financial covenants under our financing agreements, as described in note 17 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. Our Operating EBITDA is not a measure of operating performance, an alternative to cash flow or a measure of financial position under IFRS. Moreover, Operating EBITDA may not be comparable to other similarly titled measures of other companies. |
Revenues. Our consolidated revenues increased 12%, from $15,577 million in 2022 to $17,388 million in 2023. The increase in our revenues was mainly attributable to higher prices of our products in local currency across all regions. Set forth below is a quantitative and qualitative analysis of the various factors affecting our revenues on a reporting segment basis. To allow the analysis of each reportable segment on a stand-alone basis, our discussion of volume data and revenues information below is presented in both external revenues and revenues before eliminations resulting from consolidation, as described in note 4.3 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
Mexico
Our domestic cement sales volumes to external customers from our operations in Mexico increased 3% in 2023 compared to 2022, and ready-mix concrete sales volumes increased 7% over the same period. Our revenues from our operations in Mexico represented 28% and 23% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in Mexico represented 19% of our total assets in Dollar terms. During 2023, the recovery in cement volumes was driven by the formal sector, with bulk cement more than offsetting the decline in bagged cement, while ready-mix and aggregate
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volumes grew to the high single-digits, or 7% and 9%, respectively. Our cement export volumes from our operations in Mexico, which represented 13% of our Mexican cement sales volumes for the year ended December 31, 2023, of which 24% corresponded to external customers and 76% corresponded to revenues from transactions with other operating segments, decreased 9% in 2023 compared to 2022, mainly due to lower export to the United States. Of our total cement export volumes from our operations in Mexico during 2023, which include both exports to external customers and exports to other operating segments, 92% was shipped to the United States and 8% to our SCA&C segment. Our average sales price of domestic cement from our operations in Mexico increased 11%, in Mexican Peso terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 25%, in Mexican Peso terms, over the same period.
The following chart indicates the breakdown of Mexico external revenues by product, as applicable for the year ended December 31, 2023:
|
As a result of increases in domestic cement and ready-mix concrete sales prices and an increase in cement and ready-mix concrete sales volumes, partially offset by a decrease in cement exports sales, external revenues in Mexico, in Mexican Peso terms, increased 17% in 2023 compared to 2022.
United States
Our domestic cement sales volumes to external customers from our operations in the United States decreased 13% in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 10% over the same period. The decrease in domestic cement sales volumes were primarily attributable to bad weather, lower residential and commercial demand, completion of some large industrial projects, as well as some market share loss due to our pricing strategy for our products. Our operations in the United States represented 31% and 32% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in the United States represented 46% of our total assets in Dollar terms. Our average domestic cement sales prices of our operations in the United States increased 14%, in Dollar terms, in 2023 compared to 2022, and our average ready-mix concrete sales price increased 19%, in Dollar terms, over the same period.
The following chart indicates the breakdown of United States external revenues by product, as applicable for the year ended December 31, 2023:
|
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially compensated by a decrease in domestic cement and ready-mix concrete sales volumes, external revenues from our operations in the United States, in Dollar terms, increased 6% in 2023 compared to 2022.
EMEAA
In 2023, our operations in the EMEAA region consisted of our operations in the United Kingdom, France, Germany, Poland, Spain, Philippines, and Israel, which represent the most significant operations in this region, in addition to the Rest of EMEAA segment. Our revenues from our operations in the EMEAA region represented 29% and 31% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in the EMEAA region represented 22% of our total assets in Dollar terms. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our revenues for our main operations in the EMEAA region.
The following chart indicates the geographic breakdown of EMEAA region external revenues by reporting segment, as applicable for the year ended December 31, 2023:
|
United Kingdom
Our domestic cement sales volumes to external customers from our operations in the United Kingdom decreased 16% in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 9% over the same period. The decreases in domestic cement and ready-mix concrete sales volumes reflected challenging market conditions. During 2023 the country faced considerable economic challenges, especially in the housing sector and construction generally. Our operations in the United Kingdom represented 6% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. As of December 31, 2023, our operations in the United Kingdom represented 5% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the United Kingdom increased 19%, in Pound terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 13%, in Pound terms, over the same period.
The following chart indicates the breakdown of United Kingdom external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales prices, compensated by a decrease in domestic cement and ready-mix concrete sales volumes, external revenues from our operations in the United Kingdom, in Pound terms, remained flat in 2023 compared to 2022.
France
Our ready-mix concrete sales volumes to external customers from our operations in France decreased 6% in 2023 compared to 2023. The decrease in volumes reflected low economic growth, due to difficult economic conditions. Increased expenses for construction materials and wages, together with tighter environmental standards, weigh on building costs. Our operations in France represented 5% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. As of December 31, 2023, our operations in France represented 3% of our total assets in Dollar terms. Our average sales price of ready-mix concrete of our operations in France increased 9%, in Euro terms, in 2023 compared to 2022.
The following chart indicates the breakdown of France external revenues by product, as applicable for the year ended December 31, 2023:
|
As a result of an increase in ready-mix concrete sales prices, partially offset by a decrease in ready-mix concrete sales volumes, external revenues from our operations in France, in Euro terms, increased 5% in 2023 compared to 2022.
Germany
Our domestic cement sales volumes to external customers from our operations in Germany decreased 24% in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 25% over the same period. The decrease in domestic cement sales volumes was mainly originated by challenging market conditions and lower exports than in 2022 and the decrease in ready-mix concrete was mainly due to slowing demand in all markets. Our operations in Germany represented 3% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. Our cement export volumes from our operations in Germany, which represented 19% of our Germany cement sales volumes for the year ended December 31, 2023, of which 1% corresponded to external customers and 99% corresponded to transactions with other operating segments, decreased 1% in 2023 compared to 2022, mainly due to lower volumes exported to Poland and Norway. All of our cement export volumes from our operations in Germany during 2023, which include both exports to external customers and exports to other operating segments, were to our EMEAA region. As of December 31, 2023, our operations in Germany represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Germany increased 31%, in Euro terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 19%, in Euro terms, over the same period.
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The following chart indicates the breakdown of Germany external revenues by product, as applicable for the year ended December 31, 2023:
|
As a result of decreases in domestic cement and ready-mix concrete sales volumes, partially compensated by increases in domestic cement and ready-mix concrete sales volumes, external revenues from our operations in Germany, in Euro terms, decreased 2% in 2023 compared to 2022.
Poland
Our domestic cement sales volumes to external customers from our operations in Poland decreased 14% in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 15% over the same period. The decreases in domestic cement and ready-mix concrete sales volumes were mainly due to a slowdown of construction market and project delays. Our operations in Poland represented 3% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. Our cement export volumes from our operations in Poland, which represented less than 1% of our Poland cement sales volumes for the year ended December 31, 2023, of which 4% corresponded to external customers export revenues and 96% corresponded to transactions with other operating segments, decreased 1% in 2023 compared to 2022. All of our cement export volumes from our operations in Poland during 2023, which include both exports to external customers and exports to other operating segments, were to our EMEAA segment. As of December 31, 2023, our operations in Poland represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Poland increased 27%, in Euro terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 15%, in Euro terms, over the same period.
The following chart indicates the breakdown of Poland external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by decreases in domestic cement and ready-mix concrete sales volumes, external revenues from our operations in Poland, in Euro terms, increased 8% in 2023 compared to 2022.
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Spain
Our domestic cement sales volumes to external customers from our operations in Spain decreased 7% in 2023 compared to 2022, while ready-mix concrete sales volumes decreased 3% over the same period. The decreases in domestic cement and ready-mix concrete sales volumes were mainly driven by lower market share and slowdown on construction activity. Our operations in Spain represented 2% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. Our cement export volumes from our operations in Spain, which represented 29% of our Spain cement sales volumes for the year ended December 31, 2023, of which 50% corresponded to external customers and 50% corresponded to transactions with other operating segments, decreased 9% in 2023 compared to 2022. Of our total cement export volumes from our operations in Spain during 2023, which included both exports to external customers and exports to other operating segments, 78% were to the United Kingdom, 14% were to Rest of EMEAA region, and 8% were to the United States. As of December 31, 2023, our operations in Spain represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in Spain increased 23%, in Euro terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 20%, in Euro terms, over the same period.
The following chart indicates the breakdown of Spain external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by decreases in domestic cement and ready-mix concrete sales volume, external revenues from our operations in Spain, in Euro terms, increased 15% in 2023 compared to 2022.
The Philippines
Our domestic cement sales volumes to external customers from our operations in the Philippines decreased 13% in 2023 compared to 2022. The decrease in domestic cement volumes was mainly due to weaker construction activity and lower execution of infrastructure projects, in addition to adverse competitive dynamics. Our cement export volumes from our operations in the Philippines, which represented less than 1% of our Philippines’ cement sales volumes for the year ended December 31, 2023, of which 100% corresponded to external customers, increased 11% in 2023 compared to 2022. All of our cement exports from our operations in Philippines during 2023 were to the Rest of EMEAA segment. Our operations in the Philippines represented 2% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. As of December 31, 2023, our operations in the Philippines represented 3% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Philippines decreased 4%, in Philippine Peso terms, in 2023 compared to 2022.
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The following chart indicates the breakdown of Philippines external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of a decrease in domestic cement sales volumes and sales prices, external revenues of our operations in the Philippines, in Philippine Peso terms, decreased 16% in 2023 compared to 2022.
Israel
Our ready-mix concrete sales volumes to external customers from our operations in Israel decreased 7% in 2023 compared to 2022. The decrease in ready-mix concrete volumes was mainly driven by a negative effect due to the Israeli-Hamas conflict. Our operations in Israel represented 5% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. As of December 31, 2023, our operations in Israel represented 3% of our total assets in Dollar terms. Our average sales price of ready-mix concrete of our operations in Israel increased 8%, in Israeli New Shekel terms, in 2023 compared to 2022.
The following chart indicates the breakdown of Israel external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in ready-mix concrete sales price, partially compensated by a decrease in ready-mix concrete sales volume, external revenues from our operations in Israel, in Israeli New Shekel terms, increased 4% in 2023 compared to 2022.
Rest of EMEAA
Our domestic cement sales volumes to external customers from our operations in the Rest of EMEAA segment remained flat in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 4% over the same period. Our cement export volumes from our operations in the Rest of EMEAA segment, which represented 7% of our Rest of EMEAA segment cement sales volumes for the year ended December 31, 2023, of which 100% corresponded to external customers, increased 23% in 2023 compared to 2022. All of our cement exports from our operations in the Rest of EMEAA during 2023 were to the Rest of EMEAA segment. Our revenues from our operations in the Rest of EMEAA segment represented 3% and 5% in Dollar terms of our consolidated external revenues for the years ended
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December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in the Rest of EMEAA represented 3% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Rest of EMEAA segment increased 4%, in Euro terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 11%, in Euro terms, over the same period.
The following chart indicates the breakdown of Rest of EMEAA external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially compensated by a decrease in ready-mix concrete sales volumes, external revenues in the Rest of EMEAA segment, in Euro terms, increased 5%, in 2023 compared to 2022.
SCA&C
In 2023, our operations in the SCA&C region consisted of our operations in Colombia, Panama, the Dominican Republic, our Caribbean TCL operations, which represent our most significant operations in this region, and the Rest of SCA&C segment. Our revenues from our operations in the SCA&C region represented 10% and 11% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in the SCA&C region represented 9% of our total assets, in Dollar terms. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our revenues for our main operations in the SCA&C region.
The following chart indicates the geographic breakdown of SCA&C region external revenues by reporting segment, for the year ended December 31, 2023:
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Colombia
Our domestic cement sales volumes to external customers from our operations in Colombia decreased 6% in 2023 compared to 2022, and ready-mix concrete sales volumes decreased 6% over the same period. The decrease in cement sales volume in Colombia was mainly due to a lower demand and our ready-mix concrete sales volume
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decrease due to a weaker market. Our revenues from our operations in Colombia represented 3% in Dollar terms of our consolidated external revenues for both years ended December 31, 2023 and 2022. As of December 31, 2023, our operations in Colombia represented 4% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Colombia increased 15%, in Colombian Peso terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 24%, in Colombian Peso terms, over the same period.
The following chart indicates the breakdown of Colombia external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by decreases in domestic cement and ready/mix concrete sales volumes, external revenues of our operations in Colombia, in Colombian Peso terms, increased 6% in 2023 compared to 2022.
Panama
Our domestic cement sales volumes to external customers from our operations in Panama increased 5% in 2023 compared to 2022, and ready-mix concrete sales volumes increased 22% over the same period. The increases in domestic cement and ready-mix concrete sales volumes in Panama were mainly due to activity in the infrastructure sector, largely due to the fourth bridge over the Panama Canal. Our cement export volumes from our operations in Panama, which represented 33% of our Panama cement sales volumes for the year ended December 31, 2023, of which 52% corresponded to external customers and 48% corresponded to transactions with other operating segments, decreased 43% in 2023 compared to 2022. Our revenues from our operations in Panama represented 1% and 1% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in Panama represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Panama increased 3% in Dollar terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 5%, in Dollar terms, over the same period.
The following chart indicates the breakdown of Panama external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales volumes and sales price, external revenues of our operations in Panama, in Dollar terms, increased 15% in 2023 compared to 2022.
Caribbean TCL
Our domestic cement sales volumes to external customers from our operations in Caribbean TCL increased 2% in 2023 compared to 2022, and ready-mix concrete sales volumes increased 42% over the same period. The increases in cement and ready-mix sales volume came from higher demand and better weather conditions. Our revenues from our operations in Caribbean TCL represented 2% and 2% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. Our cement export volumes from our operations in Caribbean TCL segment represented 14% of our Caribbean TCL cement sales volumes for the year ended December 31, 2023, of which 100% corresponded to external customers, decreased 22% in 2023 compared to 2022. All of our cement exports from our operations in Caribbean TCL during 2023 were to the Rest of SCA&C segment. As of December 31, 2023, our operations in Caribbean TCL represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in Caribbean TCL increased 8%, in Trinidad and Tobago Dollar terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 3%, in Trinidad and Tobago Dollar terms, over the same period.
The following chart indicates the breakdown of Caribbean TCL external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in domestic cement and ready-mix concrete sales volumes and sale prices, external revenues of our operations in Caribbean TCL, in Trinidad and Tobago Dollar terms, increased 8% in 2023 compared to 2022.
Dominican Republic
Our domestic cement sales volumes to external customers from our operations in the Dominican Republic decreased 5% in 2023 compared to 2022, while ready-mix concrete sales volumes increased 2% over the same period. The decrease in our domestic cement sales volumes in the Dominican Republic region was mainly due to a light market contraction. Nevertheless, the ready-mix concrete sales volume increase was mainly due to tourism projects. Domestic cement and ready-mix sales prices continued their positive trend. Our operations in the Dominican Republic represented 2% and 2% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. Our cement export volumes from our operations in the Dominican Republic, which represented 10% of our Dominican Republic cement sales volumes for the year ended December 31, 2023, of which 49% corresponded to external customer and 51% corresponded to transactions with other operating segments, increased 212% in 2023 compared to 2022. All of our cement export volumes from our operations in the Dominican Republic during 2023, which include both exports to external customers and exports to other operating segments, were to our Rest of SCA&C segment. As of December 31, 2023, our operations in Dominican Republic represented
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1% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in the Dominican Republic increased 9%, in Dominican Peso terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete increased 18%, in Dominican Peso terms, over the same period.
The following chart indicates the breakdown of Dominican Republic external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in ready-mix concrete sales volume and domestic cement and ready-mix concrete sales prices, partially offset by a decrease in domestic cement sales volume, external revenues from our operations in the Dominican Republic, in Dominican Peso terms, increased 8% in 2023 compared to 2022.
Rest of SCA&C
Our domestic cement volumes to external customers from our operations in the Rest of SCA&C segment decreased 3% in 2023 compared to 2022, while ready-mix concrete sales volumes increased 18% over the same period. Our cement export volumes from our operations in the Rest of SCA&C segment, which represented less than 1% of our Rest of SCA&C segment cement sales volumes for the year ended December 31, 2023, of which 100% corresponded to external customer, decreased 90% in 2023 compared to 2022. All of our cement export volumes from our operations in the Rest of SCA&C segment during 2023, were within the same region. Our revenues from our operations in the Rest of SCA&C segment represented 2% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023, our operations in the Rest of SCA&C segment represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Rest of SCA&C segment increased 4% in Dollar terms, in 2023 compared to 2022, and our average sales price of ready-mix concrete decreased 4%, in Dollar terms, over the same period.
The following chart indicates the breakdown of Rest of SCA&C external revenues by product, as applicable for the year ended December 31, 2023:
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As a result of increases in ready-mix concrete sales volumes and domestic cement sales price, partially offset by decreases in domestic cement sales volumes and ready-mix concrete sales price, external revenues of our operations in the Rest of SCA&C segment, in Dollar terms, increased 5% in 2023 compared to 2022.
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Other activities (Revenues)
Revenues from our other activities segment increased 10% in 2023 compared to 2022, in Dollar terms. Our revenues from our Other activities segment represented 2% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2023 and 2022, respectively.
Cost of Sales
Our cost of sales, including depreciation, increased 7%, from $10,755 million in 2022 to $11,527 million in 2023. As a percentage of revenues, cost of sales decreased from 69.0% in 2022 to 66.3% in 2023. The decrease as a percentage of revenues was mainly driven by easing cost headwinds, and operational efficiencies. Our cost of sales includes freight expenses of raw materials used in our producing plants.
Gross Profit
For the reasons described above, our gross profit increased 22% from $4,822 million in 2022 to $5,861 million in 2023. As a percentage of revenues, gross profit increased from 31.0% in 2022 to 33.7% in 2023. In addition, our gross profit may not be directly comparable to those of other entities that include all their freight expenses in cost of sales. As described below, we include freight expenses of finished products from our producing plants to our points of sale and from our points of sale to our customers’ locations within operating expenses as part of distribution and logistics expenses.
Operating expenses
Our operating expenses, which are represented by administrative, selling, distribution and logistics expenses, increased 15%, from $3,261 million in 2022 to $3,747 million in 2023. As a percentage of revenues, operating expenses increased from 21.0% in 2022 to 21.6% in 2023. The increase as a percentage of revenues resulted primarily from higher logistic and distribution expenses due to higher fuel costs, as well as higher payroll expenses due to salary increases and higher fees. Our operating expenses include expenses related to personnel, equipment and services involved in sales activities and storage of product at points of sale, which are included as part of the operating expenses, as well as freight expenses of finished products between plants and points of sale and freight expenses between points of sale and the customers’ facilities, which are included as part of the line item “Distribution and logistics expenses.” For the years ended December 31, 2022 and 2023, selling expenses included as part of the line item “Operating expenses” amounted to $363 million and $411 million, respectively. As discussed above, we include freight expenses of finished products from our producing plants to our points of sale and from our points of sale to our customers’ locations within distribution and logistics expenses, which in the aggregate represented costs of $1,824 million in 2022, and $1,951 million in 2023. As a percentage of revenues, distribution and logistics expenses decreased from 12% in 2022 to 11% in 2023.
Operating Earnings Before Other Expenses, Net
For the reasons described above, our operating earnings before other expenses, net increased 35% from $1,561 million in 2022 to $2,114 million in 2023. As a percentage of revenues, operating earnings before other expenses, net increased 2.1 percentage points, from 10.0% in 2022 to 12.1% in 2023. Additionally, set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our operating earnings before other expenses, net on a reporting segment basis.
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Depreciation and Amortization
During 2023, in Dollar terms, our depreciation and amortization amounted to $1,233 million and increased 10% in comparison to 2022. During 2023 our capital expenditures amounted to $1,417 million, a 4% increase compared to $1,362 million in 2022, due to higher assets base and changes in exchange rates. See the table on page 185 of this annual report and note 4.3 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report for a breakdown of depreciation and amortization by reportable segment.
Operating EBITDA
Operating EBITDA is the key financial measure used by our chief executive officer to review operating performance and profitability, for decision-making purposes and to allocate resources. Moreover, Operating EBITDA is an indicator used by Cemex’s creditors to measure our ability to internally fund capital expenditures, as well as our ability to service or incur debt and comply with financial covenants under its financing agreements. We present “Operating EBITDA” by reportable segment in the table on page 185 of this annual report and in note 4.3 and 17.1 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report. Operating EBITDA is not a measure of operating performance, an alternative to cash flows or a measure of financial position under IFRS. Moreover, Operating EBITDA may not be comparable to other similarly titled measures of other companies.
Considering the effects mentioned above, our Operating EBITDA increased 25% from $2,681 million in 2022 to $3,347 million in 2023. As a percentage of revenues our Operating EBITDA margin (which management considers a relevant profitability measure despite Operating EBITDA margin not being a measure of operating performance, an alternative to cash flows or a measure of financial position under IFRS) increased from 17.2% in 2022 to 19.2% in 2023. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our operating earnings before other expenses, net and Operating EBITDA on a reporting segment basis.
For a reconciliation of Operating Earnings Before Other Expenses, Net to Operating EBITDA, see page 177 of this annual report under “Item 5—Operating and Financial Review and Prospects—Key Components of Results of Operations—Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.”
Mexico
Our operating earnings before other expenses, net, from our operations in Mexico increased 16% in Mexican Peso terms and 32%, in Dollar terms, in 2023 compared to 2022. Our operating earnings before other expenses, net from our operations in Mexico represented 60% and 62% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from strong volumes and pricing of our products. The recovery in cement volumes in 2023 was driven by the formal sector.
Moreover, in 2023 our Operating EBITDA from our operations in Mexico increased 15%, in Mexican Peso terms, and 31%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in Mexico represented 44% and 42% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
United States
Our operating earnings before other expenses, net, from our operations in the United States increased 82% in 2023 compared to 2022, in Dollar terms. Our operating earnings before other expenses, net from our operations in the United States represented 26% and 20% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from an increase in our revenues in the United States segment due to the price strategy of our products and decelerating costs.
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In 2023, our Operating EBITDA from our operations in the United States increased 37%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in the United States represented 31% and 28% of our total consolidated Operating EBITDA for the year ended December 31, 2023 and 2022, respectively, in Dollar terms.
EMEAA
United Kingdom. Our operating earnings before other expenses, net, from our operations in the United Kingdom decreased 12%, in Pound terms and 10%, in Dollar terms, in 2023 compared to 2022. Our operating earnings before other expenses, net from our operations in the United Kingdom represented 6% and 9% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease resulted primarily from lower volumes and higher costs of sale, due to higher electricity costs, as well as higher gas and coal prices and higher purchase cement. These increases in costs were partially offset by higher prices of our products.
Moreover, in 2023 our Operating EBITDA from our operations in the United Kingdom decreased 3%, in British Pounds terms, and 1%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in the United Kingdom represented 6% and 7% of our total consolidated Operating EBITDA for the year ended December 31, 2023 and 2022, respectively, in Dollar terms.
France. In 2023, our operating earnings before other expenses, net, from our operations in France decreased 111%, in Euro terms and 108%, in Dollar terms as compared to 2022. Our operating earnings before other expenses, net from our operations in France represented less than 1% and 1% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales, due to higher energy and raw material costs.
In 2023, our Operating EBITDA from our operations in France decreased 18%, in Euros terms, and 16%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in France represented 2% and 2% of our consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Germany. In 2023, our operating earnings before other expenses, net, from our operations in Germany decreased 60%, in Euro terms and 58% in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in Germany represented less than 1% and 1% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease resulted primarily from our cost of sales increase, mainly in energy, raw material and freight costs and lower revenues.
In 2023, our Operating EBITDA from our operations in Germany decreased 11%, in Euros terms, and 8%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in Germany represented 1% and 1% of our consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Poland. In 2023, our operating earnings before other expenses, net, from our operations in Poland increased 10% in Euro terms and 14%, in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in Poland represented 2% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from higher revenues due to higher prices in all of our business, partially offset by higher sale costs, especially energy and raw material.
Moreover, in 2023 our Operating EBITDA from our operations in Poland increased 9%, in Euros terms, and 13%, in Dollar terms, as compared to 2022. In addition, our Operating EBITDA from our operations in Poland represented 2%
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and 2% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Spain. In 2023, our operating earnings before other expenses, net, from our operations in Spain increased 279% in Euro terms and 282%, in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in Spain represented 2% and (1%) of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from higher revenues due to price increases.
In 2023, our Operating EBITDA from our operations in Spain increased 850%, in Euros terms, and 1,083%, in Dollar terms, as compared to 2022. In addition, our Operating EBITDA from our operations in Spain represented 2% and less than 1% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
The Philippines. In 2023, our operating earnings before other expenses, net, from our operations in the Philippines decreased 95%, in Philippine Peso terms and 96%, in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in the Philippines represented less than 1% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease resulted primarily from the decrease in our revenues, as well as the higher cost of sales.
Moreover, in 2023 our Operating EBITDA from our operations in the Philippines decreased 58%, in Philippine Peso terms, and 60%, in Dollar terms, as compared to 2022. In addition, our Operating EBITDA from our operations in the Philippines represented 1% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Israel. In 2023, our operating earnings before other expenses, net, from our operations in Israel decreased 6% in Israeli New Shekel terms and 14%, in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in Israel represented 3% and 4% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease in Israel operating earnings resulted primarily from the increase in raw materials costs, higher maintenance and increase in fuel prices.
In 2023, our Operating EBITDA from our operations in Israel decreased 12%, in Israeli New Shekel terms, and 20%, in Dollar terms, as compared to 2022. In addition, our Operating EBITDA from our operations in Israel represented 3% and 4% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Rest of EMEAA. Our operating earnings before other expenses, net, from our operations in the Rest of EMEAA segment increased 56% in Euro terms and 62%, in Dollar terms, in 2023 compared to 2022. Our operating earnings before other expenses, net from our operations in the Rest of EMEAA segment represented 5% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. This increase relates primarily to an increase in our revenues.
Moreover, our Operating EBITDA from our operations in the Rest of EMEAA segment increased 23%, in Euros terms, and 27%, in Dollar terms, in 2023 compared to 2022. In addition, our Operating EBITDA from our operations in the Rest of EMEAA segment represented 4% and 4% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
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SCA&C
Colombia. In 2023, our operating earnings before other expenses, net from our operations in Colombia decreased 2%, in Colombian Peso terms and remained flat, in Dollar terms, as compared to 2022. Our operating earnings before other expenses, net from our operations in Colombia represented 2% and 2% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales, mainly due to higher energy, fuel and raw material costs, partially offset by higher revenues.
Our Operating EBITDA from our operations in Colombia increased 1%, in Colombian Peso terms and 2%, in Dollar terms, in 2023 compared to 2022. In addition, our Operating EBITDA from our operations in Colombia represented 2% and 2% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Panama. Our operating earnings before other expenses, net, from our operations in Panama increased 50% in 2023 compared to 2022, in Dollar terms. Our operating earnings before other expenses, net from our operations in Panama represented 1% and 1% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from higher revenues due to higher prices.
Moreover, in 2023 our Operating EBITDA from our operations in Panama increased 25%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in Panama represented 1% and 1% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Caribbean TCL. In 2023, our operating earnings before other expenses, net, from our operations in Caribbean TCL increased 1%, in Trinidad and Tobago Dollar terms and 2%, in Dollar terms, compared to 2022. Our operating earnings before other expenses, net from our Caribbean TCL operations represented 3% and 4% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase resulted primarily from an increase in our revenues.
In 2023, our Operating EBITDA from our operations in Caribbean TCL increased 5%, in Trinidad and Tobago Dollar terms, and 5%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in Caribbean TCL represented 2% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Dominican Republic. In 2023, our operating earnings before other expenses, net, from our operations in the Dominican Republic increased 6%, in Dominican Peso terms and 4%, in Dollar terms, compared to 2022. Our operating earnings before other expenses, net from our operations in the Dominican Republic represented 6% and 8% of our total operating earnings before other expenses, net for the years ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase was mainly due to an increase of our revenues, due to higher prices.
Moreover, in 2023 our Operating EBITDA from our operations in Dominican Republic increased 6%, in Dominican Peso terms, and 5%, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in Dominican Republic represented 4% and 5% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Rest of SCA&C. In 2023, our operating earnings before other expenses, net, from our operations in the Rest of SCA&C segment remained flat compared to 2022, in Dollar terms. Our operating earnings before other expenses, net from our operations in the Rest of SCA&C segment represented 4% and 5% of our total operating earnings before other expenses, net for the year ended December 31, 2023 and 2022, respectively, in Dollar terms. The increase that resulted from higher revenues was partially offset by an increase in our cost of sales.
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In 2023, our Operating EBITDA from our operations in the Rest of SCA&C segment remained flat, in Dollar terms, compared to 2022. In addition, our Operating EBITDA from our operations in the Rest of SCA&C segment represented 3% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2023 and 2022, respectively, in Dollar terms.
Other Expenses, Net. Our other expenses, net, decreased significantly, in Dollar terms, from an expense of $467 million in 2022 to an expense of $265 million in 2023. In 2023, we had a reduction of non-cash impairment losses from $442 million in 2022 to $43 million in 2023, including in 2022 impairment losses of goodwill of $365 million, of which $273 million related to our operating segment in the United States and $92 million to our operating segment in Spain. In 2023, we did not recognize any impairment losses of goodwill; nonetheless, we incurred impairment losses of $36 million on fixed assets and $7 million on other intangible assets. The reduction in impairment losses was partially offset by a higher loss in results from the sale of assets and others, net, due to a one-time gain of $48 million recognized in 2022 from the remeasurement at fair value of our previous controlling interest in Neoris at the time of sale. See notes 7, 15.1, 16.1 and 16.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
The most significant items included under this caption for the years ended December 31, 2022 and 2023, are as follows:
| For the Years Ended December 31, |
||||||||
| 2022 | 2023 | |||||||
| (in millions of Dollars) | ||||||||
| Results from the sale of assets and others, net |
$ | 9 | $ | (219 | ) | |||
| Impairment losses |
(442 | ) | (43 | ) | ||||
| Restructuring costs |
(20 | ) | (2 | ) | ||||
| Incremental expenses related to the COVID-19 pandemic |
(14 | ) | (1 | ) | ||||
| $ | (467 | ) | $ | (265 | ) | |||
Financial expense. Our financial expense increased 5%, from $505 million in 2022 to $531 million in 2023, primarily attributable to an increase in financial expenses related to leases and a higher financial expense from our securitization programs during 2023 compared to 2022. See note 17.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Financial income and other items, net. Our financial income and other items, net, in Dollar terms, decreased 78%, from an income of $151 million in 2022 to an income of $33 million in 2023. The decrease is mainly due to a gain of $99 million in results from financial instruments, net in 2022, which was primarily due to a gain of $104 million recognized from debt tender offers, compared to a loss of $65 million in results from financial instruments, net, in 2023. This decrease was partially compensated by a higher gain in foreign exchange results in 2023 compared to 2022 that was mainly due to the fluctuation of the Mexican Peso against the Dollar. See notes 8.2 and 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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The most significant items included under this caption for the years ended December 31, 2022 and 2023 are as follows:
| For the Year Ended December 31, |
||||||||
| 2022 | 2023 | |||||||
| (in millions of Dollars) | ||||||||
| Financial income and other items, net: |
||||||||
| Foreign exchange results |
$ | 73 | $ | 144 | ||||
| Financial income |
27 | 40 | ||||||
| Results from financial instruments, net |
99 | (65 | ) | |||||
| Net interest cost of defined benefit liabilities |
(29 | ) | (44 | ) | ||||
| Effects of amortized cost on assets and liabilities |
(32 | ) | (42 | ) | ||||
| Others |
13 | — | ||||||
| $ | 151 | $ | 33 | |||||
Income Taxes. Our income tax effect in the statements of income, which is comprised of current income taxes plus deferred income taxes, increased from an expense of $209 million in 2022 to an expense of $1,250 million in 2023. Our current income tax expense increased from $170 million in 2022 to $1,147 million in 2023, including an income tax penalty of $620 million originated in Spain and tax effects on foreign currency gains originated in Mexico (see “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings—Tax Matters—Spain”). Our deferred income tax expense increased from a deferred income tax expense of $39 million in 2022 to a deferred income tax expense of $103 million in 2023, mainly associated with the amortization of tax losses and the deduction of deferred interest in the United States in 2023. See notes 20.1, 20.2, 20.3, and 20.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
For each of the years ended December 31, 2022 and 2023, our statutory income tax rate in Mexico was 30%. Considering the increase in our income tax expense in 2023 as compared to 2022 as described above, partially offset by the increase in our earnings before income tax from a gain of $770 million in 2022 to earnings before income tax of $1,449 million in 2023, our average effective income tax rate increased from an effective income tax rate of 27.1% in 2022 to an effective income tax rate of 86.3% in 2023. Our average effective tax rate equals the net amount of income tax expense divided by earnings before income taxes, as these line items are reported in our consolidated statement of income. See “Item 3—Key Information—Risk Factors—Risks Relating to Regulatory and Legal Matters—Certain tax matters may have a material adverse effect on our cash flow, financial condition, and net income, as well as on our reputation” and note 20.3 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
Net Income from continuing operations. For the reasons described above, our net income from continuing operations for 2023 decreased from a net income from continuing operations of $561 million in 2022 to a net income from continuing operations of $199 million in 2023. As a percentage of revenues, net income from continuing operations represented 3.6% and 1.1% for the years ended as of December 31, 2022 and 2023, respectively.
Discontinued operations. For the year ended December 31, 2022, our discontinued operations included in our consolidated statements of income amounted to a net income from discontinued operations of $324 million. For the year ended December 31, 2023, we did not recognize discontinued operations. As a percentage of revenues, income of discontinued operations, net of tax, represented 2.1% for the year ended December 31, 2022. See note 4.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Consolidated Net Income. For the reasons described above, including in 2023 the income tax penalty in Spain, our consolidated net income (before deducting the portion allocable to non-controlling interest) for 2023 decreased from a consolidated net income of $885 million in 2022 to a consolidated net income of $199 million in 2023. As a percentage
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of revenues, consolidated net income represented 5.7% and 1.1% for the years ended as of December 31, 2022 and 2023, respectively.
Non-controlling Interest Net Income. Changes in non-controlling interest net income in any period reflect changes in the percentage of the stock of our subsidiaries held by non-associated third parties as of the end of each month during the relevant period and the consolidated net income attributable to those subsidiaries.
Non-controlling interest net income decreased 37%, from an income of $27 million in 2022 to an income of $17 million in 2023, primarily attributable to a decrease in the net income of the consolidated entities in which others have a non-controlling interest and to the decrease in non-controlling interest due to the repurchase of shares in CLH and CHP. See note 21.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Controlling Interest Net Income. Controlling interest net income represents the difference between our consolidated net income and non-controlling interest net income, which is the portion of our consolidated net income attributable to those of our subsidiaries in which non-associated third parties hold interests. For the reasons described above, our controlling interest net income decreased from a controlling interest net income of $858 million in 2022 to a controlling interest net income of $182 million in 2023. As a percentage of revenues, controlling interest net income, represented 5.5% and 1.0% for the years ended as of December 31, 2022 and 2023, respectively.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Summarized in the table below are the percentage (%) increases (+) and decreases (-) for the year ended December 31, 2022 compared to the year ended December 31, 2021 in our (i) domestic cement and ready-mix concrete sales volumes, which refer entirely to sales to external customers, as well as (ii) export sales volumes of cement, which include both sales to external customers and intragroup export sales from one reportable operating segment to another, and (iii) domestic cement and ready-mix concrete average sales prices for each of our reportable operating segments.
Reportable operating segments represent the components of Cemex that engage in business activities from which we may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s top management to make decisions about resources to be allocated to the segments and assess their performance, and for which discrete financial information is available. Cemex discloses its segment information presenting fifteen reportable operating segments under IFRS 8. We operate geographically and by line of business on a regional basis. For the reported periods, the Company’s operations were organized in four geographical regions, each under the supervision of a regional president, as follows: 1) Mexico, 2) United States, 3) EMEAA, comprising 11 operating segments, of which four operating segments were aggregated into a single reportable operating segment as described below, and 4) SCA&C, comprising twelve operating segments, of which nine operating segments were aggregated into two reportable operating segments as described below. The accounting policies applied to determine the financial information by reporting segment are consistent with those described in note 28 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
As of December 31, 2022, considering similar regional and economic characteristics and/or materiality, such as: (a) the nature of the products and services, all related to construction materials and the construction industry, (b) the nature of the production processes, which are the same for cement, ready-mix concrete, aggregates and Urbanization Solutions, (c) the type of customers for their products or services, in all cases construction materials distributors and wholesalers, governments and big construction firms, and (d) the methods used to distribute their products or provide their services, which are very similar among the Company’s geographies using both third-party transportation for cement and aggregates and our own mixers fleet for ready-mix, certain operating segments have been aggregated and presented as single reportable segments. These reportable segments are as follows: (i) the “Rest of EMEAA”
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refers to Cemex’s operating segments and activities in the Czech Republic, Croatia, Egypt and the UAE; (ii) the “Rest of SCA&C” refers to Cemex’s operating segments and activities in Puerto Rico, Nicaragua, Jamaica, the Caribbean and Guatemala, excluding the operations of TCL; and (iii) the “Caribbean TCL” refers to TCL’s operating segments mainly in Trinidad and Tobago, Jamaica, Guyana and Barbados. The line item “Other activities,” included to reconcile the total of reportable segments with the consolidated amounts from continuing operations, refers to the following: (1) our cement trade maritime operations, (2) Cemex, S.A.B. de C.V., (3) other corporate entities and finance subsidiaries and (4) other minor subsidiaries with different lines of business.
The table below and the other volume data presented by reportable operating segment in this “Item 5—Operating and Financial Review and Prospects—Results of Operations—Year Ended December 31, 2022 Compared to Year Ended December 31, 2021” section present Domestic Sales Volumes of cement and ready-mix concrete, consisting entirely of sales to external customers, as well as Export Sales Volumes of cement to both external customers and other operating segments, and Average Domestic Sales Prices in Local Currency of cement and ready-mix concrete, which refer to sales to external customers.
| Domestic Sales Volumes | Export Sales Volumes (Intragroup Transactions) |
Export Sales Volumes to External Customers |
Average Domestic Sales Prices in Local Currency(1) |
|||||||||||||||||||||
| Reporting Segment |
Cement | Ready-Mix Concrete |
Cement | Cement | Cement | Ready-Mix Concrete |
||||||||||||||||||
| Mexico |
-8% | +10% | +44% | -28% | +16% | +15% | ||||||||||||||||||
| United States |
+1% | FLAT | — | — | +16% | +15% | ||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||
| United Kingdom |
-5% | -9% | — | — | +37% | +30% | ||||||||||||||||||
| France |
— | -4% | — | — | — | +7% | ||||||||||||||||||
| Germany |
+8% | -6% | -17% | -85% | +17% | +9% | ||||||||||||||||||
| Poland |
-4% | -3% | -12% | -88% | +24% | +22% | ||||||||||||||||||
| Spain |
FLAT | -3% | +32% | -19% | +30% | +23% | ||||||||||||||||||
| Philippines |
-10% | — | — | -35% | +9% | — | ||||||||||||||||||
| Israel |
— | +4% | — | — | — | +10% | ||||||||||||||||||
| Rest of EMEAA |
+8% | +3% | -99% | -25% | +27% | +22% | ||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||
| Colombia |
-1% | +14% | — | — | +8% | +4% | ||||||||||||||||||
| Panama |
+7% | +44% | +14% | +22% | -4% | +4% | ||||||||||||||||||
| Caribbean TCL |
-2% | -35% | — | -8% | +13% | +8% | ||||||||||||||||||
| Dominican Republic |
-7% | +10% | -48% | — | +18% | +12% | ||||||||||||||||||
| Rest of SCA&C |
-19% | -33% | >+100% | -85% | +13% | -8% | ||||||||||||||||||
| “—” | = Not Applicable |
| (1) | Represents the average change in domestic cement and ready-mix concrete prices in local currency terms. For the purpose of our Rest of EMEAA reportable segment, which comprises Non-Euro segments, the weighted average variance in local currency is determined and presented in Euros at the exchange rates in effect as of the end of the reporting period. For the purpose of our Rest of SCA&C reportable segment, which comprises Non-Dollar segments, the weighted average variance in local currency is presented in Dollar terms at the exchange rates in effect as of the end of the reporting period. Weighted average changes for the Rest of EMEAA and Rest of SCA&C reportable segments are based on total sales volumes in the respective segment. |
On a consolidated basis, our cement sales volumes decreased 5%, from 67.0 million tons in 2021 to 63.4 million tons in 2022, and our ready-mix concrete sales volumes increased 2%, from 49.2 million cubic meters in 2021 to 50.1 cubic meters in 2022. Our revenues increased 8%, from $14,379 million in 2021 to $15,577 million in 2022, and our operating earnings before other expenses, net decreased 9%, from $1,719 million in 2021 to $1,561 million in 2022. See the table below for a breakdown according to reporting segment.
The following tables present selected financial information for revenues of both external revenues and revenues including intragroup transactions, as well as operating earnings before other expenses, net and Operating EBITDA for
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each of our reporting segments for the years ended December 31, 2021 and 2022. Variations in revenues determined on the basis of Dollars include the appreciation or depreciation which occurred during the period between the local currencies of the countries in the regions vis-à-vis the Dollar; therefore, such variations differ substantially from those based solely on the countries’ local currencies.
As mentioned above, our “Operating EBITDA” is the financial measure used by our CEO and other management when assessing segment performance and profitability and deciding how to allocate resource, and our “Operating Earnings Before Other Expenses, Net” is the closest line item to Operating EBITDA presented in our statements of income under IFRS included elsewhere in this annual report and is a stepping stone for calculating Operating EBITDA by adding back depreciation and amortization.
| Reporting Segment |
Variation in Local Currency(1) |
Approximate Currency Fluctuations |
Variation in Dollars |
Revenues including intragroup transactions For the Years Ended |
Variation in Local Currency(1) |
Approximate Currency Fluctuations |
Variation in Dollars |
External Revenues For the Years Ended |
||||||||||||||||||||||||||||||||
| 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||||||||||||||||||||
| Mexico |
+9% | +2% | +11% | $ | 3,466 | $ | 3,842 | +7% | +3% | +10% | $ | 3,324 | $ | 3,642 | ||||||||||||||||||||||||||
| United States |
+16% | — | +16% | 4,359 | 5,038 | +16% | — | +16% | 4,355 | 5,034 | ||||||||||||||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||||||||||||||||||
| United Kingdom |
+17% | -13% | +4% | 940 | 982 | +17% | -12% | +5% | 940 | 982 | ||||||||||||||||||||||||||||||
| France |
+2% | -12% | -10% | 863 | 781 | +2% | -12% | -10% | 863 | 781 | ||||||||||||||||||||||||||||||
| Germany |
+16% | -13% | +3% | 472 | 485 | +16% | -13% | +3% | 429 | 439 | ||||||||||||||||||||||||||||||
| Poland |
+17% | -14% | +3% | 405 | 419 | +17% | -13% | +4% | 399 | 415 | ||||||||||||||||||||||||||||||
| Spain |
+20% | -14% | +6% | 359 | 382 | +17% | -13% | +4% | 334 | 346 | ||||||||||||||||||||||||||||||
| Philippines |
-2% | -9% | -11% | 424 | 379 | -2% | -9% | -11% | 424 | 379 | ||||||||||||||||||||||||||||||
| Israel |
+12% | -5% | +7% | 785 | 840 | +12% | -5% | +7% | 785 | 840 | ||||||||||||||||||||||||||||||
| Rest of EMEAA |
+29% | -15% | +14% | 618 | 707 | +30% | -15% | +15% | 613 | 706 | ||||||||||||||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||||||||||||||||||
| Colombia |
+11% | -13% | -2% | 437 | 429 | +11% | -13% | -2% | 437 | 429 | ||||||||||||||||||||||||||||||
| Panama |
+23% | — | +23% | 121 | 149 | +18% | — | +18% | 98 | 115 | ||||||||||||||||||||||||||||||
| Caribbean TCL |
+8% | FLAT | +8% | 280 | 302 | +8% | FLAT | +8% | 273 | 294 | ||||||||||||||||||||||||||||||
| Dominican Republic |
+12% | +4% | +16% | 299 | 348 | +13% | +5% | +18% | 291 | 342 | ||||||||||||||||||||||||||||||
| Rest of SCA&C |
-15% | — | -15% | 465 | 394 | -11% | — | -11% | 444 | 393 | ||||||||||||||||||||||||||||||
| Reportable Segments |
— | — | — | — | — | +8% | — | +8% | 14,009 | 15,137 | ||||||||||||||||||||||||||||||
| Other Activities |
— | — | — | — | — | +19% | — | +19% | 370 | 440 | ||||||||||||||||||||||||||||||
| Total Consolidated |
— | — | — | — | — | +8% | — | +8% | $ | 14,379 | $ | 15,577 | ||||||||||||||||||||||||||||
| “—” | = Not Applicable |
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| (1) | Represents the variation in local currency terms. For the purposes of our Rest of EMEAA reportable segment, which comprises Non-Euro segments, the weighted average variance in local currency is determined and presented in Euros at the exchange rates in effect as of the end of the reporting period. For the purposes of our Rest of SCA&C reportable segment, which comprises Non-Dollar segments, the weighted average variance in local currency is presented in Dollar at the exchange rates in effect as of the end of the reporting period. |
| Operating Earnings Before Other Expenses, Net(1) For the Year Ended December 31, |
Plus: Depreciation and amortization |
Operating EBITDA(2) For the Year Ended December 31, |
||||||||||||||||||||||
| Reporting Segment |
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | ||||||||||||||||||
| Mexico |
$ | 1,003 | $ | 961 | $ | 161 | $ | 172 | $ | 1,164 | $ | 1,133 | ||||||||||||
| United States |
314 | 307 | 464 | 455 | 778 | 762 | ||||||||||||||||||
| EMEAA |
||||||||||||||||||||||||
| United Kingdom |
72 | 135 | 69 | 60 | 141 | 195 | ||||||||||||||||||
| France |
43 | 13 | 50 | 50 | 93 | 63 | ||||||||||||||||||
| Germany |
41 | 12 | 28 | 28 | 69 | 40 | ||||||||||||||||||
| Poland |
48 | 42 | 25 | 22 | 73 | 64 | ||||||||||||||||||
| Spain |
(39 | ) | (22 | ) | 33 | 28 | (6 | ) | 6 | |||||||||||||||
| Philippines |
74 | 47 | 40 | 37 | 114 | 84 | ||||||||||||||||||
| Israel |
69 | 66 | 45 | 46 | 114 | 112 | ||||||||||||||||||
| Rest of EMEAA |
31 | 61 | 56 | 55 | 87 | 116 | ||||||||||||||||||
| SCA&C |
||||||||||||||||||||||||
| Colombia |
61 | 37 | 26 | 24 | 87 | 61 | ||||||||||||||||||
| Panama |
15 | 12 | 16 | 16 | 31 | 28 | ||||||||||||||||||
| Caribbean TCL |
46 | 57 | 19 | 17 | 65 | 74 | ||||||||||||||||||
| Dominican Republic |
121 | 125 | 7 | 8 | 128 | 133 | ||||||||||||||||||
| Rest of SCA&C |
97 | 77 | 13 | 13 | 110 | 90 | ||||||||||||||||||
| Others |
(277 | ) | (369 | ) | 68 | 89 | (209 | ) | (280 | ) | ||||||||||||||
| Continuing operations |
$ | 1,719 | $ | 1,561 | $ | 1,120 | $ | 1,120 | $ | 2,839 | $ | 2,681 | ||||||||||||
| (1) | We include the line item titled “Operating earnings before other expenses, net” in our statements of income under IFRS considering that it is a subtotal relevant for the determination of our “Operating EBITDA” (Operating earnings before other expenses, net plus depreciation and amortization) as described in note 2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (2) | Operating EBITDA is the financial measure used by our chief executive officer to review operating performance and profitability, for decision-making purposes and to allocate resources. Moreover, Operating EBITDA is a measure used by our creditors to review our ability to internally fund capital expenditures, to review our ability to service or incur debt and to comply with financial covenants under our financing agreements, as described in note 17 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. Our Operating EBITDA is not a measure of operating performance, an alternative to cash flow or a measure of financial position under IFRS. Moreover, Operating EBITDA may not be comparable to other similarly titled measures of other companies. |
Revenues. Our consolidated revenues increased 8%, from $14,379 million in 2021 to $15,577 million in 2022. The increase in our revenues was mainly attributable to the higher prices of our products in local currency across all regions and higher ready-mix and aggregates volumes. Set forth below is a quantitative and qualitative analysis of the various factors affecting our revenues on a reporting segment basis. To allow the analysis of each reportable segment on a stand-alone basis, our discussion of volume data and revenues information below is presented in both external revenues and revenues before eliminations resulting from consolidation, as described in note 4.3 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
Mexico
Our domestic cement sales volumes to external customers from our operations in Mexico decreased 8% in 2022 compared to 2021, and ready-mix concrete sales volumes increased 10% over the same period. Our revenues from our operations in Mexico represented 23% and 23% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. During 2022, bagged cement demand normalized from the
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pandemic peak related to home improvements and government social spending, as well as inflationary pressures impacting retail consumption. The country continues to experience a pickup in the formal economy, and bulk cement and ready-mix volumes benefited from nearshoring investments in border states and tourism construction. Our cement export volumes from our operations in Mexico, which represented 14% of our Mexican cement sales volumes for the year ended December 31, 2022, of which 23% corresponded to external customers and 77% corresponded to transactions with other operating segments, increased 17% in 2022 compared to 2021, mainly due to higher exports to the United States. Of our total cement export volumes from our operations in Mexico during 2022, which include both exports to external customers and exports to other operating segments, 92% was shipped to the United States and 8% to our SCA&C segment. As of December 31, 2022, our operations in Mexico represented 15% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Mexico increased 16%, in Mexican Peso terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 15%, in Mexican Peso terms, over the same period.
The following chart indicates the breakdown of Mexico external revenues by product, as applicable for the year ended December 31, 2022:
|
As a result of increases in domestic cement and ready-mix concrete sales prices, an increase in ready-mix concrete sales volumes and ready-mix concrete sales volumes, and an increase in cement exports sales, partially offset by a decrease in domestic cement sales volumes, our external revenues in Mexico, in Mexican Peso terms, increased 7% in 2022 compared to 2021.
United States
Our domestic cement sales volumes to external customers from our operations in the United States increased 1% in 2022 compared to 2021, and ready-mix concrete sales volumes remained flat over the same period. The increase in domestic cement sales volumes was primarily attributable to strong demand momentum in a largely sold-out domestic market. Our operations in the United States represented 32% and 30% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the United States represented 48% of our total assets in Dollar terms. Our average domestic cement sales prices of our operations in the United States increased 16%, in Dollar terms, in 2022 compared to 2021, and our average ready-mix concrete sales price increased 15%, in Dollar terms, over the same period.
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The following chart indicates the breakdown of United States external revenues by product, as applicable for the year ended December 31, 2022:
|
As a result of increases in domestic cement sales volumes and sales prices and ready-mix concrete sales prices, external revenues from our operations in the United States, in Dollar terms, increased 16% in 2022 compared to 2021.
EMEAA
In 2022, our operations in the EMEAA region consisted of our operations in the United Kingdom, France, Germany, Poland, Spain, Philippines and Israel, which represent the most significant operations in this region, in addition to the Rest of EMEAA segment. Our revenues from our operations in the EMEAA region represented 31% and 33% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the EMEAA region represented 23% of our total assets in Dollar terms. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our revenues for our main operations in the EMEAA region.
The following chart indicates the geographic breakdown of EMEAA region external revenues by reporting segment, as applicable for the year ended December 31, 2022:
|
United Kingdom
Our domestic cement sales volumes to external customers from our operations in the United Kingdom decreased 5% in 2022 compared to 2021, and ready-mix concrete sales volumes decreased 9% over the same period. The decreases in domestic cement and ready-mix concrete sales volumes reflected a decline in the market activity for the second half of the year, as the United Kingdom economy weakened and suffered severe weather for the months of November and December. Our operations in the United Kingdom represented 6% and 7% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31,
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2022, our operations in the United Kingdom represented 5% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the United Kingdom increased 37%, in Pound terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 30%, in Pound terms, over the same period.
The following chart indicates the breakdown of United Kingdom external revenues by product, as applicable for the year ended December 31, 2022:
|
As a result of increases in domestic cement and ready-mix concrete sales prices, external revenues from our operations in the United Kingdom, in Pound terms, increased 17% in 2022 compared to 2021.
France
Our ready-mix concrete sales volumes to external customers from our operations in France decreased 4% in 2022 compared to 2021. The decrease in volumes reflected a tight and dynamic supply and demand market. Our operations in France represented 5% and 6% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in France represented 4% of our total assets in Dollar terms. Our average sales price of ready-mix concrete of our operations in France increased 7%, in Euro terms, in 2022 compared to 2021.
The following chart indicates the breakdown of France external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of an increase in ready-mix concrete sales prices, partially offset by a decrease in ready-mix concrete sales volumes, external revenues from our operations in France, in Euro terms, increased 2% in 2022 compared to 2021.
Germany
Our domestic cement sales volumes to external customers from our operations in Germany increased 8% in 2022 compared to 2021, and ready-mix concrete sales volumes decreased 6% over the same period. The increase in
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domestic cement sales volumes was mainly originated by an unfavorable weather condition in 2021 and the decrease in ready-mix concrete was mainly due to slowing demand in all markets. Our operations in Germany represented 3% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. Our cement export volumes from our operations in Germany, which represented 20% of our Germany cement sales volumes for the year ended December 31, 2022, of which 5% corresponded to external customers and 95% corresponded to transactions with other operating segments, decreased 32% in 2022 compared to 2021, mainly due to lower volumes exported to Poland and Norway. All of our cement export volumes from our operations in Germany during 2022, which included both exports to external customers and exports to other operating segment, were to our EMEAA region. As of December 31, 2022, our operations in Germany represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Germany increased 17%, in Euro terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 9%, in Euro terms, over the same period.
The following chart indicates the breakdown of Germany external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement sales volumes and increases in sales prices, partially compensated by a decrease in ready-mix concrete sales volumes, external revenues from our operations in Germany, in Euro terms, increased 16% in 2022 compared to 2021.
Poland
Our domestic cement sales volumes to external customers from our operations in Poland decreased 4% in 2022 compared to 2021, and ready-mix concrete sales volumes decreased 3% over the same period. The decrease in domestic cement and ready-mix concrete sales volumes was mainly due to price increases and project delays. Our operations in Poland represented 3% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. Our cement export volumes from our operations in Poland, which represented 1% of our Poland cement sales volumes for the year ended December 31, 2022, of which 1% corresponded to external customers and 99% corresponded to transactions with other operating segments, decreased 13% in 2022 compared to 2021. All of our cement export volumes from our operations in Poland during 2022, which included both exports to external customers and exports to other operating segments, were to our Rest of EMEAA segment. As of December 31, 2022, our operations in Poland represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Poland increased 24%, in Euro terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 22%, in Euro terms, over the same period.
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The following chart indicates the breakdown of Poland external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by decreases in domestic cement and ready-mix concrete sales volumes, external revenues from our operations in Poland, in Euro terms, increased 17% in 2022 compared to 2021.
Spain
Our domestic cement sales volumes to external customers from our operations in Spain remained flat in 2022 compared to 2021, while ready-mix concrete sales volumes decreased 3% over the same period. The decreases in ready-mix concrete sales volumes were mainly driven by lower construction activity in all regions. Our operations in Spain represented 2% and 2% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. Our cement export volumes from our operations in Spain, which represented 29% of our Spain cement sales volumes for the year ended December 31, 2022, of which 36% corresponded to external customers and 64% corresponded to transactions with other operating segments, increased 8% in 2022 compared to 2021, due to higher export volumes to United Kingdom. Of our total cement export volumes from our operations in Spain during 2022, which included both exports to external customers and exports to other operating segment, 99% was shipped to the United Kingdom and 1% to the Rest of EMEAA region. As of December 31, 2022, our operations in Spain represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in Spain increased 30%, in Euro terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 23%, in Euro terms, over the same period.
The following chart indicates the breakdown of Spain external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by a decrease in ready-mix concrete sales volume, external revenues from our operations in Spain, in Euro terms, increased 17% in 2022 compared to 2021.
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The Philippines
Our domestic cement sales volumes to external customers from our operations in the Philippines decreased 10% in 2022 compared to 2021. The decrease in domestic cement volumes was mainly due to public and private projects experiencing financial constraints due to the increasing cost of materials. Delays in government releasing additional funds and approvals of new public projects, as well as loss of volumes related to price increase in July. Our cement export volumes from our operations in the Philippines, which represented less than 1% of our Philippines’ cement sales volumes for the year ended December 31, 2022, of which 100% corresponded to external customers export revenue, decreased 35% in 2022 compared to 2021. All of our cement exports from our operations in Philippines during 2022 were to the Rest of EMEAA segment. Our revenues from our operations in the Philippines represented 2% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the Philippines represented 3% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Philippines increased 9%, in Philippine Peso terms, in 2022 compared to 2021.
The following chart indicates the breakdown of Philippines external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of a decrease in domestic cement sales volumes, partially compensated by an increase in sales prices, external revenues of our operations in the Philippines, in Philippine Peso terms, decreased 2% in 2022 compared to 2021.
Israel
Our ready-mix concrete sales volumes to external customers from our operations in Israel increased 4% in 2022 compared to 2021. Our operations in Israel represented 5% and 5% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in Israel represented 3% of our total assets in Dollar terms. Our average sales price of ready-mix concrete of our operations in Israel increased 10%, in Israeli New Shekel terms, in 2022 compared to 2021.
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The following chart indicates the breakdown of Israel external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in ready-mix concrete sales volumes and prices, external revenues from our operations in Israel, in Israeli New Shekel terms, increased 12% in 2022 compared to 2021.
Rest of EMEAA
Our domestic cement sales volumes to external customers from our operations in the Rest of EMEAA segment increased 8% in 2022 compared to 2021, and ready-mix concrete sales volumes increased 3% over the same period. Our cement export volumes from our operations in the Rest of EMEAA segment, which represented 6% of our Rest of EMEAA segment cement sales volumes for the year ended December 31, 2022, of which 99% corresponded to external customers and 1% corresponded to transactions with other operating segments, decreased 34% in 2022 compared to 2021. Of our total cement export volumes from our operations in the Rest of EMEAA segment during 2022, which include both exports to external customers and exports to other operating segment, 99% was shipped to countries in the EMEAA region and 1% was to Poland. Our revenues from our operations in the Rest of EMEAA segment represented 5% and 4% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the Rest of EMEAA represented 3% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Rest of EMEAA segment increased 27%, in Euro terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 22%, in Euro terms, over the same period.
The following chart indicates the breakdown of Rest of EMEAA external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement and ready-mix concrete sales volumes, as well, as increases in domestic cement and ready-mix concrete sales prices, external revenues in the Rest of EMEAA segment, in Euro terms, increased 30%, in 2022 compared to 2021.
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SCA&C
In 2022, our operations in the SCA&C region consisted of our operations in Colombia, Panama, the Dominican Republic, our Caribbean TCL operations, which represent our most significant operations in this region, and the Rest of SCA&C segment. Our revenues from our operations in the SCA&C region represented 11% and 11% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the SCA&C region represented 8% of our total assets, in Dollar terms. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our revenues for our main operations in the SCA&C region.
The following chart indicates the geographic breakdown of SCA&C region external revenues by reporting segment, as applicable for the year ended December 31, 2022:
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Colombia
Our domestic cement sales volumes to external customers from our operations in Colombia decreased 1% in 2022 compared to 2021, and ready-mix concrete sales volumes increased 14% over the same period. The decrease in cement sales volume in Colombia was mainly due to our prices increasing and our ready-mix concrete sales volume increasing in tandem due to the recovery of the concrete industry, mainly supported by formal sector demand, in industrial and residential. Our revenues from our operations in Colombia represented 3% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in Colombia represented 3% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Colombia increased 8%, in Colombian Peso terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 4%, in Colombian Peso terms, over the same period.
The following chart indicates the breakdown of Colombia external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in ready-mix concrete sales volumes and increases in domestic cement and ready-mix concrete sales prices, partially offset by a decrease in domestic cement sales volume, external revenues of our operations in Colombia, in Colombian Peso terms, increased 11% in 2022 compared to 2021.
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Panama
Our domestic cement sales volumes to external customers from our operations in Panama increased 7% in 2022 compared to 2021, and ready-mix concrete sales volumes increased 44% over the same period. The increases in domestic cement and ready-mix concrete sales volumes in Panama were mainly due to increased activity in the infrastructure sector, largely due to work related to a third metro line. Our cement export volumes from our operations in Panama, which represented 62% of our Panama cement sales volumes for the year ended December 31, 2022, of which 34% corresponded to external customers and 66% corresponded to transactions with other operating segments, increased 16% in 2022 compared to 2021. All of our cement exports from our operations in Panama during 2022, which included both exports to external customers and exports to other operating segments, were to the Rest of EMEAA segment. Our revenues from our operations in Panama represented 1% and 1% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in Panama represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in Panama decreased 4% in Dollar terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 4%, in Dollar terms, over the same period.
The following chart indicates the breakdown of Panama external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement sales volumes and ready-mix concrete sales volumes and sales price, partially offset by a decrease in domestic cement sales price, external revenues of our operations in Panama, in Dollar terms, increased 18% in 2022 compared to 2021.
Caribbean TCL
Our domestic cement sales volumes to external customers from our operations in Caribbean TCL decreased 2% in 2022 compared to 2021, and ready-mix concrete sales volumes decreased 35% over the same period. The decreases in cement and ready-mix sales volume came from lower demand. Our revenues from our operations in Caribbean TCL represented 2% and 2% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. Our cement export volumes from our operations in Caribbean TCL segment represented 19% of our Caribbean TCL cement sales volumes for the year ended December 31, 2022, of which 100% corresponded to external customers, decreased 8% in 2022 compared to 2021. All of our cement exports from our operations in Caribbean TCL during 2022 were to the Rest of SCA&C segment. As of December 31, 2022, our operations in Caribbean TCL represented 2% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in Caribbean TCL increased 13%, in Trinidad and Tobago Dollar terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 8%, in Trinidad and Tobago Dollar terms, over the same period.
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The following chart indicates the breakdown of Caribbean TCL external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in domestic cement and ready-mix concrete sales prices, partially offset by decreases in domestic cement and ready-mix concrete sales volumes, external revenues of our operations in Caribbean TCL, in Trinidad and Tobago Dollar terms, increased 8% in 2022 compared to 2021.
Dominican Republic
Our domestic cement sales volumes to external customers from our operations in the Dominican Republic decreased 7% in 2022 compared to 2021, while ready-mix concrete sales volumes increased 10% over the same period. The decrease in our domestic cement sales volumes in the Dominican Republic region was mainly due to a drop in retail cement demand, partially offset by higher bulk cement demand related to tourism projects. Domestic cement and ready-mix sales prices continued their positive trend. Our operations in the Dominican Republic represented 2% and 2% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. Our cement export volumes from our operations in the Dominican Republic, which represented 3% of our Dominican Republic cement sales volumes for the year ended December 31, 2022, of which 100% corresponded to transactions with other operating segments, decreased 48% in 2022 compared to 2021. All of our cement export volumes from our operations in the Dominican Republic during 2022, were to our Rest of SCA&C segment. As of December 31, 2022, our operations in Dominican Republic represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement of our operations in the Dominican Republic increased 18%, in Dominican Peso terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete increased 12%, in Dominican Peso terms, over the same period.
The following chart indicates the breakdown of Dominican Republic external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of increases in ready-mix concrete sales volume and domestic cement and ready-mix concrete sales prices, partially offset by a decrease in domestic cement sales volume, external revenues from our operations in the Dominican Republic, in Dominican Peso terms, increased 13% in 2022 compared to 2021.
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Rest of SCA&C
Our domestic cement volumes to external customers from our operations in the Rest of SCA&C segment decreased 19% in 2022 compared to 2021, and ready-mix concrete sales volumes decreased 33% over the same period. Our cement export volumes from our operations in the Rest of SCA&C segment, which represented less than 1% of our Rest of SCA&C segment cement sales volumes for the year ended December 31, 2022, decreased 35% in 2022 compared to 2021. Also, 23% of our cement export volumes from our operations in the Rest of SCA&C segment corresponded to external customers and 77% corresponded to transactions with other operating segment. All of our cement export volumes from our operations in the Rest of SCA&C segment during 2022, which include both exports to external customers and exports to other operating segments, were within the same region. Our revenues from our operations in the Rest of SCA&C segment represented 3% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, our operations in the Rest of SCA&C segment represented 1% of our total assets in Dollar terms. Our average sales price of domestic cement from our operations in the Rest of SCA&C segment increased 13% in Dollar terms, in 2022 compared to 2021, and our average sales price of ready-mix concrete decreased 8%, in Dollar terms, over the same period.
The following chart indicates the breakdown of Rest of SCA&C external revenues by product, as applicable for the year ended December 31, 2022:
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As a result of decreases in domestic cement and ready-mix concrete sales volumes and ready-mix concrete sales price, external revenues of our operations in the Rest of SCA&C segment, in Dollar terms, decreased 11% in 2022 compared to 2021.
Other activities (Revenues)
Revenues from our Other activities segment increased 19%, in 2022 compared to 2021, in Dollar terms. The increase resulted mainly from higher revenues from our trading operations. Our revenues from our Other activities segment represented 3% and 3% in Dollar terms of our consolidated external revenues for the years ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2022, our trading operations represented 69% of our revenues in our Other activities segment, in Dollar terms.
Cost of Sales
Our cost of sales, including depreciation, increased 10%, from $9,743 million in 2021 to $10,755 million in 2022. As a percentage of revenues, cost of sales increased from 67.8% in 2021 to 69.0% in in 2022. Our cost of sales includes freight expenses of raw materials used in our producing plants.
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Gross Profit
For the reasons described above, our gross profit increased 4% from $4,636 million in 2021 to $4,822 million in 2022. As a percentage of revenues, gross profit decreased from 32.2% in 2021 to 31.0% in 2022. In addition, our gross profit may not be directly comparable to those of other entities that include all their freight expenses in cost of sales. As described below, we include freight expenses of finished products from our producing plants to our points of sale and from our points of sale to our customers’ locations within operating expenses as part of distribution and logistics expenses.
Operating Expenses
Our operating expenses, which are represented by administrative, selling, distribution and logistics expenses, increased 12%, from $2,917 million in 2021 to $3,261 million in 2022. As a percentage of revenues, operating expenses increased from 20.3% in 2021 to 20.9% in 2022. The increase as a percentage of revenues resulted primarily from higher logistic and distribution expenses due to higher fuel costs. Our operating expenses include expenses related to personnel, equipment and services involved in sales activities and storage of product at points of sale, which are included as part of the operating expenses, as well as freight expenses of finished products between plants and points of sale and freight expenses between points of sale and the customers’ facilities, which are included as part of the line item “Distribution and logistics expenses.” For the years ended December 31, 2021 and 2022, selling expenses included as part of the line item “Operating expenses” amounted to $322 million and $363 million, respectively. As discussed above, we include freight expenses of finished products from our producing plants to our points of sale and from our points of sale to our customers’ locations within distribution and logistics expenses, which in the aggregate represented costs of $1,637 million in 2021 and $1,824 million in 2022. As a percentage of revenues, distribution and logistics expenses increased from 11% in 2021 to 12% in 2022.
Operating Earnings Before Other Expenses, Net
For the reasons described above, our operating earnings before other expenses, net decreased 9% from $1,719 million in 2021 to $1,561 million in 2022. As a percentage of revenues, operating earnings before other expenses, net decreased two percentage points, from 12.0% in 2021 to 10.0% in 2022. Additionally, set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our operating earnings before other expenses, net on a reporting segment basis.
Depreciation and Amortization
During 2022, in Dollar terms, our depreciation and amortization amounted to $1,120 million and remained flat compared to 2021. During 2022, our capital expenditures amounted to $1,362 million, a 24% increase compared to $1,094 million in 2021, due to higher assets base, offset by the effects of changes in the exchange rates to our main currencies against the dollar. See the table on page 206 of this annual report and note 4.3 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report for a breakdown of depreciation and amortization by reportable segment.
Operating EBITDA
Operating EBITDA is the key financial measure used by our chief executive officer to review operating performance and profitability, for decision-making purposes and to allocate resources. Moreover, Operating EBITDA is an indicator used by Cemex’s creditors of our ability to internally fund capital expenditures and to measure our ability to service or incur debt and comply with financial covenants under its financing agreements. We present “Operating EBITDA” by
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reportable segment in the table on page 206 of this annual report and in notes 4.3 and 17.1 to the 2023 audited consolidated financial statements of Cemex, S.A.B. de C.V. included elsewhere in this annual report. Operating EBITDA is not a measure of operating performance, an alternative to cash flows or a measure of financial position under IFRS. Moreover, Operating EBITDA may not be comparable to other similarly titled measures of other companies.
Considering the effects mentioned above, our Operating EBITDA decreased 6% from $2,839 million in 2021 to $2,681 million in 2022. As a percentage of revenues our Operating EBITDA margin (which management considers a relevant profitability measure despite Operating EBITDA margin not being a measure of operating performance, an alternative to cash flows or a measure of financial position under IFRS) decreased from 20% in 2021 to 17% in 2022. Set forth below is a quantitative and qualitative analysis of the effects of the various factors affecting our operating earnings before other expenses, net and Operating EBITDA on a reporting segment basis.
For a reconciliation of Operating Earnings Before Other Expenses, Net to Operating EBITDA, see page 177 under “Item 5—Operating and Financial Review and Prospects—Key Components of Results of Operations—Year Ended December 31, 2022 Compared to Year Ended December 31, 2021.”
Mexico
Our operating earnings before other expenses, net, from our operations in Mexico decreased 6%, in Mexican Peso terms and 4%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Mexico represented 62% and 58% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales and operating expenses due to inflation, partially offset by an increase in revenues driven by home improvements and governmental social spending.
Moreover, in 2022 our Operating EBITDA from our operations in Mexico decreased 4%, in Mexican Peso terms, and 3%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Mexico represented 42% and 41% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
United States
Our operating earnings before other expenses, net, from our operations in the United States decreased 2% in 2022 compared to 2021, in Dollar terms. Our operating earnings before other expenses, net from our operations in the United States represented 20% and 18% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales due to higher imports and higher costs of fuel and raw material, partially offset by an increase in our revenues in the United States segment.
In 2022, our Operating EBITDA from our operations in the United States decreased 2%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in the United States represented 29% and 27% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
EMEAA
United Kingdom. Our operating earnings before other expenses, net, from our operations in the United Kingdom increased 110%, in Pound terms and 88%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in the United Kingdom represented 9% and 4% of our total operating
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earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The increase resulted primarily from the increase in our revenues in the United Kingdom, partially offset by higher costs of sale, due to increase in imported clinker, purchase cement and higher electricity, fuel and raw material costs.
In 2022, our Operating EBITDA from our operations in the United Kingdom increased 57%, in British Pound terms, and 38%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in the United Kingdom represented 7% and 5% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
France. Our operating earnings before other expenses, net, from our operations in France decreased 68%, in Euro terms, and 70%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in France represented 1% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales, due to higher energy and raw material costs and higher distribution and logistics expenses.
Moreover, in 2022 our Operating EBITDA from our operations in France decreased 25%, in Euro terms, and 32%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in France represented 2% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Germany. Our operating earnings before other expenses, net, from our operations in Germany decreased 64%, in Euro terms, and 71%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Germany represented 1% and 2% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from our cost of sales increase, mainly in energy, raw material and freight costs.
In 2022, our Operating EBITDA from our operations in Germany decreased 33%, in Euro terms, and 42%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Germany represented 2% and 2% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Poland. Our operating earnings before other expenses, net, from our operations in Poland decreased 1%, in Euro terms and 13%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Poland represented 3% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from higher operational costs, such as energy and raw material costs, purchase clinker costs and higher freight costs due to fuel price increases.
In 2022, our Operating EBITDA from our operations in Poland decreased 1%, in Euro terms, and 12%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Poland represented 2% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Spain. Our operating loss before other expenses, net, from our operations in Spain decreased 38%, in Euro terms and 44%, in Dollar terms, in 2022 compared to 2021. Our operating loss before other expenses, net from our operations in Spain represented a loss of $22 million and a loss of $39 million, which were negative impacts of 1% and 2% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from higher revenues due to price increases, which were partially offset by the higher cost of sales, mainly higher electric power, raw material and fuel costs.
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Moreover, in 2022 our Operating EBITDA from our operations in Spain decreased more than 100%, in Euro terms, and more than 100%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Spain represented less than 1% and less than 1% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
The Philippines. Our operating earnings before other expenses, net, from our operations in the Philippines decreased 31%, in Philippine Peso terms and 36%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in the Philippines represented 3% and 4% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the decrease in our revenues, as well as the higher cost of sales.
In 2022, our Operating EBITDA from our operations in the Philippines decreased 19%, in Philippine Peso terms, and 26%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in the Philippines represented 3% and 4% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Israel. Our operating earnings before other expenses, net, from our operations in Israel increased 16%, in Israeli New Shekel terms and decreased 4%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Israel represented 4% and 4% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The increase in Israel operating earnings resulted primarily from the increase in our revenues.
In 2022, our Operating EBITDA from our operations in Israel increased 12%, in Israeli Shekel terms, and decreased 2%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Israel represented 4% and 4% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Rest of EMEAA. Our operating earnings before other expenses, net, from our operations in the Rest of EMEAA segment increased 123%, in Euro terms and 97%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in the Rest of EMEAA segment represented 3% and 2% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. This increase relates primarily to an increase in our revenues.
Moreover, in 2022 our Operating EBITDA from our operations in the Rest of EMEAA segment increased 49%, in Euro terms, and 33%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in the Rest of EMEAA segment represented 4% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
SCA&C
Colombia. Our operating earnings before other expenses, net, from our operations in Colombia decreased 31%, in Colombian Peso terms and 39%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Colombia represented 2% and 4% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales, mainly due to higher energy, fuel and raw material costs.
In 2022, our Operating EBITDA from our operations in Colombia decreased 21%, in Colombian Peso terms, and 30%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Colombia represented 2% and 3% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
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Panama. Our operating earnings before other expenses, net, from our operations in Panama decreased 20%, in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in Panama represented 1% and 1% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from the increase in our cost of sales, such as fuel and raw materials.
In 2022, our Operating EBITDA from our operations in Panama decreased 10%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Panama represented 1% and 1% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Caribbean TCL. Our operating earnings before other expenses, net, from our operations in Caribbean TCL increased 25%, in Trinidad and Tobago Dollar terms and 24% in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our Caribbean TCL operations represented 4% and 3% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The increase resulted primarily from an increase in our revenues.
Moreover, in 2022 our Operating EBITDA from our operations in Caribbean TCL increased 15%, in Trinidad and Tobago Dollar terms, and 14%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Caribbean TCL represented 3% and 2% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Dominican Republic. Our operating earnings before other expenses, net, from our operations in the Dominican Republic remained flat, in Dominican Peso terms and increased 3% in Dollar terms, in 2022 compared to 2021. Our operating earnings before other expenses, net from our operations in the Dominican Republic represented 8% and 7% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The increase in our revenues was offset by higher operating expenses and costs of sales.
In 2022, our Operating EBITDA from our operations in Dominican Republic remained flat, in Dominican Peso terms, and increased 4%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in Dominican Republic represented 5% and 5% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Rest of SCA&C. Our operating earnings before other expenses, net, from our operations in the Rest of SCA&C segment decreased 21% in 2022 compared to 2021, in Dollar terms. Our operating earnings before other expenses, net from our operations in the Rest of SCA&C segment represented 5% and 6% of our total operating earnings before other expenses, net for the years ended December 31, 2022 and 2021, respectively, in Dollar terms. The decrease resulted primarily from lower revenues.
Moreover, in 2022 our Operating EBITDA from our operations in the Rest of SCA&C segment decreased 18%, in Dollar terms, compared to 2021. In addition, our Operating EBITDA from our operations in the Rest of SCA&C segment represented 4% and 4% of our total consolidated Operating EBITDA for the years ended December 31, 2022 and 2021, respectively, in Dollar terms.
Others. Our operating loss before other expenses, net, from our operations in our Other activities segment increased 33% in 2022 compared to 2021, in Dollar terms. The increase in the operating loss before other expenses, net resulted primarily from an increase in cost of sales, partially offset by higher revenues.
Other Expenses, Net. Our other expenses, net, increased significantly, in Dollar terms, from an expense of $82 million in 2021 to an expense of $467 million in 2022. The increase in our other expenses, net, in 2022 resulted
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primarily from an income in 2021 for the sale of 12.3 million emission allowances for a total of $600 million. In 2022, we had a reduction of non-cash impairment losses from $513 million in 2021 to $442 million in 2022. In 2022, impairment losses includes aggregate impairment losses of goodwill of $365 million related to the operating segments in the United States and Spain, as well as impairment losses of fixed assets of $77 million, while the aggregate non-cash impairment losses of 2021 included impairment losses of goodwill of $440 million related to the operating segments in Spain, the United Arab Emirates and the information technology business, impairment losses of internally developed software capitalized in prior years and other intangible assets of $53 million, as well as impairment losses of fixed assets of $43 million. Moreover, we had an increase in our restructuring cost in the year ended December 31, 2022 compared to the same period in 2021. See notes 7, 15.1, 16.1 and 16.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
The most significant items included under this caption for the years ended December 31, 2021 and 2022, are as follows:
| For the Years Ended December 31, | ||||||||
| 2021 | 2022 | |||||||
| (in millions of Dollars) | ||||||||
| Results from the sale of assets and others, net |
$ | (126 | ) | $ | 9 | |||
| Impairment losses |
(513 | ) | (442 | ) | ||||
| Restructuring costs |
(17 | ) | (20 | ) | ||||
| Incremental expenses related to the COVID-19 pandemic |
(26 | ) | (14 | ) | ||||
| Sale of CO2 allowances |
600 | — | ||||||
| $ | (82 | ) | $ | (467 | ) | |||
Financial expense. Our financial expenses decreased 12%, from $576 million in 2021 to $505 million in 2022, primarily attributable to a decrease in our financial debt during 2022 compared to 2021. See note 17.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Financial income and other items, net. Our financial income and other items, net, in Dollar terms, changed significantly from an expense of $161 million in 2021 to an income of $151 million in 2022. The decrease was mainly due to a gain of $104 million from debt tender offers and other market transactions reducing debt during the year and a gain in foreign exchange results in 2022 compared to a loss in 2021 that was mainly due to the fluctuation of the Mexican Peso against the Dollar. See notes 8.2 and 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
The most significant items included under this caption for the years ended December 31, 2021 and 2022 are as follows:
| For the Year Ended December 31, | ||||||||
| 2021 | 2022 | |||||||
| (in millions of Dollars) | ||||||||
| Financial income and other items, net: |
||||||||
| Foreign exchange results |
$ | (35 | ) | $ | 73 | |||
| Financial income |
22 | 27 | ||||||
| Results from financial instruments, net |
(88 | ) | 99 | |||||
| Net interest cost of defined benefit liabilities |
(31 | ) | (29 | ) | ||||
| Effects of amortized cost on assets and liabilities |
(28 | ) | (32 | ) | ||||
| Others |
(1 | ) | 13 | |||||
| $ | (161 | ) | $ | 151 | ||||
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Income Taxes. Our income tax effect in the statements of income, which is comprised of current income taxes plus deferred income taxes, increased from an expense of $137 million in 2021 to $209 million in 2022. Our current income tax expense decreased from $172 million in 2021 to $170 million in 2022, mainly as a result of a decrease in taxes in Spain, partially offset by increases in taxes in Colombia and the Philippines. Our deferred income tax income increased from a deferred income tax benefit of $35 million in 2021 to a deferred income tax expense of $39 million in 2022, mainly associated with the amortization of tax losses in Mexico and the United States in 2022. See notes 20.1, 20.2, 20.3 and 20.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
For each of the years ended December 31, 2021 and 2022, our statutory income tax rate in Mexico was 30%. Considering a decrease in our earnings before income tax from a gain of $954 million in 2021 to earnings before income tax of $770 million in 2022, as well as differences between accounting and tax expenses, our average effective income tax rate increased from an effective income tax rate of 14.4% in 2021 to an effective income tax rate of 27.1% in 2022. Our average effective tax rate equals the net amount of income tax expense divided by earnings before income taxes, as these line items are reported in our consolidated statements of operations. See “Item 3—Key Information—Risk Factors—Risks Relating to Regulatory and Legal Matters—Certain tax matters may have a material adverse effect on our cash flow, financial condition, and net income, as well as on our reputation” and note 20.3 to our 2023 audited consolidated financial statements included elsewhere in this annual report.
Net Income from continuing operations. For the reasons described above, our net income from continuing operations for 2022 decreased from a net income from continuing operations of $817 million in 2021 to a net income from continuing operations of $561 million in 2022. As a percentage of revenues, net income from continuing operations represented 6% and 4% for the years ended as of December 31, 2021 and 2022, respectively.
Discontinued operations. For the years ended December 31, 2021 and 2022, our discontinued operations included in our consolidated statements of income amounted to a net loss from discontinued operations of $39 million and a net income from discontinued operations of $324 million, respectively. As a percentage of revenues, loss of discontinued operations, net of tax, represented 0.3% for the year ended as of December 31, 2021 and the income of discontinued operations, net of tax, represented 2% for the year ended as of December 31, 2022. See note 4.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Consolidated Net Income. For the reasons described above, our consolidated net income (before deducting the portion allocable to non-controlling interest) for 2022 increased from a consolidated net income of $778 million in 2021 to a consolidated net income of $885 million in 2022. As a percentage of revenues, consolidated net income represented 5% and 6% for the years ended as of December 31, 2021 and 2022, respectively.
Non-controlling Interest Net Income. Changes in non-controlling interest net income in any period reflect changes in the percentage of the stock of our subsidiaries held by non-associated third parties as of the end of each month during the relevant period and the consolidated net income attributable to those subsidiaries.
Non-controlling interest net income increased 8%, from an income of $25 million in 2021 to an income of $27 million in 2022, primarily attributable to an increase in the net income of the consolidated entities in which others have a non-controlling interest. See note 21.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Controlling Interest Net Income. Controlling interest net income represents the difference between our consolidated net income and non-controlling interest net income, which is the portion of our consolidated net income attributable to those of our subsidiaries in which non-associated third parties hold interests. For the reasons described above, our controlling interest net income increased from a controlling interest net income of $753 million in 2021 to a controlling
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interest net income of $858 million in 2022. As a percentage of revenues, controlling interest net income, represented 5% for the year ended as of December 31, 2021 and controlling interest net income, represented 6% for the year ended as of December 31, 2022.
Liquidity and Capital Resources
Operating Activities
We have satisfied our operating liquidity needs primarily through the operation of our subsidiaries and expect to continue to do so for both the short and long-term. Although cash flow from our operations has historically met our overall liquidity needs for operations, servicing debt and funding capital expenditures and acquisitions, our subsidiaries are exposed to risks from changes in foreign currency exchange rates, price and currency controls, interest rates, inflation, governmental spending, social instability and other political, economic and/or social developments in the countries in which we operate, among other risks, any one of which may materially decrease our net income and cash from operations. Consequently, in order to meet our liquidity needs, we also rely on cost-cutting and operating improvements to optimize capacity utilization and maximize profitability, as well as borrowing under credit facilities, loans, proceeds of debt and equity offerings and proceeds from asset sales, including our account receivables securitizations. Our consolidated cash flows provided by operating activities from continuing operations were $2,500 million in 2021, $2,150 million in 2022, and $3,278 million in 2023. See our statements of cash flows included elsewhere in this annual report. Cemex management is of the opinion that working capital is sufficient for our current requirements.
Sources and Uses of Cash
Our review of sources and uses of cash below refers to nominal amounts included in our consolidated statements of cash flows for years ended December 31, 2021, 2022, and 2023.
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Our primary sources and uses of cash during the years ended December 31, 2021, 2022, and 2023 were as follows:
| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (in millions of Dollars) | ||||||||||||
| Operating Activities |
||||||||||||
| Consolidated net income |
778 | 885 | 199 | |||||||||
| Discontinued operations |
(39 | ) | 324 | — | ||||||||
| Net income from continuing operations |
817 | 561 | 199 | |||||||||
| Adjustments to the cash flow other than changes in working capital |
1,826 | 1,979 | 2,887 | |||||||||
| Changes in working capital, excluding income taxes |
(143 | ) | (390 | ) | 192 | |||||||
| Cash flows provided by operating activities from continuing operations |
2,500 | 2,150 | 3,278 | |||||||||
| Interest expense and income taxes paid |
(694 | ) | (681 | ) | (1,119 | ) | ||||||
| Net cash flows provided by operating activities from continuing operations |
1,806 | 1,469 | 2,159 | |||||||||
| Net cash flows provided by operating activities from discontinued operations |
37 | 6 | — | |||||||||
| Net cash flows provided by operating activities after interest and income taxes |
1,843 | 1,475 | 2,159 | |||||||||
| Investing Activities |
||||||||||||
| Purchase of property, machinery and equipment, net |
(776 | ) | (909 | ) | (968 | ) | ||||||
| Acquisition of intangible assets, net |
(192 | ) | (151 | ) | (207 | ) | ||||||
| Disposal (acquisition) of subsidiaries, net |
122 | 341 | (189 | ) | ||||||||
| Proceed from the sale of emission allowances |
600 | — | — | |||||||||
| Non-current assets and others, net |
(10 | ) | (12 | ) | 24 | |||||||
| Net cash flows used in investing activities from continuing operations |
(256 | ) | (731 | ) | (1,340 | ) | ||||||
| Net cash flows used in investing activities from discontinued operations |
(17 | ) | (1 | ) | — | |||||||
| Net cash flows used in investing activities |
(273 | ) | (732 | ) | (1,340 | ) | ||||||
| Financing Activities |
||||||||||||
| Proceeds from new debt instruments |
3,960 | 2,006 | 2,938 | |||||||||
| Debt repayments |
(5,897 | ) | (2,420 | ) | (3,840 | ) | ||||||
| Issuance of subordinated notes |
994 | — | 992 | |||||||||
| Other financial obligations, net |
(288 | ) | (197 | ) | (274 | ) | ||||||
| Own shares repurchase program |
— | (111 | ) | — | ||||||||
| Share in trust for future deliveries under share-based compensation |
— | (36 | ) | (45 | ) | |||||||
| Changes in non-controlling interests and repayment of perpetual debentures |
(447 | ) | (14 | ) | (62 | ) | ||||||
| Derivative financial instruments |
(41 | ) | 34 | (189 | ) | |||||||
| Coupons on subordinated notes and coupons on perpetual debentures |
(24 | ) | (51 | ) | (120 | ) | ||||||
| Non-current liabilities, net |
(109 | ) | (172 | ) | (101 | ) | ||||||
| Net cash flows used in financing activities |
(1,852 | ) | (961 | ) | (701 | ) | ||||||
| Increase (decrease) in cash and cash equivalents from continuing operations |
(302 | ) | (223 | ) | 118 | |||||||
| Increase in cash and cash equivalents from discontinued operations |
20 | 5 | — | |||||||||
| Foreign currency translation effect on cash |
(55 | ) | 100 | 11 | ||||||||
| Cash and cash equivalents at beginning of period |
950 | 613 | 495 | |||||||||
| Cash and cash equivalents at end of period |
613 | 495 | 624 | |||||||||
Year ended December 31, 2023
During 2023, excluding the positive foreign currency effect of our balances of cash and cash equivalents generated during the period of $11 million, there was an increase in cash and cash equivalents from continuing operations of $118 million. This increase was the result of our net cash flows provided by operating activities from continuing
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operations, which, after interest expense and income taxes paid in cash of $1,119 million, amounted to $2,159 million, partially offset by our net cash flows used in investing activities from continuing operations of $1,340 million and our net cash flows used in financing activities of $701 million.
For the year ended December 31, 2023, our net cash flows provided by operating activities included cash flows generated in working capital, excluding income taxes, of $192 million. This amount was primarily comprised of cash flows provided from other accounts payable and accrued expenses of $175 million, cash flows provided by inventories of $68 million and cash flows provided by other accounts receivable and other assets of $21 million. Thus, the aggregate amount of cash flows provided by operating activities amounted to $264 million. Cash flows provided by operating activities was partially offset by cash flows used in trade accounts payable of $45 million and cash flows used in trade accounts receivables of $27 million. Thus, the aggregate amount of cash flows resulted in $72 million. During the year ended December 31, 2023, our cash flows provided by operating activities from continuing operations before interest expense and income tax paid of $3,278 million increased by 52% or $1,128 million, compared to 2022. This increase was mainly the result of (i) a decrease in working capital of $582 million in 2023, compared to 2022, which was due to a decrease in inventories of $532 million resulting from lower levels of pet coke and coal inventories, (ii) a decrease in trade accounts receivable of $181 million, which resulted from higher collections, mainly in the United States, Israel and the United Kingdom, (iii) an increase in other accounts payable and accrued expenses of $160 million and (iv) a decrease in other accounts receivable and other assets of $44 million, partially compensated by a decrease in trade accounts payable of $335 million, which resulted from a decrease of spending, and in the United States higher payments along with lower purchases, in addition to higher primary fuels shipments in 2022 compared to 2023.
Considering the reasons mentioned above, during 2023, the increase in cash and cash equivalents was the result of our net cash flows provided by operating activities from continuing operations after interest and income taxes paid in cash of $1,119 million. Our net cash flows provided by operating activities from continuing operations after interest and income taxes paid in cash, amounted to $2,159 million and was partially offset by (i) our net cash flows used in investing activities from continuing activities of $1,340 million, which was primarily comprised of purchase of property, machinery and equipment, net, acquisition of intangible assets, and acquisition (disposal) of subsidiaries, net, for an aggregate amount of $1,364 million, also partially offset by non-current assets and others, net, for an amount of $24 million; and (ii) our net cash flows used in financing activities of $701 million, which include debt repayments, other financial obligations, net, changes in non-controlling interest, coupons on subordinated notes, shares in trust for future deliveries under share-based compensation, derivative financial instruments and non-current liabilities, net, for an aggregate amount of $4,631 million, partially offset by proceeds from new debt instruments and issuance of 9.125% Subordinated Notes for an aggregate amount of $3,930 million.
Year ended December 31, 2022
During 2022, excluding the positive foreign currency effect of our balances of cash and cash equivalents generated during the period of $100 million, there was a decrease in cash and cash equivalents from continuing operations of $223 million. This decrease was the result of our net cash flows used in financing activities of $961 million and our net cash flows used in investing activities from continuing operations of $731 million, partially offset by our net cash flows provided by operating activities from continuing operations, which, after interest expense and income taxes paid in cash of $681 million, amounted to $1,469 million.
For the year ended December 31, 2022, our net cash flows provided by operating activities included cash flows applied in working capital, excluding income taxes, of $390 million, which was primarily comprised of cash flows used in trade receivables of $208 million, cash flows used in inventories of $464 million and cash flows used in other accounts receivables and other assets, net of $23 million, for an aggregate amount of cash flows used of $695 million.
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Cash flows used in operating activities was partially offset by cash flows provided from trade payables of $290 million and cash flows provided from other accounts payable and accrued expenses of $15 million for an aggregate amount of cash flows provided by operating activities of $305 million. During the year ended December 31, 2022, our cash flows provided by operating activities from continuing operations before interest expense and income tax paid of $2,150 million decreased by 14% or $350 million, compared to the previous year. This reduction was mainly the result of (i) an increase in working capital of $247 million in 2022, compared to 2021, which was due to an increase in trade accounts receivable of $188 million, which resulted from greater sales in 2022 in comparison to 2021 after the COVID-19 Pandemic, (ii) an increase in inventories of $123 million resulting from stocking of critical supplies and spare parts compared to 2021, which resulted from supply chain delays in the aftermath of the COVID-19 Pandemic, partially compensated by a decrease in other accounts payable and accrued expenses net of other accounts receivable and other assets of $64 million.
Considering the reasons mentioned above, during 2022, the decrease in cash and cash equivalents was the result of (i) our net cash flows used in financing activities of $961 million, which include debt repayments, other financial obligations, net, changes in non-controlling interest, coupons on subordinated notes, share repurchase program, shares in trust for future deliveries under share-based compensation and non-current liabilities, net, for an aggregate amount of $3,001 million, partially offset by proceeds from new debt instruments and derivative financial instruments for an aggregate amount of $2,040 million; and (ii) our net cash flows used in investing activities from continuing activities of $731 million, which was primarily comprised of purchase of property, machinery and equipment, net, acquisition of intangible assets, and non-current assets and others, net, for an aggregate amount of $1,072 million partially offset by proceeds from disposal of subsidiaries and assets held for sale, net, for an amount of $341 million, partially offset by our net cash flows provided by operating activities from continuing operations after interest and income taxes paid in cash of $681 million, amounted to $1,469 million.
Year ended December 31, 2021
During 2021, excluding the negative foreign currency effect of our balances of cash and cash equivalents generated during the period of $55 million, there was a decrease in cash and cash equivalents from continuing operations of $302 million. This decrease was the result of our net cash flows used in financing activities of $1,852 million and our net cash flows used in investing activities from continuing operations of $256 million, partially offset by our net cash flows provided by operating activities from continuing operations, which, after interest expense and income taxes paid in cash of $694 million, amounted to $1,806 million.
For the year ended December 31, 2021, our net cash flows provided by operating activities included cash flows applied in working capital, excluding income taxes, of $143 million, which was primarily comprised of cash flows used in trade receivables of $20 million, cash flows used in inventories of $341 million and cash flows used in other accounts payable and accrued expenses of $166 million, for an aggregate amount of $527 million. Cash flows used in operating activities was partially offset by cash flows provided from other accounts receivable and other assets of $94 million and cash flows provided from trade accounts payables of $290 million for an aggregate amount of cash flows provided by operating activities of $384 million. During the year ended December 31, 2021, our cash flows provided by operating activities from continuing operations before interest expense and income tax paid of $2,500 million increased by 6% or $152 million, compared to the previous year. This increase was mainly the result of an increase of net income from continuing operations of $2,163 million, partially compensated by an increase in working capital of $342 million in 2021, compared to 2020, which was due to (i) an increase in inventories of $365 million resulting from higher levels in all regions, (ii) an increase in trade accounts receivable of $45 million, which resulted from higher sales across the regions, and (iii) an increase in other accounts payable and accrued expenses of $318 million, partially compensated by an increase in trade accounts payable of $270 million, which resulted from payment holds in December 2019 that were paid during the first quarter of 2022, mainly in the United States.
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Considering the reasons mentioned above, during 2021, the decrease in cash and cash equivalents was the result of (i) our net cash flows used in financing activities of $1,852 million, which include debt repayments, other financial obligations, net, changes in non-controlling interest and repayment of perpetual debentures, derivative financial instruments, coupons on Perpetual Debentures and subordinated notes, and non-current liabilities, net, for an aggregate amount of $6,806 million, partially offset by proceeds from new debt instruments and issuance of $1,000 million of our 5.125% subordinated notes with no fixed maturity (the “5.125% Subordinated Notes” and, together with the 9.125% Subordinated Notes, the “Subordinated Notes”) for an aggregate amount of $4,954 million; and (ii) our net cash flows used in investing activities from continuing activities of $256 million, which was primarily comprised of purchase of property, machinery and equipment, net, acquisition of intangible assets, and non-current assets and others, net, for an aggregate amount of $978 million partially offset by proceeds from disposal of subsidiaries and assets held for sale, net, and sale of emission allowance for an aggregate amount of $722 million, partially offset by our net cash flows provided by operating activities from continuing operations after interest and income taxes paid in cash of $694 million, amounted to $1,806 million.
As of December 31, 2023, we had the following lines of credit, of which the only committed portion refers to the revolving credit facility under the Amended 2021 Credit Agreement, at annual interest rates ranging between 5.36% and 6.56%, depending on the negotiated currency:
| Lines of Credit | Available | |||||||
| (in millions of Dollars) | ||||||||
| Other lines of credit in foreign subsidiaries |
401 | 274 | ||||||
| Other lines of credit from banks |
774 | 774 | ||||||
| Revolving credit facility Amended 2021 Credit Agreement |
2,000 | 1,400 | ||||||
| 3,175 | 2,448 | |||||||
As of December 31, 2023, we had $1,400 million available in our committed revolving credit tranche under the Amended 2021 Credit Agreement. In connection with other lines of credit from banks, such uncommitted amounts are subject to the lenders’ availability. We expect that this, in addition to our proven capacity to continually refinance and replace short-term obligations, will enable us to meet any liquidity risk in the short term.
We have in the past (see “Presentation of Financial Information,” “Item 3—Key Information,” “Item 5—Operating and Financial Review and Prospects—Results of Operations—Selected Consolidated Financial Information,” “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Relevant Transactions Related to Our Indebtedness in 2023,” and “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness”) and may from time to time in the future, subject to restrictions under our debt agreements and instruments, and depending upon market conditions and other factors our senior management deems relevant, refinance or repurchase our debt in privately negotiated or open market transactions, by tender offer or otherwise, at prices and on terms we deem appropriate (which may be at, above or below par), using cash generated from our operating activities or from the proceeds of asset sales or debt or capital transactions.
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Capital Expenditures
Our capital expenditures incurred for the years ended December 31, 2022 and 2023 and our expected capital expenditures during the year ended December 31, 2024, which include an allocation to 2024 of a portion of our total future committed amount, are as follows:
| Actual for the Year Ended December 31, |
Estimated for the Year Ended December 31, |
|||||||||||
| 2022 | 2023 | 2024 | ||||||||||
| (in millions of Dollars) | ||||||||||||
| Mexico |
265 | 264 | 311 | |||||||||
| United States |
551 | 521 | 549 | |||||||||
| EMEAA: |
||||||||||||
| United Kingdom |
74 | 107 | 67 | |||||||||
| France |
57 | 44 | 40 | |||||||||
| Germany |
33 | 47 | 38 | |||||||||
| Poland |
33 | 44 | 39 | |||||||||
| Spain |
27 | 38 | 58 | |||||||||
| Philippines |
72 | 85 | 116 | |||||||||
| Israel |
37 | 41 | 66 | |||||||||
| Rest of EMEAA |
55 | 75 | 68 | |||||||||
| SCA&C: |
||||||||||||
| Colombia |
45 | 76 | 121 | |||||||||
| Panama |
19 | 13 | 10 | |||||||||
| Caribbean TCL |
16 | 18 | 52 | |||||||||
| Dominican Republic |
18 | 16 | 20 | |||||||||
| Rest of SCA&C |
20 | 25 | 36 | |||||||||
| Others |
40 | 3 | 9 | |||||||||
| Total consolidated |
1,362 | 1,417 | 1,600 | |||||||||
| Of which: |
||||||||||||
| Expansion capital expenditures |
474 | 420 | 1,000 | |||||||||
| Base capital expenditures |
888 | 997 | 600 | |||||||||
For the years ended December 31, 2022 and 2023 we recognized $1,362 million and $1,417 million in capital expenditures from our continuing operations, respectively. As of December 31, 2023, in connection with our significant projects, we had capital expenditure commitments of $1,600 million, an amount that is expected to be incurred during 2024, based on the evolution of the related projects.
Our Indebtedness
As of December 31, 2023, our indebtedness as presented in the statement of financial position which does not include $2,000 million aggregate principal amount of Subordinated Notes, amounted to $8,164 million (principal amount $8,210 million, excluding deferred issuance costs) of total debt plus other financial obligations. Of our total debt plus other financial obligations, 12% was current (including current maturities of non-current debt) and 88% was non-current. As of December 31, 2023, 70% of our total debt plus other financial obligations was Dollar-denominated, 15% was Euro-denominated, 2% was Pound Sterling-denominated, 10% was Mexican Peso-denominated, 2% was Philippine Peso-denominated and 1% was denominated in other currencies. See notes 17.1 and 17.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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On July 19, 2017, Cemex, S.A.B. de C.V. and certain of its subsidiaries entered into the a facilities agreement for an amount in different currencies equivalent to $4.1 billion (in aggregate) (the “2017 Facilities Agreement”), the proceeds of which were used to refinance in full the indebtedness incurred under a credit agreement entered into with nine banks in 2014 and other debt repayment obligations, allowing us to increase the then average life of our syndicated bank debt to approximately 4.3 years with a final maturity in July 2022. The indebtedness incurred under the 2017 Facilities Agreement ranked equally in right of payment with certain of our other indebtedness, pursuant to the terms of an intercreditor agreement, dated September 17, 2012, among Cemex, S.A.B. de C.V. and certain of its subsidiaries named therein, Citibank Europe PLC, UK Branch (formerly Citibank International plc), as facility agent, the financial institutions, noteholders and other entities named therein and Wilmington Trust (London) Limited, as security agent (as amended and restated from time to time, the “Intercreditor Agreement”). At the time, Cemex, S.A.B. de C.V. and certain of its subsidiaries pledged collateral and all proceeds thereof to secure our payment obligations under the 2017 Facilities Agreement, our then-senior secured notes and under several other of our financing arrangements (the “Collateral”). The subsidiaries whose shares made up the Collateral collectively own, directly or indirectly, substantially all our operations worldwide. As of December 31, 2023, the Collateral has been released and the Intercreditor Agreement is no longer in effect, as described below.
On April 2, 2019, an amendment and restatement agreement to the 2017 Facilities Agreement was executed to, among other things, (i) extend the July 2020 and January 2021 repayment installments for a significant portion of the term loan tranches by three years; (ii) delay the scheduled tightening of the consolidated financial leverage ratio limit by one year; and (iii) make adjustments for the implementation of IFRS 16 and to compensate for its effects on certain financial ratios (together, the “April 2019 Facilities Agreement Amendments”).
On November 4, 2019, we amended and restated by an amendment and restatement agreement the 2017 Facilities Agreement. These amendments (together, the “November 2019 Facilities Agreement Amendments”) included: amendments providing for an additional basket of up to $500 million that could only be used for buy-backs of shares or securities that represented shares of Cemex, S.A.B. de C.V.; amendments providing for a new allowance for disposals of non-controlling interest in subsidiaries that are not obligors (as defined in the 2017 Facilities Agreement) under the 2017 Facilities Agreement of up to $100 million per calendar year; amendments relating to the implementation of corporate reorganizations in Mexico, Europe and in the Trinidad Cement Group (as defined in the 2017 Facilities Agreement); and amendments to the consolidated leverage ratio and the consolidated coverage ratio (as defined and calculated in the 2017 Facilities Agreement) to increase Cemex’s flexibility.
On May 22, 2020, we amended and restated by an amendment and restatement agreement the 2017 Facilities Agreement. These amendments (together, the “May 2020 Facilities Agreement Amendments”) included: (a) modifications to the limits of the consolidated coverage ratio and the consolidated leverage ratio; (b) modifications to the applicable margin over LIBOR, or EURIBOR in relation to any Euro loan, depending on the consolidated leverage ratio, to accommodate for the increased leverage limits; and (c) certain temporary or circumstance-based limitations on our ability to execute certain capital expenditures, acquisitions, share buybacks and the granting of loans to third parties.
On October 13, 2020, we further amended and restated by an amendment and restatement agreement the 2017 Facilities Agreement. As a result of these amendments (together, the “October 2020 Facilities Agreement Amendments”), we extended $1.1 billion of term loan maturities by three years, from 2022 to 2025, and $1.1 billion of commitments under the revolving credit facility by one year from 2022 to 2023. In addition, on October 15, 2020, we prepaid $530 million corresponding to the July 2021 amortization under the new term loan facilities created pursuant to the October 2020 Facilities Agreement Amendments.
Under the October 2020 Facilities Agreement Amendments, we also redenominated $313 million of previous Dollar exposure under the term loans that were part of the 2017 Facilities Agreement to Mexican Pesos, as well as $82
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million to Euros. Aside from the new Mexican Pesos tranche that was created under the 2017 Facilities Agreement, which included a lower interest rate margin grid, pricing for all other tranches under the 2017 Facilities Agreement remained unchanged.
Following the October 2020 Facilities Agreement Amendments, certain tranches under the 2017 Facilities Agreement amounting to $3.2 billion incorporated five sustainability-linked metrics, including reduction of net CO2 emissions and use of power from green energy, among other indicators. Annual performance with respect to these five metrics could result in a total adjustment of the interest rate margin under these tranches of up to plus or minus five basis points.
Along with other technical amendments, under the October 2020 Facilities Agreement Amendments, we also tightened our consolidated leverage ratio covenant under the 2017 Facilities Agreement from 7.00:1 to a limit of 6.25:1 for the periods ending on September 30, 2020, December 31, 2020 and March 31, 2021. In addition, on December 17, 2020, commitments were increased by $93 million and $43 million under the new term loan facilities and the new revolving credit facility created pursuant to the October 2020 Facilities Agreement Amendments, respectively. Subsequently, we cancelled commitments in those same amounts under the term loan facilities and the revolving credit facility already existing before the October 2020 Facilities Agreement Amendments. Following the aforementioned increase and cancellation, the amount of commitments under the 2017 Facilities Agreement remained effectively unchanged, but maturity of the aforementioned amounts were effectively extended from 2022 to 2025 (for the term loan facility commitments) and to 2023 (for the revolving credit facility commitments). Additionally, effective December 24, 2020, an additional $14 million of commitments under the revolving facility existing prior to the October 2020 Facilities Agreement Amendments were cancelled.
On October 5, 2021, we further amended by an amendment agreement the 2017 Facilities Agreement. As a result of these amendments (the “October 2021 Facilities Agreement Amendments” and, together with the October 2020 Facilities Agreement Amendments, the April 2019 Facilities Agreement Amendments, the November 2019 Facilities Agreement Amendments and the May 2020 Facilities Agreement Amendments, the “Facilities Agreement Amendments”), the 2017 Facilities Agreement was modified so that when at any time Cemex reported a Consolidated Leverage Ratio (as calculated pursuant to the Facilities Agreement Amendments) of 3.75x or less for two consecutive quarterly periods, the automatic release of the liens on the Collateral would be triggered. The terms of the indentures governing Cemex’s then-senior secured notes, which were also secured by liens on the Collateral, also contain an automatic release of such liens when the Collateral is released under the 2017 Facilities Agreement.
As Cemex reported a Consolidated Leverage Ratio of 3.75x or less for the quarterly periods ending on March 31, 2021 and June 30, 2021, Cemex complied with all requirements for the automatic release of the liens on the Collateral securing its indebtedness under the 2017 Facilities Agreement and, in turn, its then-senior secured notes that benefited from the same Collateral. The Collateral was released on October 6, 2021 and, at the time, consisted of the shares of COM, Cemex España and CIH. The then-senior secured notes that previously benefitted from the Collateral were the 2.750% Euro-denominated Notes due 2024, the March 2026 Euro Notes, the November 2029 Dollar Notes, the June 2027 Dollar Notes, the September 2030 Dollar Notes, and the July 2031 Dollar Notes. As of December 31, 2023, the June 2027 Dollar Notes had been fully redeemed.
Additionally, the aforementioned Collateral release caused the automatic termination of the Intercreditor Agreement governing the rights of certain of Cemex and its subsidiaries’ creditors in accordance with its terms.
Amended 2021 Credit Agreement
On October 29, 2021, Cemex, S.A.B. de C.V. entered into a New York-law credit agreement for up to $3.25 billion to refinance indebtedness (including the 2017 Facilities Agreement) and general corporate purposes (the “Original 2021 Credit Agreement”). Upon closing of the Original 2021 Credit Agreement on November 8, 2021, we fully repaid all
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outstanding indebtedness under the 2017 Facilities Agreement, which amounted to $1.9 billion in different currencies. Following this repayment, the 2017 Facilities Agreement is no longer in effect. The funds used to repay the 2017 Facilities Agreement were sourced from the Original 2021 Credit Agreement, which was closed with 21 financial institutions participating as lenders.
On June 5, 2023 the Original 2021 Credit Agreement was amended to provide for Secured Overnight Financing Rate (“SOFR”) as the replacement benchmark rate for LIBOR, such that future SOFR-based loans will accrue interest as Term SOFR plus (i) a 0.11448%, 0.26161%, or 0.42826% per annum spread for one, three, and six month interest periods, respectively and (ii) a margin between 100 and 175 basis points, depending on Cemex’s Consolidated Leverage Ratio (as defined in the Original 2021 Credit Agreement).
On October 30, 2023, Cemex, S.A.B. de C.V. signed and closed an amendment to the Original 2021 Credit Agreement to reduce the term loans by $500 million and increase the revolving commitments by $250 million under the Original 2021 Agreement, and to extend the maturity of the credit agreement to October 2028. $500 million in term loans were prepaid shortly before the Amended 2021 Credit Agreement became effective.
The main terms and conditions of the Amended 2021 Credit Agreement are summarized as follows:
| • | Final maturity in October 2028; |
| • | $1 billion in Term Loans (as defined in the Amended 2021 Credit Agreement), amortizing in five equal semi-annual payments starting in October 2026; |
| • | $2 billion of commitments under a Revolving Facility (as defined in the Amended 2021 Credit Agreement) maturing in October 2028; |
| • | All loans under the Amended 2021 Credit Agreement bear interest at the same rate, including an applicable margin over the benchmark interest rate of between 100 and 175 basis points for SOFR-based loans (as defined in the Amended 2021 Credit Agreement), depending on Cemex’s Consolidated Leverage Ratio (as defined in the Amended 2021 Credit Agreement), with such margin being subject to positive or negative adjustments in an aggregate amount not to exceed five basis points, based on certain sustainability-linked performance metrics from the prior annual period; |
| • | Financial covenants consistent with an investment grade capital structure, with a maximum leverage ratio of 3.75x throughout the life of the loan, and a minimum interest coverage ratio of 2.75x; and |
| • | Guaranteed by the Refinancing Guarantors. |
The Amended 2021 Credit Agreement is denominated exclusively in Dollars and includes an interest rate margin grid that is about 25 basis points lower on average than that of the previously existing 2017 Facilities Agreement. Furthermore, the Amended 2021 Credit Agreement is issued under the SLFF, which is aligned to the company’s “Future in Action” program and its ultimate vision of a carbon- neutral economy. The annual performance in respect of the three metrics referenced in the Amended 2021 Credit Agreement, which are aligned with those provided for in the SLFF, may result in an adjustment of the interest rate margin of up to plus or minus five basis points, in line with other sustainability-linked loans from investment grade rated borrowers.
As of December 31, 2023, we reported an aggregate amount of outstanding debt of $1,600 million under the Amended 2021 Credit Agreement. As of December 31, 2023, we had $1,400 million of availability under the committed revolving credit tranche under the Amended 2021 Credit Agreement.
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Mexican Peso Banorte Agreement
On December 20, 2021, Cemex, S.A.B. de C.V. entered into the Mexican Peso Banorte Agreement for a principal amount of Ps 5,231 million under terms and conditions substantially similar to those of the Original 2021 Credit Agreement.
On December 6, 2023 and December 13, 2023, Cemex, S.A.B. de C.V. signed and closed, respectively, a refinancing of the Mexican Peso Banorte Agreement to extend its maturity to 2028. The Mexican Peso Banorte Agreement now provides for a 5-year amortizing Ps 6,000 million term loan with an interest rate margin dependent on leverage ratio slightly lower than that applicable prior to the refinancing. Other terms and conditions are substantially similar to those of the Amended 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. The borrowing under the Mexican Peso Banorte Agreement is also issued under the SLFF.
As of December 31, 2023, we reported an aggregate amount of outstanding debt of $354 million under the Mexican Peso Banorte Agreement and we had drawn the entirety of the only term loan thereunder for the then Mexican Peso equivalent of $255 million.
2022 EUR Credit Agreement
On October 7, 2022, Cemex, S.A.B. de C.V. entered into and closed the 2022 EUR Credit Agreement for €500 million for general corporate purposes (including to refinance indebtedness). The 2022 EUR Credit Agreement consists of a 3-year non-amortizing term loan facility. The 2022 EUR Credit Agreement is denominated exclusively in Euros, and the loans bear interest at a rate per annum equal to the EURIBOR rate plus a margin ranging from 115 basis points to 190 basis points, depending on our leverage ratio. Furthermore, the borrowing under the 2022 EUR Credit Agreement is also issued under the SLFF. As of December 31, 2023, other terms and conditions of the 2022 EUR Credit Agreement were substantially similar to those of the Original 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. As of December 31, 2023, we had drawn the entirety of the only term loan under the 2022 EUR Credit Agreement for the then Euro equivalent of $498 million and we reported an aggregate amount of outstanding debt of $552 million under the 2022 EUR Credit Agreement.
See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Refinancing of 2022 EUR Credit Agreement.”
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If we are unable to comply with our upcoming principal maturities under our indebtedness, or refinance or extend maturities of our indebtedness, our debt could be accelerated. Acceleration of our debt would have a material adverse effect on our financial condition. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Indebtedness and Certain Other Obligations—We have a substantial amount of debt and other financial obligations. If we are unable to secure refinancing on favorable terms or at all, we may not be able to comply with our payment obligations upon their maturity. Our ability to comply with our principal maturities and financial covenants may depend on us implementing certain strategic initiatives, including, but not limited to, making asset sales, and there is no assurance that we will be able to implement any such initiatives or execute such sales, if needed, on terms favorable to us or at all.” Some of our subsidiaries have issued or provided guarantees of certain of our indebtedness, as indicated in the table below.
| The Notes, excluding the 2023 CEBURES |
Amended 2021 Credit Agreement |
2022 EUR Credit Agreement |
Mexican Peso Banorte Agreement |
2023 CEBURES |
||||||||||||||||
| $3,006 million (principal amount $3,020 million) |
$1,574 million (principal amount $1,600 million) |
$549 million (principal amount $552 million) |
$352 million (principal amount $354 million) |
$351 million (principal amount $354 million) |
||||||||||||||||
| Amount Outstanding as of December 31, 2023(1) |
||||||||||||||||||||
| Cemex, S.A.B. de C.V. |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Cemex Operaciones México, S.A. de C.V. |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Cemex Concretos, S.A. de C.V. |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Cemex Corp. |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| Cemex Innovation Holding Ltd |
✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
| (1) | Includes Notes that have been repurchased and are held by Cemex. |
In addition, as of December 31, 2023, (i) Cemex Materials LLC was a borrower of $151 million (principal amount $151 million) under an indenture which is guaranteed by Cemex Corp. and (ii) several of our other operating subsidiaries were borrowers under debt facilities or debt arrangements aggregating $245 million.
Most of our current outstanding indebtedness was incurred to finance our acquisitions and to finance our capital expenditure programs. Historically, we have addressed our liquidity needs (including funds required to make scheduled principal and interest payments, refinance debt, and fund working capital and planned capital expenditures) with operating cash flow, securitizations, borrowings under credit facilities, proceeds of debt and equity offerings and proceeds from asset sales.
If (i) monetary policies to reduce inflation fail or induce a recession, (ii) policies in the largest economies diverge, resulting in Dollar appreciation with negative cross-border effects, (iii) energy and food price shocks cause inflation to persist for longer and weigh on investment and productivity growth, raising additional roadblocks in the recovery path, (iv) a global tightening of financial conditions triggers widespread emerging market debt distress, (v) a resurgence of the COVID-19 pandemic, or any related COVID-19 strain, or new pandemic or epidemic, hinders growth, further impacting financial institutions extending maturities to companies that have our credit rating or that are leveraged similarly to us, which become more restrictive and our operating results worsen significantly, (vi) we are unable to complete debt or equity offerings, (vii) we are unable to consummate asset sales, (viii) the rapid growth of cryptocurrencies without clear regulation leads to financial instability with negative effects for the global economy, or (ix) the proceeds of any divestitures and/or our cash flow or capital resources prove inadequate, among other events, we could face liquidity problems and may not be able to comply with our upcoming principal payments under our indebtedness or refinance our indebtedness. If we are unable to comply with our upcoming principal maturities under
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our indebtedness, or refinance or extend maturities of our indebtedness, our debt could be accelerated. Acceleration of our debt would have a material adverse effect on our business and financial condition.
Historically, we and our subsidiaries have sought and obtained waivers and amendments to several of our debt instruments relating to a number of financial ratios or other terms and conditions. Our ability to comply with these ratios or other terms and conditions may be affected by current global economic conditions and volatility in foreign exchange rates and the financial and capital markets, including the effects of the COVID-19 or other pandemic and geopolitical risks, such as the conflict between Russia and Ukraine and ongoing conflicts in the Middle East, on the financial sector and the ability of our lenders to grant waivers or amendments to companies that have our credit rating or that are highly leveraged like us. We may need to seek waivers or amendments in the future. However, we cannot assure you that any future waivers or amendments, if requested, will be obtained. If we or our subsidiaries are unable to comply with the provisions of our debt instruments and are unable to obtain a waiver or amendment, the indebtedness outstanding under such debt instruments could be accelerated. Acceleration of these debt instruments would have a material adverse effect on our financial condition.
Relevant Transactions Related to Our Indebtedness in 2023
The following is a description of our most important transactions related to our indebtedness in 2023:
| • | On June 5, 2023, the Original 2021 Credit Agreement was amended to provide for Term SOFR as the replacement benchmark rate for LIBOR. |
| • | On June 5, 2023, Cemex, S.A.B. de C.V. fully redeemed the June 2027 Dollar Notes. |
| • | On October 5, 2023, Cemex, S.A.B. de C.V. issued the 2023 CEBURES for an aggregate principal amount of Ps 6,000 million, consisting of the Floating Interest Rate Notes and the Fixed Interest Rate Notes. The 2023 CEBURES were issued under the SLFF. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Reopening and Placement of 2023 CEBURES.” |
| • | On October 30, 2023, Cemex, S.A.B. de C.V. entered into and closed the Amended 2021 Credit Agreement. Debt under the Amended 2021 Credit Agreement was issued under the SLFF. |
| • | On December 6, 2023 we signed, and on December 13, 2023 we successfully closed, our refinancing of the Mexican Peso Banorte Agreement, extending the maturity to 2028. Debt under the refinanced Mexican Peso Banorte Agreement was issued under the SLFF. |
For a description of the Credit Agreements and the Notes, see “Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Our Indebtedness.”
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Our Other Financial Obligations
Other financial obligations in the consolidated statement of financial position as of December 31, 2022 and 2023 are detailed as follows:
| 2022 | 2023 | |||||||||||||||||||||||
| Short-term | Long-term | Total | Short-term | Long-term | Total | |||||||||||||||||||
| (in millions of Dollars) | ||||||||||||||||||||||||
| Leases |
$ | 258 | $ | 918 | $ | 1,176 | $ | 272 | $ | 986 | $ | 1,258 | ||||||||||||
| Liabilities secured with accounts receivable |
678 | — | 678 | 678 | — | 678 | ||||||||||||||||||
| $ | 936 | $ | 918 | $ | 1,854 | $ | 950 | $ | 986 | $ | 1,936 | |||||||||||||
Leases
We have several operating and administrative assets under lease contracts. We apply the recognition exemption for short-term leases and leases of low-value assets. See notes 15.2 and 17.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Changes in the balance of lease financial liabilities during 2021, 2022, and 2023 were as follows:
| (in millions of Dollars) |
2021 | 2022 | 2023 | |||||||||
| Lease financial liability at beginning of year |
$ | 1,260 | $ | 1,176 | $ | 1,176 | ||||||
| Additions from new leases |
227 | 296 | 341 | |||||||||
| Reductions from payments |
(313) | (276) | (256) | |||||||||
| Cancellations and liability remeasurements |
27 | 7 | (24) | |||||||||
| Foreign currency translation and accretion effects |
(25) | (27) | 21 | |||||||||
| Lease financial liability at end of year |
$ | 1,176 | $ | 1,176 | $ | 1,258 | ||||||
As of December 31, 2023, the maturities of non-current lease financial liabilities are as follows:
| (in millions of Dollars) |
Total | |||
| 2025 |
181 | |||
| 2026 |
144 | |||
| 2027 |
108 | |||
| 2028 |
77 | |||
| 2029 and thereafter |
476 | |||
| 986 | ||||
Total cash outflows for leases including the interest expense portion as disclosed in note 8.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report in 2021, 2022, and 2023 were $381 million, $342 million and $331 million, respectively.
Our Receivables Financing Arrangements
Our subsidiaries in Mexico, the United States, France and the United Kingdom are parties to sales of trade accounts receivable programs with financial institutions, referred to as securitization programs. As of December 31, 2022 and 2023, trade accounts receivable included receivables of $828 million and $848 million, respectively. Under these programs, our subsidiaries effectively surrender control associated with the trade accounts receivable sold and there is no guarantee or obligation to reacquire the assets. Nonetheless, in such programs, our subsidiaries retain certain residual interest in the programs and/or maintain continuing involvement with the accounts receivable. Therefore, the
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trade accounts receivable sold were not removed from the statement of financial position, and the funded amounts were recognized within the line item “Other financial obligations” and the difference in each year against the trade receivables sold was maintained as reserves. Trade accounts receivable qualifying for sale exclude amounts over a certain number of days past due or concentrations over certain limits to any customer, according to the terms of the programs. The portion of the accounts receivable sold maintained as reserves amounted to $150 million and $170 million as of December 31, 2022 and 2023, respectively. Therefore, the funded amount to us was $678 million and $678 million as of December 31, 2022 and 2023, respectively. The discount granted to the acquirers of the trade accounts receivable is recorded as financial expense and amounted to $11 million in 2021, $24 million in 2022, and $52 million in 2023. Our securitization programs are usually negotiated for periods of one to two years and are usually renewed at their maturity. See notes 10 and 17.2 to our 2023 audited consolidated financial statements included elsewhere in this annual report. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness.”
Perpetual Debentures
We defined the Perpetual Debentures, collectively, as the (i) Dollar-denominated 6.196% Fixed-to-Floating Rate Callable Perpetual Debentures issued by C5 Capital (SPV) Limited, (ii) Dollar-denominated 6.640% Fixed-to-Floating Rate Callable Perpetual Debentures issued by C8 Capital (SPV) Limited, (iii) Dollar-denominated 6.722% Fixed-to-Floating Rate Callable Perpetual Debentures issued by C10 Capital (SPV) Limited and (iv) Euro-denominated 6.277% Fixed-to-Floating Rate Callable Perpetual Debentures issued by C10-EUR Capital (SPV) Limited. Unless the context otherwise requires, when we refer to the Perpetual Debentures, we also include our dual-currency notes that underlie the Perpetual Debentures.
In June 2021, considering the issuance of the 5.125% Subordinated Notes, we redeemed all series of our outstanding Perpetual Debentures and, in each case, an equal aggregate amount of underlying dual-currency notes. See note 21.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Issuance costs, as well as the interest expense, which is accrued based on the principal amount of the Perpetual Debentures, were included within “Other equity reserves” and represented expenses of $11 million in 2021.
Subordinated Notes
On June 8, 2021, we issued $1.0 billion aggregate principal amount of the 5.125% Subordinated Notes with no fixed maturity and subordinated to all senior obligations, and senior only to equity, in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. After issuance costs, we received $994 million. The net proceeds obtained were used to repurchase in full the balance then outstanding of perpetual debentures issued by subsidiaries and the repayment of debt. See note 21.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
On March 14, 2023, we issued $1.0 billion aggregate principal amount of the 9.125% Subordinated Notes with no fixed maturity and subordinated to all senior obligations, and senior only to equity, in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. After issuance costs, we received $992 million. The 9.125% Subordinated Notes are aligned with the GFF and the net proceeds obtained in the issuance should be applied to finance or refinance, in whole or in part, one or more new or existing Eligible Green Projects (“EGPs”) under its use-of-proceeds GFF. EGPs include, broadly, those related to pollution prevention and control, renewable energy, energy efficiency, clean transportation, sustainable water and wastewater management, and eco-efficient and/or circular economy adapted products, production technologies and processes.
Based on the above characteristics of the Subordinated Notes, included in contractual terms that are considered to be substantive, and legal considerations, under IAS 32, we concluded that the Subordinated Notes represent equity instruments and are classified within controlling interest stockholders’ equity. The classification as equity of the Subordinated Notes can be summarized as follows:
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The Subordinated Notes do not meet the definition of financial liability under IAS 32 considering that they include no contractual obligation: (i) to deliver cash or another financial asset to another entity; or (ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the issuer due to the following reasons:
| • | The noteholders have agreed to the deferral of interest and principal, given that, Cemex, S.A.B. de C.V. has the unilateral and unconditional right to perpetually defer the payment of principal and interest; |
| • | Except in the event of liquidation and provided all senior obligations are previously satisfied, Cemex, S.A.B. de C.V. controls at all times any payments to be made to the noteholders, even in the event of bankruptcy reorganization under either the laws of Mexico (Ley de Concursos Mercantiles) or U.S. bankruptcy laws (Chapter 11); and |
| • | The Subordinated Notes contractually evidence a residual interest in the assets of Cemex, S.A.B. de C.V. after deducting all of its liabilities. Provided all senior obligations are previously satisfied, the only requirement to settle the Subordinated Notes would be in liquidation, which is akin to an equity instrument under IAS 32. |
Coupon payments on the Subordinated Notes for the years ended December 31, 2021, 2022, and 2023 were included within “Other equity reserves” and amounted to $30 million, $54 million, and $120 million, respectively.
Stock Repurchase Program
Under Mexican law, Cemex, S.A.B. de C.V.’s shareholders are the only ones authorized to approve the maximum amount of resources that can be allocated to the stock repurchase program at any ordinary general shareholders’ meeting. Unless otherwise instructed by Cemex, S.A.B. de C.V.’s shareholders, we are not required to purchase any minimum number of shares pursuant to any such program.
In connection with Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meetings held on March 25, 2021, March 24, 2022 and March 23, 2023 proposals were approved to set the amount of $500 million or its equivalent in Mexican Pesos, each year and until the next ordinary general shareholders’ meeting, respectively, as the maximum amount of resources that Cemex, S.A.B. de C.V. can use to repurchase its own shares or securities that represent such shares. Cemex, S.A.B. de C.V.’s Board of Directors approved the policy and procedures for the operation of any stock repurchase program, and is authorized to determine the basis on which the repurchase and placement of such shares is made, appoint the persons who will be authorized to make the decision of repurchasing or replacing such shares and appoint the persons responsible to make the transaction and furnish the corresponding notices to authorities. The Board of Directors of Cemex, S.A.B. de C.V. and/or attorneys-in-fact or delegates designated in turn, or the persons responsible for such transactions, will determine, in each case, if the repurchase is made with a charge to stockholders’ equity as long as the shares belong to Cemex, S.A.B. de C.V. or with a charge to share capital if it is resolved to convert the shares into non-subscribed shares to be held in treasury. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.” We remain subject to certain restrictions regarding the repurchase of shares of our capital stock under the Credit Agreements and the indentures governing the outstanding Notes.
During 2021, Cemex did not use the repurchase program authorized at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 25, 2021. As a result, given that no repurchases of CPOs took place during 2021, Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 24, 2022 did not include on its agenda the cancellation of shares repurchased by Cemex, S.A.B. de C.V.
During 2022, under the repurchase programs authorized at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 25, 2021 and March 24, 2022, Cemex, S.A.B. de C.V. repurchased 220.6 million CPOs, at a weighted average price in Mexican Pesos equivalent to $0.5026 per CPO, which was equivalent to an amount of
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$110.9 million. The 662 million shares underlying CPOs repurchased during 2022 under such repurchase programs were proposed and subsequently approved for cancellation at Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting held on March 23, 2023.
During 2023, we did not use the repurchase programs authorized at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meetings held on March 24, 2022 and March 23, 2023. As a result, given that no repurchases of CPOs took place during 2023, Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 22, 2024 did not include on its agenda the cancellation of shares repurchased by Cemex, S.A.B. de C.V.
Research and Development, Patents, and Licenses, etc.
Headed by Cemex Global R&D, Research and Development is increasingly assuming a key role as it is recognized as an important element in creating value for our products, which is important to Cemex’s comprehensive pricing strategy for Cemex’s products. Through the development of innovative technologies, services, and commercial models, Cemex is leveraging its know-how-based assets to create an important differentiation in its offerings to customers in a broad range of markets with unique challenges. We focus on creating tangible value for our customers by creating products designed to make their business more profitable, but more importantly, as leaders in the industry, Cemex intends to elevate and accelerate the industry’s evolution in order to achieve greater sustainability, increase engagement in social responsibility and provoke an important leap in its technological advancement.
Cemex’s R&D initiatives are globally led, coordinated and managed by Cemex Global R&D, mainly based in Switzerland, which encompasses the areas of Global R&D, Intellectual Property Management, Cement Production Technology, Sustainability, Business Process & IT, Innovation, and Commercial & Logistics. We also have other laboratories and research locations in other parts of the world.
Cemex’s interaction and engagement with customers is growing and evolving through the exploration of novel interaction methodologies. Cemex’s R&D continues to develop and evolve in the area of customer centricity, but with complementary emphases on digitalization, development of digital-based business models, socio-urban dynamics, processes and technologies to mitigate CO2, and evaluating, adopting and proposing methodologies to engage specific types of customers who are the key decision makers in the very early stages of a construction project. Such methodologies are defining innovative approaches to involve and expose existing, potential, and future customers (e.g., Engineering & Architectural students) to our value-added products (e.g. Resilia, Insularis, Promptis, Hidratium, Pervia, Evolution, Neogem, D.fab) and constructions solutions. In other words, we aspire to create a unique customer experience in which the customer can see, touch, interact and even stimulate the modification of our technologies.
The areas of Global R&D, Cement Production Technology and Cemex Ventures are responsible for, among others, developing new products for our cement, ready-mix concrete, aggregate and admixture businesses as well as introduce novel and/or improved processing and manufacturing technology for all of Cemex’s core businesses. These areas also address energy efficiency of buildings, comfort, novel and more efficient construction systems. Additionally, the Global R&D and Sustainability areas collaborate to develop and propose construction solutions through consulting and the integration of the aforementioned technologies.
The Cement Production Technology and Sustainability areas are dedicated to, among others, operational efficiencies leading to cost reductions and enhancing our CO2 footprint and overall environmental impact through the usage of alternative or biomass fuels, the use of supplementary materials in substitution of clinker, as well as by managing our CO2 footprint, mitigating it and processing it in the context of a circular economy. For example, we have developed processes and products that allow us to reduce heat consumption in our kilns, which in turn reduces energy costs. Special emphasis is placed on defining parameters by which we communicate our efforts to preserve resources for the future, reduce our CO2 footprint and become more resilient with respect to our energy-related needs and potential supply constraints.
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With respect to energy, the R&D team is focusing on energy storage, which represents the largest and most near-term opportunity to accelerate renewable energy deployments and bring us closer to replacing fossil fuels as the primary resource to meet the world’s continual growth in energy demand. Global products/brands have been conceptualized and engineered to positively impact the jobsite safety, promote efficient construction practices, sensibly preserve natural resources vital to life, lower carbon footprint, and improve the quality of life in rapidly transforming cities.
Underlying Cemex’s R&D philosophy is a growing culture of global collaboration and coordination, where the innovation team identifies and promotes novel collaboration practices and mobilizes its adoption within Cemex. Getting closer and understanding our customers is a fundamental transformation within Cemex, and consequently the Commercial & Logistics area is carrying out research initiatives to better attend the needs of customers as well as identify key changes in our supply chain management that should enable us to bring products, solutions and services to our customers in the most cost-effective and efficient manner, using what we believe to be the best available technologies to design a new standard in digital commercial models. As of December 31, 2023, Cemex Global R&D actively participates in several research projects (ABSALT, LEILAC 2, DRIVE, FASTCARB, ECOCO2, CLYNGAS, REDOL, DESTINY, and BIOFLEXGEN), funded by the EU under the H2020 program or other programs, to develop new technologies aimed at reducing Cemex’s carbon footprint in Europe and other countries in which Cemex operates.
There are 11 laboratories supporting Cemex’s R&D efforts under a collaborative network. The laboratories are strategically located in close proximity to our plants and assist the operating subsidiaries with troubleshooting, optimization techniques and quality assurance methods. The laboratories located in Switzerland and Mexico are continually improving and consolidating our research and development efforts in the areas of cement, concrete, aggregates, admixtures, mortar and asphalt technology, sustainability, and energy management. In addition, Cemex Global R&D actively generates and registers patents and pending applications in many of the countries in which Cemex operates. Patents and trade secrets are managed strategically to achieve important technology lock-ins associated with Cemex technology.
Our information technology divisions develop information management systems and software relating to cement and ready-mix concrete operational practices, automation, and maintenance. These systems have helped us to better serve our clients with respect to purchasing, delivery, and payment. More importantly, thanks to the activities of the Business Process and IT departments, Cemex is continuously improving and innovating its business processes to adapt them to the dynamically evolving markets to better serve Cemex’s needs. The launch of Cemex Go and its deployment throughout our operations is a testament to our commitment to evolve our digital commercial model to better serve the market and our customers.
R&D activities comprise part of the daily routine of the aforementioned departments and divisions. Therefore, the costs associated with such activities are expensed as incurred. In 2021, 2022, and 2023, total combined expenses of these departments recognized within administrative expenses were $44 million, $42 million and $55 million, respectively. We capitalize the costs incurred in the development of software for internal use which are amortized in operating results over the estimated useful life of the software, which is approximately five years. Capitalized direct costs incurred in the development stage of internal-use software, such as professional fees, direct labor and related travel expenses amounted to $132 million in 2021, $136 million in 2022, and $148 million in 2023. See notes 6 and 16.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2023 that are reasonably likely to have a material and adverse effect on our revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.
Summary of Material Contractual Obligations and Commercial Commitments
2021 Credit Agreement
On October 29, 2021, Cemex, S.A.B. de C.V. entered into the Original 2021 Credit Agreement for up to $3.25 billion to refinance indebtedness (including the 2017 Facilities Agreement) and general corporate purposes, which closed on November 8, 2021. On June 5, 2023, the Original 2021 Credit Agreement was amended to provide for SOFR as the replacement benchmark rate for LIBOR. On October 30, 2023, the Original 2021 Credit Agreement was further amended to refinance a portion of the Term Loans (as defined in the Original 2021 Credit Agreement) and Revolving Commitments (as defined in the Original 2021 Credit Agreement), and to extend the maturity of the credit agreement to October 2028. The Amended 2021 Credit Agreement consists of a $1 billion 5-year term loan facility amortizing in five equal-semi annual payments starting in October 2026 and a $2 billion 5-year committed revolving credit facility. The Amended 2021 Credit Agreement has financial covenants consistent with an investment grade capital structure, with a maximum leverage ratio of 3.75x throughout the life of the facility, and a minimum interest coverage ratio of 2.75x. The Amended 2021 Credit Agreement is denominated exclusively in Dollars and includes an interest rate margin grid that is about 25 basis points lower on average than that of the 2017 Facilities Agreement. Furthermore, the Amended 2021 Credit Agreement is the first debt to be issued under our latest updated SLFF, which is aligned to Cemex’s “Future in Action” program and its ultimate vision of a carbon-neutral economy. The annual performance in respect of the three metrics referenced in the Amended 2021 Credit Agreement, which are aligned with those provided for in the SLFF, may result in an adjustment of the interest rate margin of up to plus or minus five basis points, in line with other sustainability-linked loans from investment grade rated borrowers. Cemex, S.A.B. de C.V.’s obligations under the Amended 2021 Credit Agreement are guaranteed by the Refinancing Guarantors.
As of December 31, 2023, we reported an aggregate principal amount of outstanding debt of $1,600 million under the Amended 2021 Credit Agreement. As of December 31, 2023, the Term Loans under the Amended 2021 Credit Agreement had an amortization profile of $200 million in semi-annual principal payments (as such payments may be reduced as a result of prepayments) commencing in October 2026, plus any applicable interest, in accordance with the Amended 2021 Credit Agreement. For a discussion of restrictions and covenants under the 2023 Credit Agreement, see Item 5—Operating and Financial Review and Prospects—Liquidity and Capital Resources—Our Indebtedness.”
Mexican Peso Banorte Agreement
On December 20, 2021, Cemex, S.A.B. de C.V. entered into the Mexican Peso Banorte Agreement for a principal amount of Ps 5,231 million under terms and conditions substantially similar to those of the Original 2021 Credit Agreement. On December 6, 2023 we signed, and on December 13, 2023 we successfully closed, the refinancing of the Mexican Peso Banorte Agreement, extending the maturity to 2028. Following the refinancing, the credit facility consists of an Ps 6.0 billion 5-year amortizing term loan, which represents an increase of Ps 769 million from the original amount of the loan. The term loan, denominated in Mexican Pesos, has an interest rate margin dependent on leverage ratio slightly lower than that applicable prior to the refinancing. Other terms and conditions are substantially similar to those of the Amended 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. The borrowing under the Mexican Peso Banorte Agreement is also issued under the SLFF.
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As of December 31, 2023, we had drawn the entirety of the only term loan thereunder for the then Mexican Peso equivalent of $255 million.
For a discussion of restrictions and covenants under the Mexican Peso Banorte Agreement, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Indebtedness and Certain Other Obligations—The Credit Agreements, the indentures governing our outstanding Notes, and our other debt agreements and/or instruments contain several restrictions and covenants. Our failure to comply with such restrictions and covenants or any inability to capitalize on business opportunities or refinance our debt resulting from them could have a material adverse effect on our business and financial conditions.”
2022 EUR Credit Agreement
On October 7, 2022, Cemex, S.A.B. de C.V. entered into and closed the 2022 EUR Credit Agreement for €500 million for general corporate purposes (including to refinance indebtedness). The 2022 EUR Credit Agreement consists of a 3-year non-amortizing term loan facility. The 2022 EUR Credit Agreement is denominated exclusively in Euros, and the loans bear interest at a rate per annum equal to the EURIBOR rate plus a margin ranging from 115 basis points to 190 basis points, depending on our leverage ratio. Furthermore, the borrowing under the 2022 EUR Credit Agreement is also issued under the SLFF. As of December 31, 2023, other terms and conditions of the 2022 EUR Credit Agreement were substantially similar to those of the Original 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. As of December 31, 2023 we had drawn the entirety of the only term loan under the 2022 EUR Credit Agreement for the then Euro equivalent of $498 million. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Refinancing of 2022 EUR Credit Agreement.”
As of December 31, 2023, we reported an aggregate amount of outstanding debt of $552 million under the 2022 EUR Credit Agreement. For a discussion of restrictions and covenants under the 2022 EUR Credit Agreement, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Indebtedness and Certain Other Obligations—The Credit Agreements, the indentures governing our outstanding Notes, and our other debt agreements and/or instruments contain several restrictions and covenants. Our failure to comply with such restrictions and covenants or any inability to capitalize on business opportunities or refinance our debt resulting from them could have a material adverse effect on our business and financial conditions.”
Notes
The indentures governing our outstanding Notes impose operating and financial restrictions on us. These restrictions limit our ability, among other things, to: (i) incur debt, including restrictions on incurring debt at our subsidiaries, which are not parties to the indentures governing the Notes; (ii) pay dividends on stock; (iii) redeem stock or redeem subordinated debt; (iv) make investments; (v) guarantee indebtedness; and (vi) create or assume liens.
March 2026 Euro Notes. On March 19, 2019, Cemex, S.A.B. de C.V. issued €400 million aggregate principal amount of its March 2026 Euro Notes in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The Refinancing Guarantors fully and unconditionally guarantee the performance of all obligations of Cemex, S.A.B. de C.V. under the March 2026 Euro Notes.
November 2029 Dollar Notes. On November 19, 2019, Cemex, S.A.B. de C.V. issued $1.0 billion aggregate principal amount of its November 2029 Dollar Notes in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The Refinancing Guarantors fully and unconditionally guarantee the performance of all obligations of Cemex, S.A.B. de C.V. under the November 2029 Dollar Notes.
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September 2030 Dollar Notes. On September 17, 2020, Cemex, S.A.B. de C.V. issued $1.0 billion aggregate principal amount of its September 2030 Dollar Notes in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The Refinancing Guarantors fully and unconditionally guarantee the performance of all of our obligations under the September 2030 Dollar Notes.
July 2031 Dollar Notes. On January 12, 2021, Cemex, S.A.B. de C.V. issued $1.75 billion aggregate principal amount of its July 2031 Dollar Notes in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The Refinancing Guarantors fully and unconditionally guarantee the performance of all of our obligations under the July 2031 Dollar Notes.
During any period of time that the March 2026 Euro Notes, November 2029 Dollar Notes, September 2030 Dollar Notes, or the July 2031 Dollar Notes, respectively, have investment grade ratings from two rating agencies, Cemex, S.A.B. de C.V. and certain subsidiaries shall no longer be subject to certain covenants under the indentures governing the March 2026 Euro Notes, November 2029 Dollar Notes, September 2030 Dollar Notes, or the July 2031 Dollar Notes, as applicable.
On November 8, 2021, concurrently with funding under the Original 2021 Credit Agreement and in accordance with indentures that governed our then outstanding senior secured notes, Cemex entered into supplemental indentures to add COM and CIH as new guarantors to each of the Notes. Cemex Corp. and Cemex Concretos were already guarantors of the Notes. Also, concurrently with funding under the Original 2021 Credit Agreement and the full repayment of the 2017 Facilities Agreement, the provisions contained in the indentures governing the Notes that provide that any guarantor of the Notes shall be released of its guarantee obligations upon a refinancing of the 2017 Facilities Agreement with debt not guaranteed by the guarantor were triggered. As a result, both the Credit Agreements and the Notes are now guaranteed exclusively by the Refinancing Guarantors. The original note guarantors that are no longer guaranteeing the Notes are Cemex España, Cemex Asia B.V. (“Cemex Asia”), Cemex Finance LLC, Cemex Africa & Middle East Investments B.V., Cemex France Gestion (S.A.S.), Cemex Research Group AG and Cemex UK.
2023 CEBURES – Long-Term Notes 1. On October 5, 2023, Cemex, S.A.B. de C.V. issued Ps 1,000 million aggregate principal amount of its long-term notes (certificados bursátiles de largo plazo) with a 3-year tenor at a floating annual interest rate of TIIE 28 plus 0.45%, which are registered in Mexico. The Refinancing Guarantors fully and unconditionally guarantee the performance of all of our obligations under the Long-Term Notes 1. The Long-Term Notes 1 were issued under the SLFF and performance in respect of specific sustainability performance targets (the “SPTs”) referenced in the Long-Term Notes 1 may result in an adjustment to the financial conditions of the Long-Term Notes 1. The relevant SPT under the Long-Term Notes 1 consists of a reduction of Scope 1 and Scope 2 CO2 emissions per ton of cementitious product to 564 kg by the end of 2025. If we do not meet the SPTs by the established dates, the nominal value of the Long-Term Notes 1 would increase by 20 basis points. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Reopening and Placement of 2023 CEBURES.”
2023 CEBURES – Long-Term Notes 2. On October 5, 2023, Cemex, S.A.B. de C.V. issued Ps 5,000 million aggregate principal amount of its long-term notes (certificados bursátiles de largo plazo) with a 7-year tenor at a fixed annual interest rate of 11.48%, which are registered in Mexico. The Refinancing Guarantors fully and unconditionally guarantee the performance of all of our obligations under the Long-Term Notes 2. The Long-Term Notes 2 were issued under the SLFF and performance in respect of specific SPTs referenced in the Long-Term Notes 2 may result in an adjustment to the financial conditions of the Long-Term Notes 2. The relevant SPT under the Long-Term Notes 2 consists of a decrease of 513 kg by the end of 2027. If we do not meet the SPTs by the established dates, the interest rate on the Long-Term Notes 2 would increase by 25 basis points. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Our Indebtedness—Reopening and Placement of 2023 CEBURES.”
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As of December 31, 2023, the aggregate principal amount outstanding under the 2023 CEBURES was Ps 6,000 million.
In connection with these issuances, Cemex negotiated interest rate and currency derivative instruments to synthetically change the financial risks profile of these issuances from the Peso to the Dollar.
Subordinated Notes
5.125% Subordinated Notes. On June 8, 2021, Cemex, S.A.B. de C.V. issued $1.0 billion aggregate principal amount of the 5.125% Subordinated Notes with no fixed maturity and subordinated to all senior obligations, and senior only to equity, in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act.
9.125% Subordinated Notes. On March 14, 2023, Cemex, S.A.B. de C.V. issued $1.0 billion aggregate principal amount of the 9.125% Subordinated Notes with no fixed maturity and subordinated to all senior obligations, and senior only to equity, in transactions exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. The 9.125% Subordinated Notes were issued under the GFF.
Commercial Commitments
On July 27, 2012, we entered into a Master Professional Services Agreement with IBM (the “IBM 2012 MPSA”). The IBM 2012 MPSA provided the framework for certain ordinary course of business-related services on a global scale, including: information technology, application development and maintenance, finance and accounting services, and human resources administration. The term of the IBM 2012 MPSA expired on August 31, 2022.
On March 31, 2021, we signed an amendment to the IBM 2012 MPSA by which the finance and accounting services were removed from the scope of such agreement and, on the same date, we entered into a new Master Services Agreement with IBM for the provision of finance and accounting services previously provided under the IBM 2012 MPSA (the “IBM 2021 MSA”). On June 30, 2021, we signed an amendment to the IBM 2021 MSA by which advanced cybersecurity services were incorporated into the agreement. On September 30, 2021, we signed another amendment to the IBM 2021 MSA by which the finance and accounting services were modified to incorporate advanced order-to-cash services. The cybersecurity services under the IBM 2021 MSA will end on June 30, 2026 and the finance and accounting services under the IBM 2021 MSA will end on December 31, 2028, unless terminated earlier. In comparison with the IBM 2012 MPSA, the IBM 2021 MSA includes provisions for automation, as well as provisions for increased consumption flexibility and a reassessment of service level requirements. We may terminate the IBM 2021 MSA (or a portion of it) at our discretion and without cause at any time by providing at least six months’ notice to IBM and paying the corresponding termination charges. Other termination rights may be available to us for a termination charge that varies depending on the reason for termination. IBM may terminate the IBM 2021 MSA if we (i) fail to make payments when due or (ii) become bankrupt and do not pay in advance for the services. See note 24.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
On February 8, 2022, we renewed or entered into new agreements with six service providers in the fields of data processing services (back office) in finance, accounting and human resources; as well as IT infrastructure services, support and maintenance of IT applications in the countries in which we operate, for a tenure of five to seven years at an average annual cost of approximately $60 million. The services provided under these agreements replaced the services provided under the IBM 2012 MPSA which expired on August 31, 2022.
As of December 31, 2023, we did not depend on any single one of our suppliers of goods or services to conduct our business.
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Cash Requirements
As of December 31, 2023, we had material cash requirements as set forth in the table below.
| As of December 31, 2023 | ||||||||||||||||||||
| Obligations |
Less than 1 year |
1-3 years | 3-5 years | More than 5 Years |
Total | |||||||||||||||
| Non-current debt |
25 | 1,614 | 1,734 | 2,902 | 6,275 | |||||||||||||||
| Leases(1) |
340 | 493 | 282 | 509 | 1,624 | |||||||||||||||
| Total debt and other financial obligations(2) |
365 | 2,107 | 2,016 | 3,411 | 7,899 | |||||||||||||||
| Interest payments on debt(3) |
369 | 595 | 464 | 393 | 1,821 | |||||||||||||||
| Pension plans and other benefits(4) |
173 | 300 | 296 | 734 | 1,503 | |||||||||||||||
| Acquisition of property, plant and equipment(5) |
286 | 155 | — | — | 441 | |||||||||||||||
| Purchases of services, raw material, fuel and energy(6) |
674 | 1,043 | 643 | 611 | 2,971 | |||||||||||||||
| Total cash requirements |
1,867 | 4,200 | 3,419 | 5,149 | 14,635 | |||||||||||||||
| (1) | Represent nominal cash flows. As of December 31, 2023, the net present value of future payments under such leases was $1,258 million, of which, $325 million refers to payments from one to three years and $185 million refer to payments from three to five years. See note 24.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
| (2) | The schedule of debt payments, which includes current maturities, does not consider the effect of any refinancing of debt that may occur during the following years. In the past, we have replaced our non-current obligations for others of a similar nature. |
| (3) | Estimated cash flows on floating rate denominated debt were determined using the floating interest rates in effect as of December 31, 2023. |
| (4) | Represents estimated annual payments under these benefits for the next 10 years (see note 19 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report), including the estimate of new retirees during such future years. |
| (5) | Refers mainly to the expansion of a cement-production line in the Philippines. |
| (6) | Future payments for the purchase of raw materials are presented on the basis of contractual nominal cash flows. Future nominal payments for energy were estimated for all contractual commitments on the basis of an aggregate average expected consumption per year using the future prices of energy established in the contracts for each period. Future payments also include our commitments for the purchase of fuel. In addition, this line item includes a contractual commitment with Neoris over a 5-year contract beginning in 2023 until 2027 for the acquisition of digitalization services and solutions for an annual amount of $55 million. Moreover, this line item includes our commitments with six vendors for back-office services for an average annual amount of $60 million. |
As of December 31, 2021, 2022, and 2023, in connection with the commitments for the purchase of fuel and energy included in the table above, a description of the most significant contracts is as follows:
On October 24, 2018, we entered into two fixed-for-floating energy financial hedge agreements in Mexico, for a period of 20 years starting in 2020 with the solar power plants Tuli Energía and Helios Generación.
Pursuant to these agreements, we fixed the megawatt-hour price (which increases at a fixed annual rate) over an electric energy volume per year and the differential between the agreed price and the market price is settled monthly. We consider these agreements to be a hedge for a portion of our aggregate consumption of electric energy in Mexico and recognize the result of the exchange of price differentials described previously in the statement of operations as a part of the costs of energy. During 2023, we received $3 million as a result of these hedges. We do not record these agreements at fair value because there is not a deep market for electric power in Mexico that would effectively allow for their valuation.
In connection with the Ventikas, located in the Mexican state of Nuevo León with a combined generation capacity of 252 MW, we agreed to acquire a portion of the energy generated by Ventikas for our overall electricity needs in Mexico for a period of 20 years, which began in April 2016. As of December 31, 2023, the estimated annual cost of this agreement is $26 million, assuming energy generation at full capacity (energy supply from wind sources is variable in nature and final amounts can be determined only based on energy ultimately received at the agreed prices per unit).
Beginning in October 2008, for our overall electricity needs in Mexico, we reached an agreement with the EURUS Wind Farm (“EURUS”) for the purchase of the electric energy generated for a period of no less than 20 years. EURUS
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is a wind farm with an installed capacity of 250 MW operated by ACCIONA in the Mexican state of Oaxaca. The estimated annual cost of this agreement is $78 million assuming that we receive all our energy allocation. Energy supply from wind sources is variable in nature and final amounts can be determined only based on energy ultimately received at the agreed prices per unit.
We maintain a commitment initiated in April 2004 to purchase the energy generated by TEG until September 2027 for our overall electricity needs in Mexico. The estimated annual cost of this agreement is $183 million assuming we receive all our energy allocation. Nonetheless, final amounts will be determined considering the final megawatt hour effectively received, the market price of petcoke and the agreed charges.
In connection with the above, we also committed to supply TEG and another third-party electrical energy generating plant adjacent to TEG all fuel necessary for their operations until the year 2027, equivalent to approximately 1.1 million tons of pet coke per year. We cover our commitments under this agreement by acquiring the aforementioned volume of fuel from sources in the international markets and Mexico.
Furthermore, Cemex is also a party to other agreements executed in connection with the financing, management and operation of the TEG power plant since before its date of commencement of operations, among those which are (i) a long-term limestone supply agreement dated as of March 26, 1999, pursuant to which Cemex agreed to sell and deliver to TEG limestone to be used at the TEG power plant for desulfurization of petcoke used for fuel, and (ii) a put option agreement dated as of March 26, 1999, pursuant to which Cemex is required to purchase the TEG power plant assets upon expiration of the term of the agreement executed with TEG to purchase the energy generated by TEG or, alternatively, at an earlier date upon the occurrence of one or more events described therein and which would be triggered upon the occurrence of one or more situations or circumstances, not attributable to TEG, that would prevent TEG from continuing operating the TEG power plant. The aforementioned agreements are set to expire on September 30, 2027.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that are reasonably likely to have a material effect on our financial condition, operating results and liquidity or capital resources.
Quantitative and Qualitative Market Disclosure
Our Derivative Financial Instruments
In the ordinary course of business, we are exposed to credit risk, interest rate risk, foreign exchange risk, equity risk, commodities risk and liquidity risk, considering the guidelines set forth by Cemex, S.A.B. de C.V.’s Board of Directors, which represent our risk management framework and are supervised by several of our committees. Our management establishes specific policies that determine strategies focused on obtaining natural hedges or risk diversification to the extent possible, such as avoiding customer concentration on a determined market or aligning the currencies portfolio in which we incur our debt with those in which we generate our cash flows. As of December 31, 2022 and 2023, these strategies were sometimes complemented by the use of derivative financial instruments. See notes 17.4 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
During the reported periods, in compliance with the guidelines established by our risk management committee, the restrictions set forth by our debt agreements and our hedging strategy, we held derivative instruments, with the objectives of, as the case may be: (a) changing the risk profile or fixing the price of fuels; (b) foreign exchange hedging; (c) hedge of forecasted transactions; (d) changing the risk of changes in market interest rates; and (e) other corporate purposes. See note 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
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As of December 31, 2022 and 2023 the notional amounts and fair values of our derivative instruments were as follows:
| At December 31, 2022 | At December 31, 2023 | |||||||||||||||||||
| (in millions of Dollars) |
Notional Amount |
Estimated Fair value |
Notional Amount |
Estimated Fair value |
Maturity Date | |||||||||||||||
| Net investment hedge |
837 | (48 | ) | 976 | (94 | ) | July 2025 | |||||||||||||
| Cross currency swaps |
— | — | 335 | 23 | September 2030 | |||||||||||||||
| Interest rate swaps |
1,018 | 54 | 750 | 30 | November 2026 | |||||||||||||||
| Fuel price hedging |
136 | 8 | 232 | 5 | December 2024 | |||||||||||||||
| Foreign exchange options |
500 | 18 | 300 | 10 | December 2025 | |||||||||||||||
| 2,491 | 32 | 2,593 | (26 | ) | ||||||||||||||||
The caption “Financial income and other items, net” in the statement of operations includes gains and losses related to the recognition of changes in fair values of the derivative financial instruments during the applicable period, which represented net losses of $6 million in 2021, $5 million in 2022, and $19 million in 2023. As described below, changes in fair value of our net investment hedge are recognized in other comprehensive income for the period as part of our currency translation results. In addition, changes in fair value of our outstanding interest rate swaps related to debt are recognized as part of our financial expense in the income statement. Changes in fair value of our fuel price hedging derivatives are temporarily recognized through other comprehensive income and are allocated to operating expenses as the related fuel volumes are consumed.
Our Net Investment Hedge. As of December 31, 2022 and 2023, there are Dollar/Peso foreign exchange forward contracts with target tenor ranging from one to 15 months for a notional amount of $738 million and $518 million, respectively. We have designated this program as a hedge of our net investment in Pesos, pursuant to which changes in fair market value of these instruments are recognized as part of other comprehensive income in equity. For the years 2021, 2022, and 2023, these contracts generated losses of $4 million, $96 million and $172 million, respectively, which partially offset currency translation gains in each year recognized in equity generated from our net assets denominated in Pesos. The losses generated from these derivatives relate to the appreciation of the Peso, mainly in 2022 and 2023.
In addition, as of December 31, 2022 and 2023, as part of our Peso net investment hedge strategy, there are additional Dollar/Peso capped forwards, structured with option contracts, for a notional amount of $99 million and $458 million, respectively. These capped forwards contain limits on the upside that the instrument may generate. Changes in fair market value of such capped forward contracts are also recognized as part of other comprehensive income in equity. For the years 2022 and 2023, these contracts generated losses of $2 million and $54 million, respectively, which partially offset currency translation gains recognized in equity generated from our net assets denominated in Pesos, due to the appreciation of the Peso in 2022 and 2023.
During the year 2022, we unwound Dollar/Euro cross-currency swap contracts for a notional amount of $750 million, which resulted in a settlement gain of $80 million in equity. We designated the foreign exchange forward component of these instruments as a hedge of our net investment in Euros, pursuant to which changes in fair market of such forward contracts were recognized as part of other comprehensive income in equity, while changes in fair value of the interest rate swap component were recognized within “Financial income and other items, net,” representing losses of $1 million in 2021 and gains of $8 million in 2022. For the years ended December 31, 2021 and 2022 the foreign exchange forward component generated respective gains of $10 million and $70 million, recognized in equity, which partially offset currency translation losses recognized in equity generated from our net assets denominated in Euros due to the depreciation of the Euro against the Dollar in 2021 and 2022, related to the exchange of interest rates in the income statement.
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Our Cross Currency Swaps. During October 2023, we entered into cross-currency swap contracts for a notional amount of $335 million in connection with the issuances of the 2023 CEBURES as described in note 17.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report, aiming to change the rate and currency risk profile of such 2023 CEBURES from the Peso to the Dollar. We designated these contracts as cash flow hedges of interest rate payments in relation to an equivalent amount of variable and fixed interest rate debt. Changes in fair value of these contracts for the interest rate swap leg are initially recognized as part of other comprehensive income in equity and are subsequently allocated through financial expense as interest expense on the related loans is accrued in the income statement, while changes in fair value of the currency forward leg are recognized directly in the income statement partially offsetting the related Peso denominated debt’s foreign exchange fluctuation. For the year 2023, changes in the fair value of these contracts generated gains of $23 million recognized in other comprehensive income and gains of $5 million recognized in the income statement.
Our Interest Rate Swaps. For accounting purposes under IFRS, we designate interest rate swaps as cash flow hedges, to fix interest rate payments in relation to an equivalent amount of floating interest rate debt; therefore, changes in fair value of these contracts are initially recognized as part of other comprehensive income in equity and are subsequently reclassified to financial expense as the interest expense of the related floating interest rate debt is accrued in the income statement.
As of December 31, 2022 and 2023, we held interest rate swaps for a notional amount of $750 million in both years, with a fair market value representing assets of $39 million in 2022 and assets of $30 million in 2023, negotiated in June 2018 to fix interest payments of existing bank loans bearing Dollar floating rates. In November 2021, we partially unwound one of the interest rate swap, resulting in a settlement loss of $5 million, recognized within “Financial income and other items, net” in the income statement, and extended the remaining contracts until November 2026. For the years ended in 2021, 2022, and 2023, changes in fair value of these contracts generated gains of $23 million, gains of $69 million and losses of $9 million, respectively, recognized in other comprehensive income. Moreover, during the same periods, we reclassified results from equity to the line item of “Financial expenses” representing an expense of $22 million in 2021, $2 million in 2022, and an income of $22 million in 2023.
In addition, as of December 31, 2022, we held interest rate swaps for a notional of $268 million negotiated to fix interest payments of existing bank loans referenced to Peso floating rates that matured in November 2023, which fair value represented an asset of $15 million in 2022. During December 2021, we partially unwound this interest rate swap receiving $3 million recognized within “Financial income and other items, net” in the income statement. For the years ended December 31, 2021, 2022, and 2023 until their settlement, changes in fair value of these contracts generated gains of $15 million, gains of $3 million and losses of $15 million, respectively, recognized in other comprehensive income. Moreover, during the same periods, we recycled results from equity to the line item of “Financial expenses” representing expenses of $0.3 million in 2021, gains of $7 million in 2022, and gains of $18 million in 2023.
Our Fuel Price Hedging Derivatives. As of December 31, 2022 and 2023, we maintained swap and option contracts negotiated to hedge the price of certain fuels in several operations, primarily diesel and gas, for aggregate notional amounts of $136 million and $110 million, respectively, with an estimated aggregate fair value representing assets of $8 million in 2022, and $1 million in 2023. By means of these contracts, for its own consumption only, we either fixed the price of these fuels, or entered into option contracts to limit the prices to be paid for these fuels, over certain volumes representing a portion of the estimated consumption of such fuels in several operations. These contracts have been designated as cash flow hedges of diesel or gas consumption, and as such, changes in fair value are recognized temporarily through other comprehensive income and are recycled to operating expenses as the related fuel volumes are consumed. For the years 2021, 2022, and 2023 changes in fair value of these contracts recognized in other comprehensive income represented gains of $22 million, losses of $25 million and losses of $6 million, respectively. Moreover, during the same periods, we recycled results from equity to the line items “Cost of sales” and
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“Operating expenses,” as applicable, representing gains of $36 million in 2021, gains of $88 million in 2022, and losses of $7 million in 2023.
In addition, as of December 31, 2023, we held Brent Oil call spreads with a notional of $122 million, intended economically to mitigate the exposure over a portion of the diesel cost implicit in our distribution expense. Changes in the fair value of these contracts are recognized directly in the income statement as part of “Financial income and other items, net” which resulted in losses of $1 million in 2023.
Foreign Exchange Options. As of December 31, 2022 and 2023, we held Dollar/Peso call spread option contracts for a notional amount of $500 million and $300 million, respectively. Such contracts mature between June 2025 and December 2025 and were negotiated to maintain the value in Dollars over an equivalent amount of revenues generated in Pesos. Changes in the fair value of these instruments, generated losses of $5 million in 2021, $13 million in 2022, and $18 million in 2023, recognized within “Financial income and other items, net” in the income statement.
See note 17.4 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Other Derivative Financial Instruments.
With respect to our existing financial derivatives, we may incur net losses and be subject to margin calls that will require cash. Likewise, if we enter into new derivative financial instruments, we may incur net losses and be subject to margin calls. The cash required to cover the margin calls may be substantial and may reduce the funds available to us for our operations or other capital needs.
As with any derivative financial instrument, we assume the creditworthiness risk of the counterparty, including the risk that the counterparty may not honor its obligations to us. Before entering into any derivative financial instrument, we evaluate, by reviewing credit ratings and our business relationship according to our policies, the creditworthiness of the financial institutions and corporations that are prospective counterparties to our derivative financial instruments. We select our counterparties to the extent we believe that they have the financial capacity to meet their obligations in relation to these instruments. Under current financial conditions and volatility, we cannot assure that risk of non-compliance with the obligations agreed to with such counterparties will always be minimal. See notes 17.4 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
The fair value of derivative financial instruments is based on estimated settlement costs or quoted market prices and supported by confirmations of these values received from the counterparties to these financial instruments. The notional amounts of derivative financial instrument agreements are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss.
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Interest Rate Risk, Foreign Currency Risk, and Equity Risk
Interest Rate Risk. The table below presents tabular information of our fixed and floating rate non-current foreign currency-denominated debt as of December 31, 2023 Average floating interest rates are calculated based on forward rates in the yield curve as of December 31, 2023. Future cash flows represent contractual principal payments. The fair value of our floating rate non-current debt is determined by discounting future cash flows using borrowing rates available to us as of December 31, 2023 and is summarized as follows:
| Expected maturity dates as of December 31, 2023 | ||||||||||||||||||||||||||||
| Non-Current Debt(1) |
2024 | 2025 | 2026 | 2027 | After 2028 | Total | Fair Value | |||||||||||||||||||||
| (in millions of Dollars, except percentages) | ||||||||||||||||||||||||||||
| Variable rate |
10 | 607 | 236 | 284 | 841 | 1,978 | 2,008 | |||||||||||||||||||||
| Average interest rate |
7.07 | % | 5.17 | % | 9.00 | % | 8.70 | % | 7.11 | % | ||||||||||||||||||
| Fixed rate |
— | 168 | 594 | 297 | 3,176 | 4,235 | 4,031 | |||||||||||||||||||||
| Average interest rate |
7.70 | % | 7.08 | % | 3.36 | % | 4.01 | % | 5.27 | % | ||||||||||||||||||
| (1) | The information above includes the current maturities of the non-current debt. Total non-current debt as of December 31, 2023 does not include our other financial obligations and the Subordinated Notes for an aggregate amount of $3,936 million issued by consolidated entities. See notes 17.2 and 21.2 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. |
As of December 31, 2023, we were subject to the volatility of floating interest rates, which, if such rates were to increase, may adversely affect our financing cost and our net income. As of December 31, 2021, 10% of our long-term debt bore floating rates at a weighted average interest rate of LIBOR plus 150 basis points. As of December 31, 2022, 21% of our long-term debt bore floating rates at a weighted average interest rate of LIBOR plus 148 basis points. As of December 31, 2023, 26% of our long-term debt bore floating rates at a weighted average interest rate of SOFR plus 95 basis points. As of December 31, 2021, 2022, and 2023, if interest rates at that date had been 0.5% higher, with all other variables held constant, our net income for 2021, 2022, and 2023 would have been reduced by $7 million, $13 million and $14 million, respectively, as a result of higher interest expense on variable-rate denominated debt. However, this analysis does not include the interest rate swaps held by us during 2021, 2022, and 2023. See notes 17.4 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Foreign Currency Risk. Due to our geographic diversification, our revenues and costs are generated in various countries and settled in different currencies. However, some of our production costs, including fuel and energy, and some of our cement prices, are periodically adjusted to take into account fluctuations between the Dollar and the other currencies in which we operate. For the year ended December 31, 2023, 29% of our revenues, before eliminations resulting from consolidation, were generated in Mexico, 31% in the United States, 6% in the United Kingdom, 5% in France, 3% in Germany, 3% in Poland, 3% in Spain, 2% in Philippines, 5% in Israel, 4% in the Rest of EMEAA segment, 3% in Colombia, 1% in Panama, 2% in Caribbean TCL, 2% in the Dominican Republic, and 1% in the Rest of SCA&C segment.
Foreign exchange gains and losses occur by monetary assets or liabilities in a currency different from its functional currency and are recorded in the consolidated statements of income, except for exchange fluctuations associated with foreign currency indebtedness directly related to the acquisition of foreign entities and related parties’ long-term balances denominated in foreign currency, for which the resulting gains or losses are reported in other comprehensive income. As of December 31, 2022 and 2023, excluding from the sensitivity analysis the impact of translating the net assets of foreign operations into our reporting currency and considering a hypothetical 10% strengthening of the Dollar against the Mexican Peso, with all other variables held constant, our net income for 2022 and 2023 would have decreased by $42 million and $160 million, respectively, as a result of higher foreign exchange losses on our Dollar-denominated net monetary liabilities held in consolidated entities with other functional currencies. Conversely, a hypothetical 10% weakening of the Dollar against the Mexican Peso would have had the opposite effect.
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As of December 31, 2023, 70% of our total debt plus other financial obligations was Dollar-denominated, 15% was Euro-denominated, 10% was Mexican Peso-denominated, 2% was Pound Sterling-denominated, 2% was Philippine Peso-denominated, and 1% was denominated in other currencies. Therefore, we had a foreign currency exposure arising mainly from the Dollars denominated debt versus the several currencies in which our revenues are settled in most countries in which we operate. We cannot guarantee that we will generate sufficient revenues in Dollars from our operations to service these obligations. As of December 31, 2023, we had implemented a derivative financing hedging strategy using foreign exchange options for a notional amount of $300 million to hedge the value in Dollar terms of revenues generated in Pesos to partially address this foreign currency risk. See notes 17.4 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report. Complementarily, we may negotiate other derivative financing hedging strategies in the future if either of our debt portfolio currency mix, interest rate mix, market conditions, and/or expectations changes.
In addition, considering that Cemex S.A.B. de C.V.’s functional currency for all assets, liabilities and transactions associated with its financial and holding company activities is the Dollar, there is foreign currency risk associated with the translation of subsidiaries’ net assets denominated in different currencies (Mexican Peso, Euro, Pound Sterling and other currencies) into Dollars. When the Dollar appreciates, the value of Cemex S.A.B. de C.V.’s net assets denominated in other currencies decreases in terms of Dollars, generating negative foreign currency translation and reducing stockholders’ equity. Conversely, when the Dollar depreciates, the value of Cemex S.A.B. de C.V.’s net assets denominated in other currencies would increase in terms of Dollars generating the opposite effect. As mentioned above in our derivative financial instruments section, we have implemented a Dollar/Peso foreign exchange forward contract program to hedge foreign currency translation in connection with our net assets denominated in Mexican Pesos. See notes 28.3 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Equity Risk. Equity risk represents the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in the market price of Cemex, S.A.B. de C.V.’s and/or a third party’s shares.
Considering specific objectives, we have negotiated equity forward contracts on third-party shares. Under these equity derivative instruments, there is a direct relationship from the change in the fair value of the derivative with the change in price of the underlying share. All changes in fair value of such derivative instruments are recognized in the income statement as part of “Financial income and other items, net.” During the reported periods effects were not significant. As of December 31, 2023, we do not have derivative financial instruments based on the price of Cemex, S.A.B. de C.V.’s shares or any third-party’s shares. See notes 17.4 and 17.5 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Liquidity Risk. Liquidity risk represents the risk that we will not have sufficient funds available to meet our obligations. In addition to cash flows provided by our operating activities, in order to meet our overall liquidity needs for operations, servicing debt and funding capital expenditures and acquisitions, we rely on cost-cutting and operating improvements to optimize capacity utilization and maximize profitability, as well as borrowing under credit facilities, proceeds of debt and equity offerings, and proceeds from asset sales. We are exposed to risks from changes in foreign currency exchange rates, prices and currency controls, interest rates, inflation, governmental spending, social instability, and other political, economic, and/or social developments in the countries in which we operate, any one of which may materially affect our results and reduce cash from operations. As of December 31, 2023, we had $1,400 million available under the committed revolving credit tranche under the Amended 2021 Credit Agreement.
As of December 31, 2023, current liabilities, which included $975 million of current debt and other financial obligations, exceeded current assets by $1,781 million. It is noted that as part of our operating strategy implemented by our management, we operate with a negative working capital balance. For the year ended December 31, 2023, we generated net cash flows provided by operating activities of $2,159 million. In addition, as of December 31, 2023, we
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had $1,400 million available under the committed revolving credit facility under the Amended 2021 Credit Agreement and had $1,048 million under other uncommitted lines of credit subject to the lenders’ availability. See notes 17.1, 17.2, 17.5, and 24.1 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
Investments, Acquisitions, and Divestitures
The transactions described below represent our principal investments, acquisitions, and divestitures completed during 2021, 2022, and 2023.
Investments and Acquisitions
On November 1, 2023, through a subsidiary in Germany, for a total consideration of $13 million we completed the acquisition of Kiesel, a mortars and adhesives company in the construction industry based in Germany. Kiesel serves the German, French, Polish, and Czech markets, consisting of a production facility and five distribution locations. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we determined a goodwill of $5 million.
On May 11, 2023, through a subsidiary, we completed the purchase of the assets of Atlantic Minerals Limited in Newfoundland, Canada, consisting mainly of an aggregates quarry and maritime port operations for a price of $75 million. With this investment, we secured a new long-term aggregates reserve for our operations in Florida and the east coast of the United States, as well as a source for chemical-grade stone. As of December 31, 2023, based on the preliminary valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill.
On February 3, 2023, the Colombian Financial Superintendency (Superintendencia Financiera de Colombia) authorized Cemex España to commence the Delisting CLH Offer to acquire a minimum of one ordinary share and a maximum of 26,281,913 ordinary shares of CLH. The period to tender CLH shares under the Delisting CLH Offer concluded on February 28, 2023, with the final results of the Delisting CLH Offer being confirmed on March 3, 2023. As a result of the Delisting CLH Offer, we acquired 23,232,946 ordinary shares of CLH, increasing our interest to 99.46% of CLH (excluding shares owned by CLH) and delisted CLH’s shares from the Colombian Stock Exchange (Bolsa de Valores de Colombia). The registry of CLH’s shares in the National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) was canceled thereafter. The total consideration that we paid as a result of the acquisition of the validly tendered shares amounted to 4,735 Colombian Pesos per share, totaling 110,007,999,310 Colombian Pesos ($28.54 million as of December 31, 2023, based on an exchange rate of 3,854.92 Colombian Pesos to $1.00).
On January 25, 2023, in Manila, Philippines, CASEC filed a Tender Offer Report on Form 19-1 with the Securities and Exchange Commission of the Philippines and the Philippine Stock Exchange, pursuant to Rule 19 of the Securities Regulation Code of the Philippines, in connection with its intention to conduct the CHP Tender Offer to acquire a minimum of one and a maximum of 1,614,000,000 common shares of CHP. The tender offer period commenced on February 16, 2023 and lasted for a period of 20 business days, ending on March 16, 2023. Payment of the net proceeds of the validly tendered shares took place on March 30, 2023. As part of the CHP Tender Offer, CASEC acquired 1,614,000,000 common shares of CHP, resulting in CASEC owning 89.86% of the outstanding common shares of CHP. In the CHP Tender Offer, CASEC paid 1.30 Philippine Pesos per share, an equivalent of 2,098.20 million Philippine Pesos ($37.88 million as of December 31, 2023, based on an exchange rate of 55.39 Philippine Pesos to $1.00) for all the acquired shares.
On July 11, 2022, through a subsidiary in Germany, we completed the acquisition of a 53% stake in the German aggregates company ProStein for a total consideration of $21 million. The investment expands our aggregates
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business in the region, and we estimate that it increases the life of the aggregates’ reserves for our operations in Central Europe for at least the next 25 years. The majority stake in ProStein’s assets adds a full range of fine and hard aggregates to our aggregates’ portfolio. In addition to supplying the greater Berlin area, the additional capacity can supply several urban centers in Poland and the Czech Republic. ProStein’s assets include six active hardstone plants and six CDEW recovery sites. During 2023, based on the valuation of the fair values of the assets acquired and liabilities assumed, we did not determine any goodwill.
On December 10, 2021, through a subsidiary in Mexico, we acquired Broquers Ambiental, a sustainable waste management company for a total consideration of $13 million. Broquers Ambiental assets include a plant for solid waste treatment for its use as alternate fuel. During 2022, considering the fair values of the assets acquired and liabilities assumed, we determined goodwill of $4 million.
On February 16, 2021, we announced that we acquired the ready-mix assets of Beck Readymix Concrete Co. LTD., including three ready-mix concrete plants and one portable plant to service the San Antonio, Texas metropolitan area and surrounding areas.
Divestitures
During 2021, 2022, and 2023, we made divestitures of $211 million, $569 million and $106 million, respectively (which included fixed assets of, $62 million, $155 million, and $106 million, respectively).
On October 25, 2022, we created a partnership with Advent International (“Advent”). As part of the partnership, we sold to Advent a 65% stake in Neoris for a total consideration of $119 million. While surrendering control to Advent, we retain a 35% stake and remain as a key strategic partner and customer of Neoris. Our retained 35% stake in Neoris was remeasured at fair value at the date of loss of control and was subsequently accounted for under the equity method and presented in the line item “Investments in associates and joint ventures.” Neoris’ results for the year ended December 31, 2021 and for the period from January 1 to October 25, 2022 are reported in the statements of income, net of income tax, in the single line item “Discontinued operations,” including a gain on sale of $117 million in 2022, net of the reclassification of foreign currency translation effects accrued in equity until the date of loss of control.
On August 31, 2022, we announced that we, through certain of our subsidiaries, concluded the sale agreed in December 2021 of our operations in Costa Rica and El Salvador to affiliates of Cementos Progreso Holdings, S.L. for a total consideration of $325 million, related to our aggregate controlling interest. The divested assets consisted of one fully integrated cement plant, one grinding station, seven ready-mix plants, one aggregate quarry, as well as one distribution center in Costa Rica and one distribution center in El Salvador. Our operations of these assets in Costa Rica and El Salvador for the year ended December 31, 2021 and for the period from January 1, 2022 to August 31, 2022 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2022 a gain on sale of $240 million, which includes the reclassification of foreign currency translation effects accrued in equity until the disposal date.
On July 9, 2021, we announced that we concluded the sale agreed in March 2019 of our white cement business, except for Mexico and the United States, to Çimsa Çimento Sanayi Ve Ticaret A.S¸ for a total consideration of $155 million. Assets sold included our Buñol cement plant in Spain and white cement customer list. Our operations of these assets in Spain for the period from January 1, 2021 to July 9, 2021 are reported in the statements of income, net of income tax, as part of the single line item “Discontinued operations,” including in 2021 a loss on sale of $67 million net of the proportional allocation of goodwill of $41 million.
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On March 31, 2021, we sold 24 concrete plants and one aggregates quarry in France to Holcim for an amount in Euros equivalent to $44 million. These assets were located in the Rhône-Alpes region in the Southeast of France, east of our operations in Lyon. The operations related to these assets for the three-month period ended March 31, 2021 are presented in our statements of income, net of income tax, as part of the single line item “Discontinued operations.”
Recent Developments
Recent Developments Relating to Our Indebtedness
Refinancing of 2022 EUR Credit Agreement
On April 11, 2024, we signed and closed the refinancing of the 2022 EUR Credit Agreement, extending the final maturity to 2029. The refinanced 2022 EUR Credit Agreement consists of a €450 million 5-year amortizing term loan, and a new €300 million 4-year committed revolving credit facility. This represents a reduction of €50 million in the term loan and an additional source of liquidity in the form of a revolver. The rest of the terms and conditions of the 2022 EUR Credit Agreement remain substantially unchanged and are substantially the same as those of the Amended 2021 Credit Agreement. Cemex, S.A.B. de C.V.’s obligations are guaranteed by the Refinancing Guarantors. Debt under the refinanced 2022 EUR Credit Agreement was issued under the SLFF.
Reopening and Placement of 2023 CEBURES
On February 20, 2024, we closed the reopening and placement of the 2023 CEBURES, pursuant to which Cemex, S.A.B. de C.V. issued Ps 2 billion of the Floating Interest Rate Notes and Ps 3.5 billion of the Fixed Interest Rate Notes. The 2023 CEBURES issued pursuant to this reopening and placement have terms and conditions identical to those of the 2023 CEBURES of their corresponding series issued on October 5, 2023, with the exception of the issue date and the placement price.
Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings
On February 9, 2024, Cemex, S.A.B. de C.V. filed with the SEC and the BMV the notice and agenda, and supplemental information for its Ordinary General Shareholders’ Meeting, which took place in the city of Monterrey, Nuevo León, Mexico on March 22, 2024 (the “AGM”). The aforementioned documents described the topics to be discussed and voted during the AGM, providing additional context for the items in the agenda.
On February 23, 2024, Cemex, S.A.B. de C.V. filed with the SEC and the BMV the list of documents proposed for approval by its shareholders at the AGM. The list of documents included, among others: (i) the proposal for the appointment of the members of Cemex, S.A.B. de C.V.’s Board of Directors, as well as its Chairman, Secretary, and Assistant Secretary, voted on an individual basis as opposed to on a “group slate” basis; (ii) the proposal for the appointment of the members of the Audit Committee, the Corporate Practices and Finance Committee and the Sustainability, Climate Action, Social Impact, and Diversity Committee, as well as their respective presidents, secretaries and assistant secretaries, voted on an individual basis, as opposed to on a “group slate” basis; (iii) the proposal to set, from March 22, 2024 to the date of the next Cemex, S.A.B. de C.V. ordinary general shareholders’ meeting, the compensation, as honoraria, for each appointed member of Cemex, S.A.B. de C.V.’s Board of Directors for each meeting they attend, and the compensation, as honoraria, for each member of the Audit Committee, the Corporate Practices and Finance Committee, and the Sustainability, Climate Action, Social Impact, and Diversity Committee, for each committee meeting they attend; and (iv) the proposal for allocation of profits for the year ended December 31, 2023, including the declaration of a cash dividend of $120 million to be paid in Mexican Pesos in four equal installments; (v) the proposal to set the amount of $500 million or its equivalent in Mexican Pesos as the
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maximum amount of resources that, from the date of the AGM until the next ordinary general shareholders’ meeting of Cemex, S.A.B. de C.V. is held in 2025, Cemex, S.A.B. de C.V. may use for the acquisition of its own shares or securities that represent such shares; and (vi) the proposal to extend the RSIP (as defined below) for up to five years.
On March 25, 2024, Cemex, S.A.B. de C.V. filed with the SEC and the BMV the resolutions adopted at the AGM. The most significant items that were approved by the shareholders at the AGM were: (i) the appointment of the members of Cemex, S.A.B. de C.V.’s Board of Directors, as well as its Chairman, Secretary, and Assistant Secretary, on an individual basis; (ii) the appointment of the members of the Audit Committee, the Corporate Practices and Finance Committee and the Sustainability, Climate Action, Social Impact, and Diversity Committee, as well as their respective presidents, secretaries and assistant secretaries, on an individual basis; (iii) setting the compensation, as honoraria, for each member of Cemex, S.A.B. de C.V.’s Board of Directors for each meeting they attend, and the compensation, as honoraria, for each member of the Audit Committee, the Corporate Practices and Finance Committee, and the Sustainability, Climate Action, Social Impact, and Diversity Committee, for each Committee meeting they attend, from March 22, 2024 to the date of the next Cemex, S.A.B. de C.V. ordinary general shareholders’ meeting in 2025; (iv) the allocation of profits for the year ended December 31, 2023, including the declaration of a cash dividend of $120 million to be paid in Mexican Pesos in four equal installments; (v) setting the amount of $500 million, or its equivalent in Mexican Pesos, as the maximum amount of resources that Cemex, S.A.B. de C.V. may use for the acquisition of its own shares or securities that represent such shares, from the date of the AGM until the next ordinary general shareholders’ meeting of Cemex, S.A.B. de C.V. is held in 2025; and (vi) the extension of the RSIP for up to five years.
As a result of the AGM, as of March 22, 2024, (i) the Board of Directors is comprised of 13 members, ten (77%) of which are considered independent under Mexican Securities Market Law (as defined below) criteria; (ii) Rogelio Zambrano Lozano (Chairman), Fernando A. González Olivieri, Marcelo Zambrano Lozano, Armando J. García Segovia, Rodolfo García Muriel, Francisco Javier Fernández Carbajal, Armando Garza Sada, David Martínez Guzmán, Everardo Elizondo Almaguer, Ramiro Gerardo Villarreal Morales, Gabriel Jaramillo Sanint, Isabel María Aguilera Navarro, and María de Lourdes Melgar Palacios are the members of Cemex, S.A.B. de C.V.’s Board of Directors; (iii) Everardo Elizondo Almaguer (President), Francisco Javier Fernández Carbajal, and Gabriel Jaramillo Sanint are the members of the Audit Committee of Cemex, S.A.B. de C.V.’s Board of Directors; (iv) Francisco Javier Fernández Carbajal (President), Rodolfo García Muriel, and Ramiro Gerardo Villarreal Morales are the members of the Corporate Practices and Finance Committee of Cemex, S.A.B. de C.V.’s Board of Directors; (v) Armando J. García Segovia (President), Marcelo Zambrano Lozano, Isabel María Aguilera Navarro, and María de Lourdes Melgar Palacios are the members of the Sustainability, Climate Action, Social Impact, and Diversity Committee of Cemex, S.A.B. de C.V.’s Board of Directors; (vi) Roger Saldaña Madero and René Delgadillo Galván are the Secretary and Assistant Secretary, respectively, of Cemex, S.A.B. de C.V.’s Board of Directors and each of its Committees; (vii) the compensation amount, as honoraria, for each of the 13 members of Cemex, S.A.B. de C.V.’s Board of Directors was set at Ps 543,500.00 for each meeting they attend; and (viii) the compensation amount, as honoraria, for each of the three members of the Audit Committee, each of the three members of the Corporate Practices and Finance Committee, and each of the four members of the Sustainability, Climate Action, Social Impact, and Diversity Committee was set at Ps 131,000.00 for each Committee meeting they attend.
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As of March 22, 2024, the composition of Cemex, S.A.B. de C.V.’s Board of Directors was as follows:
Snapshot of the Board of Directors as of March 22, 2024
Gender
As of March 22, 2024, Cemex, S.A.B. de C.V.’s Board of Directors was comprised of 13 members, of which 85% were men and 15% were women.
Tenure (in years as a member of the Board of Directors)
As of March 22, 2024, Cemex, S.A.B. de C.V.’s Board of Directors’ average tenure was 14 years.
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Independence
As of March 22, 2024, Cemex, S.A.B. de C.V.’s Board of Directors was comprised of 13 members, of which 23% were considered to be non-independent and 77% were considered to be independent under Mexican Securities Market Law (as defined below).
Recent Developments Relating to our Stock Repurchase Program
From January 1, 2024 to April 26, 2024, Cemex, S.A.B. de C.V. did not repurchase any CPOs under any stock repurchase program.
Recent Developments Relating to Our Business and Operations
EUA Forward Contracts
Through our CO2 reduction roadmap to 2030 in Europe, we will surrender less emission allowances each year, as of the date of this annual report, not expecting a deficit until 2029. However, with the goal of covering a significant part our expected emission allowances deficits in Europe in 2029 and 2030, during March 2024, Cemex, S.A.B. de C.V. entered into physically-settled forward contracts with two large financial institutions for a nominal amount of €152 million to purchase 1.8 million EUAs at a fixed price. As a result, as of the date of this annual report, we believe that our operations in Europe have their CO2 emissions allowances requirements mostly covered until the end of 2030.
Divestment of our Operations in the Philippines
On April 25, 2024, we entered into separate agreements with DACON Corporation, DMCI Holdings, Inc. and Semirara Mining & Power Corporation, (i) to have Cemex Asia divest a 100% equity interest in CASEC, which in turn owns approximately 89.86% of CHP, which is listed on the Philippine Stock Exchange, Inc., for a purchase price of $306 million. CHP is the owner of Cemex’s main operating subsidiaries in the Philippines, APO and Solid, which are engaged in the production, sale, and distribution of cement and other buildings materials in the Philippines; (ii) pursuant to which one of the buyers is acquiring a 100% interest in ALQC for a purchase price of $43 million, of which 40% is to be paid to Cemex Asia for its indirect equity interest in ALQC; and (iii) pursuant to which one of the buyers is acquiring a 100% interest in IQAC for a purchase price of $98 million, of which 40% is to be paid to Cemex Asia for its indirect equity interest in IQAC. The transaction is subject to customary purchase price adjustments. The transaction, if closed, would represent the divestment of all of our operations and assets in the Philippines. As of the date of this annual report, Cemex expects to finalize this transaction before December 31, 2024, subject to the satisfaction of closing conditions, including, but not limited to, the approval by the Philippine Competition Commission and the fulfillment of any mandatory tender offer requirement by the purchasers to the shareholders of CHP, including the minority interest owned by third parties in CHP. As of December 31, 2023, our operation in the Philippines represented 2% of our external revenues by reportable segment.
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Recent Developments Relating to Our Regulatory Matters and Legal Proceedings
Antitrust Matters
Polish Antitrust Investigation
On March 7, 2024, the Polish Government, who is also acting as a party in the ECJ proceeding, delivered to the ECJ its written position regarding the independence of the Polish Supreme Court judge that sent the judicial questions to the ECJ, considering said judge to have been wrongly appointed and thus, shall not be treated as entitled to act as an independent judge in front of the ECJ. Consequently, as of the date of this annual report, we expect the ECJ will reject to answer the judicial questions. As of the date of this annual report, we don’t expect this development to have a material adverse impact on our results of operations, liquidity, and financial condition.
Environmental Matters
Emissions Control and Raw Materials Extraction
The constitutional challenge filed against the Ecological Taxes in the state of Yucatán, Mexico has been resolved against Cemex; and, as of the date of this annual report, we are evaluating next steps we may take to prevent the application of these taxes to our operations. As of the date of this annual report, we don’t expect this resolution, individually, to have a material adverse impact on our results of operations, liquidity, and financial condition.
Energy Procurement
The constitutional challenges filed against the Energy Industry Law Reform by the private generators were withdrawn in the first quarter of 2024. Also in the first quarter of 2024, Cemex withdrew from the constitutional challenge filed against the increase in transmission charges. As the Energy Industry Law Reform has been declared unconstitutional, and the private generators have obtained favorable resolutions to the constitutional challenges filed against the increase in transmission charges, these withdrawals do not have a negative impact for Cemex. On March 27, 2024, the CRE granted a favorable resolution regarding the private generators’ request to migrate to the Electricity Market. Consequently, on March 27, 2024, the private generators filed a request for CENACE to instruct CFE the signing of a new interconnection contract to operate in the Electricity Market. The new interconnection contract was signed with CFE on April 18, 2024. As of the date of this annual report, considering the Energy Industry Law Reform has been declared unconstitutional, we do not expect any adverse material impact on our business, operations, and contractual obligations in Mexico to arise from this matter.
On January 24, 2024, notwithstanding our request filed with the SENER to obtain a five-year permit for the import of petcoke into Mexico, the SENER authorized a one-year import permit. As of the date of this annual report, we do not expect this development to have a material adverse impact on our results of operations, liquidity, and financial condition.
Tax Matters
Spain – Tax Assessment for the Years 2010 to 2014
On February 26, 2024, Cemex España received the provisional assessment corresponding to the TEAC ruling for the years 2010-2014 notified on December 11, 2023 (the “Provisional Assessment”), for a total of €58 million ($66 million as of December 31, 2023, based on an exchange rate of €0.88 to $1.00), including the amount of income tax plus interest and penalty. The Provisional Assessment provides for a reduction of the originally imposed penalty, under the condition that Cemex España does not appeal the Provisional Assessment and pays or requests for a postponement of the payment over the required amounts. Cemex decided not to appeal the amount of tax plus late interest and requested a postponement of the payment of the penalty to the Spanish Tax Authorities. Additionally, on April 1, 2024,
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Cemex España paid the amount of tax plus late interest and only the penalty is pending payment. As of the date of this annual report, we don’t expect this development to have a material adverse impact on our results of operations, liquidity, and financial condition.
Recent Developments Relating to Our Major Shareholders
On January 25, 2024, BlackRock, Inc. (“BlackRock”) filed Amendment No. 15 to a statement on Schedule 13G with the SEC, stating that according to their calculations made as of December 31, 2023, BlackRock beneficially owned 1,331,556,388 CPOs, representing 8.8% of Cemex, S.A.B. de C.V.’s outstanding capital stock.
On February 9, 2024, FMR LCC (“FMR”) filed Amendment No. 1 to a statement on Schedule 13G with the SEC, stating that according to their calculations made as of December 29, 2023, FMR beneficially owned 799,728,895 CPOs, representing 1.84% of Cemex, S.A.B. de C.V.’s outstanding capital stock.
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Item 6—DIRECTORS, SENIOR MANAGEMENT, AND EMPLOYEES
Senior Management and Directors
Senior Management
Set forth below is the name, position, and experience of each member of our senior management team as of December 31, 2023. The terms of office of the senior managers are indefinite.
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AGE 69 |
DIRECTOR SINCE 2015 | |
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Citizenship Mexican
Nationality Mexican
Seniority Since 1989
Tenure as Cemex’sChief Executive Officer Since 2014
Type of Board Member Non-Independent
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FERNANDO A. GONZÁLEZ OLIVIERI
Chief Executive Officer
Board Memberships at Listed Entities Mr. González Olivieri is a member of the board of directors of GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.), and of Axtel, S.A.B. de C.V. (both Mexican corporations listed in Mexico).
Experience at Cemex and Other Relevant Experience Mr. González Olivieri joined Cemex in 1989 and held various positions in the Strategic Planning, Business Development and Human Resources departments through 1998. From 1998 through 2009, Mr. González Olivieri led various regions of Cemex, including SCA&C, Europe, Asia and Oceania. He was appointed as Cemex’s Executive Vice President of Planning and Development in May 2009, and he was appointed Cemex’s Chief Financial Officer in 2011. Mr. González Olivieri held these positions until he was named Chief Executive Officer in 2014. In 2023, he was named President of the Global Cement and Concrete Association.
With his comprehensive knowledge of Cemex’s organization and the markets where it operates around the world, Mr. González Olivieri brings to Cemex’s Board of Directors and Senior Management a unique global perspective and innovative leadership, that directly contributes to formulating and implementing a results-oriented business strategy. With over 30 years of direct involvement in top management positions, and a detailed understanding of Cemex’s four main businesses (cement production, ready-mix concrete, aggregates and Urbanization Solutions), he has given particular attention to constantly improving Cemex’s Health and Safety policies, and to implementing a sustainability strategy aimed at achieving Net Zero Carbon growth and development. Mr. González Olivieri is a member of the board of trustees of Tecmilenio University, which forms part of the Instituto Tecnológico y de Estudios Superiores de Monterrey.
Education Mr. González Olivieri holds a B.A. degree in Business Administration, and an MBA from the Instituto Tecnológico y de Estudios Superiores de Monterrey.
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AGE 55 |
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Citizenship Spanish
Nationality Spanish
Seniority Since 1996
Tenure as President of Cemex USA Since 2019
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JAIME MUGUIRO DOMÍNGUEZ
President of Cemex USA
Experience at Cemex and Other Relevant Experience Mr. Muguiro Domínguez has held several executive positions in the Strategic Planning, Business Development, Ready-Mix Concrete, Aggregates and Human Resources areas. He headed Cemex’s operations in Egypt, our former Mediterranean Region operations, and more recently, our operations in the South, Central America, and the Caribbean region.
Education Mr. Muguiro Domínguez holds a B.A. degree in Management from San Pablo CEU University in Spain, a Law degree from the Universidad Complutense de Madrid, and an MBA from the Massachusetts Institute of Technology.
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AGE 51 |
||
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Citizenship Mexican
Nationality Mexican
Seniority Since 2019
Tenure as President of Cemex Mexico: Since 2019 | ||
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RICARDO NAYA BARBA
President of Cemex Mexico
Experience at Cemex and Other Relevant Experience Mr. Naya Barba has held several executive positions, including Vice President of Strategic Planning for the South, Central America and the Caribbean region, Vice President of Strategic Planning for the Europe, Middle East, Africa and Asia region, President of Cemex Poland and the Czech Republic, Vice President of Strategic Planning for the United States, Vice President of Commercial and Marketing in Mexico, Vice President of Distribution Segment Sales in Mexico, and most recently, President of Cemex Colombia.
Education Mr. Naya Barba holds a B.A. degree in Economics from the Instituto Tecnológico y de Estudios Superiores de Monterrey and an MBA from the Massachusetts Institute of Technology.
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AGE 53 |
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Citizenship Mexican
Nationality Mexican
Seniority Since 1993
Tenure as President of Cemex Europe, Middle East, Africa & Asia Since 2020 | ||
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SERGIO MAURICIO MENÉNDEZ MEDINA
President of Cemex Europe, Middle East, Africa & Asia
Experience at Cemex and Other Relevant Experience Mr. Menéndez Medina has held several executive positions, including Director of Planning and Logistics in Asia, Corporate Director of Commercial Development, President of Cemex Philippines, Vice President of Strategic Planning for the Europe, Middle East, Africa and Asia region, President of Cemex Egypt, Vice President of Infrastructure Segment and Government Sales in Mexico, and most recently, as Vice President of Distribution Segment Sales in Mexico.
Education Mr. Menéndez Medina holds a B.S. degree in Industrial Engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey and an MBA from Stanford University.
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AGE 53 |
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Citizenship Mexican and Spanish
Nationality Mexican
Seniority Since 1998
Tenure as Executive Vice President of Strategic Planning and Business Development Since 2020
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JOSÉ ANTONIO GONZÁLEZ FLORES
Executive Vice President of Strategic Planning and Business Development
Experience at Cemex and Other Relevant Experience Mr. González Flores has held executive positions in the Finance, Strategic Planning, and Corporate Communications and Public Affairs areas, including, most recently, Executive Vice President of Finance and Administration (CFO).
Additionally, Mr. González Flores is a member of the board of directors of GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.) and is an alternate director of the board of directors of Axtel, S.A.B. de C.V.
Education Mr. González Flores holds a B.S. degree in Industrial Engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey and an MBA from Stanford University.
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AGE 60 |
||
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Citizenship Mexican
Nationality Mexican
Seniority Since 1996
Tenure as Executive Vice President of Digital and Organization Development Since 2020
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LUIS HERNÁNDEZ ECHÁVEZ
Executive Vice President of Digital and Organization Development
Experience at Cemex and Other Relevant Experience Mr. Hernández Echávez has held senior management positions in Strategic Planning and Human Resources. In his current position, he heads the areas of Organization and Human Resources, Information Technology, Digital Innovation, as well as Cemex Ventures.
Education Mr. Hernández Echávez holds a B.S. degree in Civil Engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey, a Master’s degree in Civil Engineering, and an MBA from the University of Texas at Austin.
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AGE 65 |
||
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Citizenship American
Nationality American
Seniority Since 2000
Tenure as Executive Vice President of Finance and Administration and Chief Financial Officer Since 2020 | ||
MAHER AL-HAFFAR
Executive Vice President of Finance and Administration and Chief Financial Officer
Experience at Cemex and Other Relevant Experience Mr. Al-Haffar has held several executive positions, including Managing Director of Finance, Head of Investor Relations, and most recently, Executive Vice President of Investor Relations, Corporate Communications and Public Affairs.
Additionally, he is a member of the UN Global Compact CFO Coalition for the SDGs, was a member of the NYSE Advisory Board and, before joining Cemex, he spent 19 years with Citicorp Securities Inc. and with Santander Investment Securities as an investment banker and capital markets professional.
Education Mr. Al-Haffar holds a B.S. degree in Economics from the University of Texas and a Master’s degree in International Relations and Finance from Georgetown University.
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AGE 49 |
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Citizenship Mexican and German
Nationality Mexican
Seniority Since 1996
Executive Vice President of Corporate Affairs, Enterprise Risk Management and Social Impact Since 2021
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MAURICIO DOEHNER COBIÁN
Executive Vice President of Corporate Affairs, Enterprise Risk Management and Social Impact
Experience at Cemex and Other Relevant Experience Mr. Doehner Cobián has held several executive positions in areas such as Strategic Planning and Enterprise Risk Management for Europe, Asia, the Middle East, South America and Mexico, and most recently Executive Vice President of Corporate Affairs and Enterprise Risk Management.
Additionally, he has also worked in the public sector within the office of the Mexican Presidency. Mr. Doehner was president of the Mexican National Cement Chamber (Cámara Nacional del Cemento) between 2017 and 2019, Vice President of the Transformation Industry Chamber (CAINTRA — Cámara de la Industria de Transformación) between 2012 and 2013. He’s currently Vice President of Social Responsibility and Vertebration of the Mexican Employers Confederation (COPARMEX — Confederación Patronal de la República Mexicana), and member of the board of directors of Vista Oil & Gas, S.A.B. de C.V., ITESM’s Escuela de Ciencias Sociales y Gobierno (formerly EGAP), Trust for the Americas and Museo de Arte Contemporáneo de Monterrey, A.C.
Education Mr. Doehner Cobián holds a B.A. degree in Economics from the Instituto Tecnológico y de Estudios Superiores de Monterrey, an MBA from Instituto Panamericano de Alta Dirección de Empresas (IPADE) and IESE Business School of the University of Navarra in Madrid, and a Master’s in Public Administration from Harvard University.
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AGE 58 |
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Citizenship American
Nationality Spanish
Seniority Since 1998
Tenure as President of Cemex South, Central America and the Caribbean Since 2019 | ||
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JESÚS VICENTE GONZÁLEZ HERRERA
President of Cemex South, Central America and the Caribbean
Experience at Cemex and Other Relevant Experience Mr. González Herrera has held several senior positions, including Corporate Director of Strategic Planning, Vice President of Strategic Planning in Cemex USA, President of Cemex Central America, President of Cemex UK and, more recently, Executive Vice President of Sustainability and Operations Development.
Education Mr. González Herrera holds a B.S. and an M.Sc. in Naval Engineering, both from the Polytechnic University of Madrid and an MBA from IESE—University of Navarra, Barcelona.
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AGE 64 |
| |
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Citizenship American
Nationality American
Seniority Since 2006
Tenure as Executive Vice President of Investor Relations, Corporate Communications, and Public Affairs Since 2021 | ||
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LOUISA (LUCY) P. RODRIGUEZ
Executive Vice President of Investor Relations, Corporate Communications and Public Affairs
Experience at Cemex and Other Relevant Experience Ms. Rodriguez has held several executive positions including Head of Investor Relations. She has over 25 years of experience in international finance and capital markets.
Prior to Cemex, Ms. Rodríguez spent 15 years at Citibank and Santander where she was a capital markets professional in Emerging Markets and held various senior management roles. Additionally, she is a member of the board of directors of MSD Investment Corp, a $2 billion private credit fund in the U.S. In her early career, she also worked for KPMG, and she was previously a Certified Public Accountant.
Education Ms. Rodriguez holds a B.A. degree in Economics from Trinity College (Hartford, CT.), an MBA from New York University, and a Master’s from Columbia University School of International and Public Affairs.
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AGE 60 |
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Citizenship Mexican
Nationality Mexican
Seniority Since 1985
Tenure as Vice President of Comptrollership Since 1999
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RAFAEL GARZA LOZANO
Vice President of Comptrollership
Experience at Cemex and Other Relevant Experience Mr. Garza Lozano is a member of the board of directors of the Mexican Council for Research and Development of Financial Reporting Standards (CINIF — Consejo Mexicano para la Investigación y Desarrollo de Normas de Información Financiera) and an alternate member of the board of directors of GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.)
Mr. Garza Lozano is a certified public accountant.
Education Mr. Garza Lozano has a Master’s degree in Administration and Finance from the Instituto Tecnológico y de Estudios Superiores de Monterrey. He also attended executive programs at Instituto Tecnológico Autónomo de México (ITAM), Instituto Panamericano de Alta Dirección de Empresas (IPADE), and Harvard University.
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AGE 55 |
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Citizenship Mexican
Nationality Mexican
Seniority Since 2000
Tenure as Senior Vice President of Legal Since 2017
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ROGER SALDAÑA MADERO
Senior Vice President of Legal
Experience at Cemex and Other Relevant Experience Mr. Saldaña Madero joined Cemex in 2000 and served in different positions in the Legal Department of the Company. On March 30, 2017, he was appointed Cemex’s General Counsel and Secretary of Cemex’s Board of Directors and its Committees. Prior to joining Cemex, he served as Legal Counsel in Cydsa, S.A.B. de C.V. from 1995 to 2000 in the city of Monterrey, Mexico, was a foreign associate in the law firm Fried, Frank, Harris, Shriver & Jacobson, in New York, N.Y., USA from 1994 until 1995, and previously was Chief of the Double Taxation Department in Mexico’s Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) in Mexico City, Mexico.
Since 2022, Mr. Saldaña Madero has actively participated in the Global Compact Group of the United Nations Organization focused on Corporate Governance and its evolution. He also participated as a speaker in September 2023 in the United Nations Global Compact Leader Summit held in New York City. Additionally, he was invited by the Global Compact Group as an observer to the tenth working session of participating states of the United Nations Convention against Corruption (UNCAC) of which Mexico is a signatory state.
Education Mr. Saldaña Madero is a graduate of the Universidad de Monterrey, A.C. with a degree in Law, holds a Master’s degree in Law (LL.M.) from Harvard University, and a diploma from Harvard University’s International Tax Program. Harvard University International Tax Program awarded Mr. Saldaña Madero a certificate of merit for research and writing for the dissertation “Transfer Pricing in Mexico, Current Status and Future Trends”. Mr. Saldaña Madero was an Organization of American States and Consejo Nacional de Ciencia y Tecnología scholar.
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Senior Management Skill Matrix
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Snapshot of the Board of Directors as of December 31, 2023
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Board of Directors
Set forth below are the names, positions, and experiences of the members of Cemex, S.A.B. de C.V.’s Board of Directors as of December 31, 2023. For information regarding the individuals that were appointed as members of Cemex, S.A.B. de C.V.’s Board of Directors at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 22, 2024, see “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
No alternate directors were elected at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting that took place on March 22, 2024. Members of Cemex, S.A.B. de C.V.’s Board of Directors serve for one-year terms.
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AGE 67 |
DIRECTOR SINCE 1987 | |
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Chairman Since 2014
Citizenship Mexican
Nationality Mexican
Type of Board Member Non-Independent | ||
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ROGELIO ZAMBRANO LOZANO
Chairman of Cemex, S.A.B. de C.V.’s Board of Directors
Board Memberships at Listed Entities N/A
Other Current Roles Mr. Zambrano Lozano is an alternate member of the board of directors of Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México, a member of the Regional Council of Banco de México (Mexico’s central bank), a member of the Consejo Mexicano de Negocios, and a member of the board of trustees of the Instituto Tecnológico y de Estudios Superiores de Monterrey, as well as a visiting professor at this same university.
Experience Mr. Zambrano Lozano was President of the Finance Committee of Cemex’s Board of Directors from 2009 until March 2015.
He has been involved in the construction and building materials industries for over 40 years, as well as in various entrepreneurship matters in Mexico and the United States, after founding and serving as co-chief executive officer of Carza, S.A.P.I. de C.V., a leading real estate development company. With his vast experience and proven leadership, since his appointment as Chairman of Cemex’s Board of Directors, Mr. Zambrano Lozano has been responsible for guiding Cemex’s global business strategy, particularly focusing on strengthening best corporate governance practices, based on a commitment to create lasting value for all Cemex’s stakeholders.
He supports various non-profit organizations related to education, health and entrepreneurship.
Education Mr. Zambrano Lozano holds a B.S. degree in Industrial and Systems Engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey, and an MBA from the Wharton Business School of the University of Pennsylvania.
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AGE 69 |
DIRECTOR SINCE 2015 | |
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Citizenship Mexican
Nationality Mexican
Type of Board Member Non-Independent
| ||
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FERNANDO A. GONZÁLEZ OLIVIERI
Chief Executive Officer
Board Memberships at Listed Entities Mr. González Olivieri is a member of the board of directors of GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.) and Axtel, S.A.B. de C.V., both Mexican corporations listed in Mexico.
Experience and Education See “Item 6—Directors, Senior Management and Employees—Senior Management and Directors—Senior Management.”
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| PART I | ||||
|
AGE 68 |
DIRECTOR SINCE 2017 | |
|
Citizenship Mexican
Nationality Mexican
Type of Board Member Non-Independent
Tenure on Cemex’s Sustainability, Climate Action, Social Impact, and Diversity Committee Since 2017 | ||
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MARCELO ZAMBRANO LOZANO
Board Memberships at Listed Entities Mr. Zambrano Lozano is a member of the technical committee of one of Go Proyectos, S.A. de C.V.’s development trusts, known by its ticker symbol as CARZACK 18, which is listed in Mexico. He is a member of technical committee of Fibra Inn, a real estate investment trust listed in Mexico.
Other Current Roles Mr. Zambrano Lozano is a founding partner and executive chairman of the board of directors of Carza, S.A.P.I. de C.V., a recognized real estate development non-public corporation in the residential, commercial, and industrial sectors. He is a member of the board of directors of Grupo Vigia, S.A. de C.V. (a Mexican non-public corporation dedicated to distribution of gas, fuel, and other oil derivatives) and GreenPaper (Productora de Papel, S.A. de C.V.) (a Mexican non-public corporation dedicated to the fabrication and distribution of paper). He is also a member of the general board of Universidad de Monterrey, A.C. and Teléfonos de México, S.A.B. de C.V. (a Mexican non-public corporation).
Experience Mr. Zambrano Lozano’s ample knowledge of the real estate and construction industries in Mexico and the United States provides Cemex’s Board of Directors with an insightful view of major trends shaping the sector globally, particularly in key areas such as logistics and supply-chain development, thus helping Cemex to anticipate the evolving needs of its customers in the aforementioned markets.
Education Mr. Zambrano Lozano holds a B.A. degree in Marketing from the Instituto Tecnológico y de Estudios Superiores de Monterrey.
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| PART I | ||||
|
AGE 71 |
DIRECTOR SINCE 1983 | |
|
Citizenship Mexican
Nationality Mexican and Spanish
Type of Board Member Independent | ||
| Tenure on Cemex’s Sustainability, Climate Action, Social Impact, and Diversity Committee
|
Member since 2014 and President since 2014 | |
ARMANDO J. GARCÍA SEGOVIA
Board Memberships at Listed Entities Mr. García Segovia is a member of the board of directors of Hoteles City Express, S.A.B. de C.V. and an independent member of the board of directors of GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.), both of which are listed corporations in Mexico.
Other Current Roles Mr. García Segovia is a member of the board of directors of Innovación y Conveniencia, S.A. de C.V., PYOSA Industrias, S.A.P.I. de C.V. (both Mexican non-public corporations) and Universidad
de Monterrey, A.C. He is a member of the Consejo de Participación Ciudadana de Parques y Vida Silvestre de Nuevo León, a non-profit entity with a sustainability agenda. Mr. García Segovia is the founder and chairman of the board of directors of Comenzar de Nuevo, A.C., a non-profit organization focused on the treatment, education, prevention, and research of eating behavior disorders and related diseases. Mr. García Segovia also serves as honorary consul in Monterrey of the Kingdom of Denmark.
Experience Mr. García Segovia worked at Cydsa, S.A.B. de C.V. (a Mexican listed corporation) and Conek, S.A. de C.V. (a Mexican non-public corporation). From 1985 to 2010, he held several positions at Cemex, including Director of Operations and Strategic Planning, Corporate Services, and Business Development, as well as Executive Vice President of Development, Technology, Energy and Sustainability. He was also vice president of the Mexican Employers’ Association (COPARMEX), chairman of the Private Sector Commission for Sustainable Development Studies (CESPEDES), member of the board of directors of the World Environmental Center (a non-profit organization), and vice president of the Patronato del Museo de la Fauna y Ciencias Naturales, A.B.P. Since 2014, he serves as President of the Sustainability, Climate Action, Social Impact, and Diversity Committee of Cemex’s Board of Directors (formerly known as the Sustainability Committee).
Mr. García Segovia brings to Cemex’s Board of Directors a broad knowledge of the technical and production aspects of the global building-materials industry, along with a deep commitment to sustainability, climate action and nature conservancy, that provides valuable leadership to Cemex’s sustainability and climate action strategy, a core component to Cemex’s long-term value creation objective.
Education Mr. García Segovia holds a B.S. degree in Mechanical Engineering and Administration from the Instituto Tecnológico y de Estudios Superiores de Monterrey, and an MBA from the University of Texas.
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| PART I | ||||
|
AGE 78 |
DIRECTOR SINCE 1985 | |
|
Citizenship Mexican
Nationality Mexican
Type of Board Member Independent
Tenure on Cemex’s Corporate Practices and Finance Committee Since 2015
| ||
|
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RODOLFO GARCÍA MURIEL
Board Memberships at Listed Entities N/A
Other Current Roles Mr. García Muriel is the chief executive officer of Compañía Industrial de Parras, S.A. de C.V., chairman of the board of directors of Grupo Romacarel, S.A.P.I de C.V., (both are non-public corporations), and a member of the regional board of directors of Grupo Financiero Citibanamex (a non-public corporation).
Experience Mr. García Muriel was a member of the Finance Committee of Cemex’s Board of Directors from 2009 until March 2015.
He is a Mexican business leader with decades of experience and an outstanding record as founder, director, and president of major companies in the manufacturing, construction, transport, and communications industries. His vast business experience brings to Cemex’s Board of Directors useful knowledge in critical areas such as logistics and manufacturing as well as macroeconomic and market trends
Education Mr. García Muriel holds a B.S. degree in Electric Mechanical Engineering from the Universidad Iberoamericana and completed specialized programs in Business Administration at both Harvard University, and the Anderson School of the University of California in Los Angeles.
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| PART I | ||||
|
AGE 68 |
DIRECTOR SINCE 2012 | |
|
Citizenship Mexican
Nationality Mexican
Type of Board Member Independent
Tenure on Cemex’s Audit Committee Since 2015
Tenure on Cemex’s Corporate Practices and Finance Committee Member since 2015 and President since 2019 | ||
|
| ||
FRANCISCO JAVIER FERNÁNDEZ CARBAJAL
Board Memberships at Listed Entities Mr. Fernández Carbajal is a member of the board of directors of Alfa, S.A.B. de C.V. (a listed corporation in Mexico) and VISA, Inc. (a NYSE-listed corporation), as well as an alternate member of the board of directors of Fomento Económico Mexicano, S.A.B. de C.V. (a corporation listed in Mexico and on the NYSE).
Other Current Roles Mr. Fernández Carbajal is the chief executive officer of Servicios Administrativos Contry, S.A. de C.V. (a Mexican non-public corporation).
Experience Previously, Mr. Fernández Carbajal held positions Grupo Financiero BBVA México S.A. de C.V., including deputy president of strategic planning, president of systems and operations, chief financial office, and chief executive officer.
With a business career of more than 40 years and in-depth knowledge of specialized areas like payment systems and complex financial services worldwide, Mr. Fernández Carbajal brings to Cemex’s Board of Directors relevant insights in strategic planning and risk management, as well as in essential business functions, including financial reporting and competitive compensation mechanisms, which are fundamental to attracting and retaining talent.
Education Mr. Fernández Carbajal holds a B.S. degree in Electric Mechanical Engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey, and an MBA from the Harvard Business School.
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| PART I | ||||
|
AGE 66 |
DIRECTOR SINCE 2015 | |
|
Citizenship Mexican
Nationality Mexican
Type of Board Member Independent
Tenure on Cemex’s Corporate Practices and Finance Committee Since 2015 | ||
|
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ARMANDO GARZA SADA
Board Memberships at Listed Entities Mr. Garza Sada is the chairman of the board of directors of Alfa, S.A.B. de C.V., a listed corporation in Mexico with presence in 25 countries, and a business portfolio that includes petrochemicals, refrigerated food, and energy. He is also chairman and co-chairman, respectively, of the board of directors of Alpek, S.A.B. de C.V. and Nemak, S.A.B. de C.V., as well as a member of the board of directors of Axtel, S.A.B. de C.V., El Puerto de Liverpool, S.A.B. de C.V., and Grupo Lamosa, S.A.B. de C.V., all of which are listed corporations in Mexico.
Other Current Roles Mr. Garza Sada is an alternate member of the board of directors of Grupo Financiero BBVA México, S.A. de C.V. (a private financial institution). He is also a member of the board of trustees of the Instituto Tecnológico y de Estudios Superiores de Monterrey.
Experience Mr. Garza Sada’s decades of experience at the highest corporate level in top-ranked companies provides Cemex’s Board of Directors with a unique insight on the global economic landscape, and a hands-on experience to best align Cemex’s business strategy with its day-to-day operations.
Education Mr. Garza Sada holds a B.S. degree in Industrial Engineering from the Massachusetts Institute of Technology and an MBA from Stanford University.
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| PART I | ||||
|
AGE 66 |
DIRECTOR SINCE 2015 | |
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Citizenship British
Nationality British
Type of Board Member Independent | ||
|
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DAVID MARTÍNEZ GUZMÁN
Board Memberships at Listed Entities Mr. Martínez Guzmán serves on the board of directors of Alfa, S.A.B. de C.V. and Vitro, S.A.B. de C.V., both of which are listed corporations in Mexico, and Sabadell Bank, a listed corporation in Spain.
Other Current Roles Mr. Martínez Guzmán is the founder and principal of Fintech Advisory Inc., as well as managing director of its London subsidiary, Fintech Advisory, Ltd., and member of the board of directors of ICA Tenedora, S.A. de C.V.
Experience Mr. Martínez Guzmán is the principal of Fintech Advisory Inc., which he founded in 1987. From 1984 to 1986, Mr. Martínez Guzmán worked as vice president, Latin America Sovereign Restructuring unit of Citibank, N.A. in New York, where he helped coordinate the 1984 Argentina Financing Plan. Since founding Fintech, Mr. Martínez Guzmán has participated, at times as the largest creditor, in most of the sovereign debt restructurings around the world, historically approaching sovereign restructurings with a collaborative approach to governments. Mr. Martínez Guzman also has a strong track record of successful involvement in corporate restructurings and debt exchanges, most often working with companies to ensure long-term viability and business continuity as a value-recovering proposition. More recently, Mr. Martínez Guzmán has allocated a significant portion of Fintech’s position to private equity investments, successfully investing across multiple jurisdictions in Latin America, Asia, and Europe, and across a wide range of sectors, including telecom and media, utilities, industrials, infrastructure, construction, oil and gas, and financial institutions.
Mr. Martínez Guzmán brings a renowned worldwide expertise in the financial sector and global markets to Cemex’s Board of Directors, providing significant guidance on Cemex’s proactive financial management for deleveraging and achieving an investment grade credit rating, as well as Cemex’s sustainable growth strategy.
Education Mr. Martínez Guzmán holds a B.S. degree in Mechanical and Electrical Engineering from the Universidad Nacional Autónoma de México (UNAM), a B.A. degree in Philosophy from the Universitas Gregoriana in Rome, Italy, and an MBA from Harvard Business School.
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| PART I | ||||
|
AGE 80 |
DIRECTOR SINCE 2016 | |
|
Citizenship Mexican
Nationality Mexican
Type of Board Member Independent
Tenure on Cemex’s Audit Committee Member since 2018 and President since 2019 | ||
|
| ||
EVERARDO ELIZONDO ALMAGUER
Board Memberships at Listed Entities Mr. Elizondo Almaguer is a member of the board of directors of Grupo Financiero Banorte, S.A.B. de C.V., of Compañía Minera Autlán, S.A.B. de C.V., and of Gruma, S.A.B. de C.V., all of which are listed corporations in Mexico.
Other Current Roles Mr. Elizondo Almaguer is a professor of Macroeconomics at EGADE Business School of the Instituto Tecnológico y de Estudios Superiores de Monterrey and at the School of Economics of the Universidad Autónoma de Nuevo León (UANL). He is also a member of the board of directors of Afore XXI-Banorte, S.A. and Rassini, S.A.B. de C.V. (both are non-public corporations).
Mr. Elizondo Almaguer qualifies as a “financial expert” for purposes related to the Sarbanes-Oxley Act.
Experience He served as deputy governor of the Banco de México (Mexico’s central bank) from 1998 to 2008. Before that, he was the director for Economic Studies at Alfa, S.A.B. de C.V. (a Mexican listed company), and at Grupo Financiero BBVA México S.A. de C.V. (a private financial institution). He founded and was the director of the Graduate School of Economics of the Universidad Autónoma de Nuevo León.
With a distinguished professional career as a financial analyst, exemplary public official and academic scholar, Mr. Elizondo Almaguer brings to Cemex’s Board of Directors extensive knowledge of the financial system and the international macroeconomic environment, providing insights to ensure Cemex’s full observance of best corporate practices, and identify new business opportunities.
Education Mr. Elizondo Almaguer holds a B.A. degree in Economics from the Universidad Autónoma de Nuevo León, a Master’s in Economics from the University of Wisconsin-Madison, a certificate from Harvard University’s International Tax Program and an Honoris Causa Doctorate from the Universidad Autónoma de Nuevo León.
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| PART I | ||||
|
AGE 76 |
DIRECTOR SINCE 2017 | |
|
Citizenship Mexican
Nationality Mexican and Spanish
Type of Board Member Independent | ||
|
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RAMIRO GERARDO VILLARREAL MORALES
Board Memberships at Listed Entities Mr. Villarreal Morales is a member of the board of directors of Andean Precious Metals, a company listed on the Toronto Stock Exchange, and GCC, S.A.B. de C.V. (formerly Grupo Cementos de Chihuahua, S.A.B. de C.V.) and Vinte Viviendas Integrales, S.A.B. de C.V., two public corporations listed in Mexico.
Other Current Roles Mr. Villarreal Morales is a member of the advisory board of Arendal (a non-public corporation in the construction industry).
Experience Mr. Villarreal Morales joined Cemex in 1987 as General Legal Director, and subsequently served in various positions, including Executive Vice President of Legal and Advisor to the Chairman of Cemex’s Board of Directors and the Chief Executive Officer until December 2017. Previously, he served as general director of the regional bank division of Banpaís, where he was responsible for the operation of the bank’s 121 branches, and, until February 2012, he was the secretary of the board of directors of Enseñanza e Investigación Superior, A.C., a non-profit managed by the Instituto Tecnológico y de Estudios Superiores de Monterrey.
He served as Secretary of Cemex’s Board of Directors from 1995 to March 30, 2017.
With over 50 years of professional experience in different countries where Cemex has operations, Mr. Villarreal Morales provides Cemex’s Board of Directors with key guidance around regulatory and legal matters, as well as international financial transactions, helping to ensure strict observance of all applicable laws.
Education Mr. Villarreal Morales holds a B.A. degree in Law from the Universidad Autónoma de Nuevo León, and a Master’s in Finance from the University of Wisconsin-Madison.
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|
AGE 74 |
DIRECTOR SINCE 2018 | |
|
Citizenship Brazilian
Nationality Colombian
Type of Board Member Independent
Tenure on Cemex’s Audit Committee Since 2023 | ||
|
| ||
GABRIEL JARAMILLO SANINT
Board Memberships at Listed Entities Mr. Jaramillo Sanint is a member of the board of directors of Minerva Foods, a listed corporation in Brazil.
Other Current Roles Mr. Jaramillo Sanint is the founder and director of a sustainable economic development program in the Orinoco Basin in Colombia. He is also a member of the board of directors of Centro Hospitalario Tatama (Colombia) (a non-profit organization), Medicines for Malaria Ventures (a non-profit organization) based in Geneva, Switzerland, and the Colombian branch of BTG Pactual Bank.
Experience Previously, Mr. Jaramillo Sanint served as chairman of the board of directors and chief executive officer of Santander USA (formerly Sovereign Bank), Banco Santander Brasil, and Banco Santander Colombia, and as CEO of Citibank Mexico, and Citibank Colombia. Since retiring, he has focused on health-related philanthropic work, leading the transformation of the Global Fund to Fight AIDS, Tuberculosis and Malaria, which raised $13 billion from 2017 to 2020.
From October 2012 to April 2018, he was a member of the board of directors and president of the audit committee of Cemex Latam Holdings, S.A., a company listed on the Colombian Securities Exchange at the time.
With an outstanding career of more than 35 years in South America, Mexico and the United States, Mr. Jaramillo Sanint not only brings to Cemex’s Board of Directors extensive experience in complex financial matters, but also in sustainability, health and safety, as well as corporate social responsibility, a pillar of Cemex’s global strategy to achieve sustainable growth and create lasting value.
Education Mr. Jaramillo Sanint holds a B.A. degree in Marketing and an MBA from California State University. In 2015, Mr. Jaramillo Sanint received honorary degrees from the Universidad Autónoma de Manizales in Colombia and Northeastern University.
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| PART I | ||||
|
AGE 63 |
DIRECTOR SINCE 2019 | |
|
Citizenship Spanish
Nationality Spanish
Type of Board Member Independent
| ||
| Tenure on Cemex’s Sustainability, Climate Action, Social Impact, and Diversity Committee Since 2023 | ||
|
| ||
ISABEL MARÍA AGUILERA NAVARRO
Board Memberships at Listed Entities Mrs. Aguilera Navarro is a member of the board of directors of Oryzon Genomics, S.A., Lar España Real Estate SOCIMI, S.A., and Clínica Baviera, all of which are listed corporations in Spain.
Other Current Roles Mrs. Aguilera Navarro is an independent consultant and executive in residence at the Esade Business School in Barcelona. She is a member of the board of directors of the Spanish multinational state-owned entity Canal de Isabel II, which manages the water supply infrastructure of Madrid, Spain and has operations in South America. She is also a member of the board of directors of Making Science, a company listed on the BME Growth market.
Experience Mrs. Aguilera Navarro was president of General Electric Spain and Portugal from 2008 to 2009, general manager of Google Inc. (now Alphabet) Spain and Portugal from 2006 to 2008, operations director of NH Hotel Group, S.A. from May 2002 to June 2005, and general director of Dell Computer Corporation for Spain, Italy and Portugal from March 1997 to May 2002. She has also served as an advisor to various Spanish non-profit organizations, including the Instituto de Empresa, and the Asociación para el Progreso de la Gestión. She was a member of the advisory board of Farmaindustria, Ikor, and Pelayo Mutua de Seguros, and a business entrepreneur from 2009 to 2012 at Twindocs International. Previously, she was a board member of Indra, Banco BMN, Aegón Seguros, Banca Farmafactoring S.p.A. and Hightech Payment System SA.
With her experience in multinational corporations in Europe, Mrs. Aguilera Navarro brings to Cemex’s Board of Directors guidance on the overall global business landscape and an informed view on innovation, entrepreneurship, technological and digitalization issues, from customer-centric platforms to organizational processes and essential corporate functions, a key element of Cemex’s digital strategy. In addition, she brings important insights in urban planning and a critical customer influencer, architects.
Education Mrs. Aguilera Navarro holds a B.A. degree in Architecture and Urban Planning from the Escuela Técnica Superior de Arquitectura de Sevilla (ETSA), an MBA from the IE Business School, a Program for Management Development (PMD) from the IESE Business School, and has a Specialization Diploma in the Metaverse from The Valley Digital Business School in Madrid and a Diploma in Museum Management from ELBS School. Likewise, she completed the Environmental, Social and Governance (ESG) and Corporate Finance for Board Members modules at the Esade Business School in Barcelona.
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| PART I | ||||
|
AGE 61 |
DIRECTOR SINCE 2023 | |
|
Citizenship Mexican
Nationality Mexican and Spanish | ||
|
Type of Board Member Independent | ||
|
Tenure on Cemex’s Sustainability, Climate Action, Social Impact, and Diversity Committee Since 2023 | ||
|
| ||
MARÍA DE LOURDES MELGAR PALACIOS
Board Memberships at Listed Entities Dr. Melgar Palacios is a member of the board of directors of Smurfit Kappa Group PLC, an Irish conglomerate listed in Ireland.
Other Current Roles Dr. Melgar Palacios is a member of the board of directors of Banco Santander México, S.A., Institución de Banca Múltiple, Grupo Financiero Santander México. She is a researcher affiliated with the Center of Collective Intelligence at the Massachusetts Institute of Technology and non-resident researcher at the Baker Institute Center for Energy Studies. She is a member of the board of directors of Mount Holyoke College (academic institution). Additionally, she is a member of the board of directors of the following non-profit organizations: Global Energy Alliance for People and Planet, the Natural Resource Governance Institute, Phius, and Chapter Zero Mexico. Dr. Melgar Palacios is a member of the International Women’s Forum, having chaired the Mexican Local Forum from 2016 to 2018.
Experience From 1997 to 2005, Dr. Melgar Palacios was part of the Mexican Foreign Service. From 1998 to 2002, she served as the general director of the Office of International Affairs of the Ministry of Energy, having participated in the strategy and negotiation to stabilize the international oil market, and led the energy sector in the Continental Shelf Delimitation Treaty with the United States in the Western Gulf of Mexico (Doughnut Hole). From 2005 to 2007, she served as Minister at the Mexican permanent mission to the Organization for Economic Co-Operation and Development, overseeing the coordination of various topics and representing Mexico in meetings regarding matters such as corporate governance, anticorruption, sustainable development, among others. Subsequently, she served as Undersecretary of Electricity from December 2012 to February 2014 and as Undersecretary of Hydrocarbons from February 2014 to July 2016, at the Ministry of Energy of Mexico. Dr. Melgar Palacios also held the Robert E. Wilhelm chair at the Massachusetts Institute of Technology.
Her academic and professional experience, as well as her experience in non-profit organizations and matters related to energy, sustainability, climate action, and corporate governance, provides Cemex’s Board of Directors with a unique perspective on said matters, all of which are key components for Cemex’s future.
Education Dr. Melgar Palacios holds a B.A. in International Relations and Comparative Literature from Mount Holyoke College and studied at the Paris Institute of Political Studies (Sciences Po). She completed diplomatic studies at the Instituto Matías Romero de Estudios Diplomáticos, graduating as a member of the 1997 class of the Mexican Foreign Service. She also holds a Master’s and a PhD in Political Science with a specialization in Political Economy, both from the Massachusetts Institute of Technology.
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| PART I | ||||
Board of Directors Skill Matrix
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| PART I | ||||
| (1) | M = Male, F = Female |
| (2) | N = Non-independent, I = Independent |
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Familial relationships among members of Cemex, S.A.B. de C.V.’s Board of Directors
| • | Rogelio Zambrano Lozano |
Mr. Rogelio Zambrano Lozano (Chairman of Cemex, S.A.B. de C.V.’s Board of Directors) has a familial relationship with Mr. Marcelo Zambrano Lozano.
| • | Marcelo Zambrano Lozano |
Mr. Marcelo Zambrano Lozano has a familial relationship with Mr. Rogelio Zambrano Lozano (Chairman of Cemex, S.A.B. de C.V.’s Board of Directors).
| • | Armando J. García Segovia |
Mr. Armando J. García Segovia has a familial relationship with Mr. Rodolfo García Muriel.
| • | Rodolfo García Muriel |
Mr. Rodolfo García Muriel has a familial relationship with Mr. Armando J. García Segovia.
Senior Management and Board Composition
The composition of our Senior Management and Board of Directors, as well as certain information regarding the areas of expertise and seniority of their members as of December 31, 2023, is addressed in this section.
Senior Management
Gender
As of December 31, 2023, our senior management was comprised of 12 members, of which 92% were men and 8% were women.
Seniority (in years at the Company)
As of December 31, 2023, our senior management’s average years at the Company was 27 years.
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Board of Directors
Gender
As of December 31, 2023, our Board of Directors was comprised of 13 members, of which 85% were men and 15% were women.
Tenure (in years as a member of the Board of Directors)
As of December 31, 2023, our Board of Directors’ average tenure was 14 years.
Independence
As of December 31, 2023, our Board of Directors was comprised of 13 members, of which 23% were considered to be non-independent and 77% were considered to be independent.
As of December 31, 2023, there were no alternate members of Cemex, S.A.B. de C.V.’s Board of Directors.
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Board Practices
Pursuant to the Mexican Securities Market Law (Ley del Mercado de Valores) (the “Mexican Securities Market Law”), Cemex, S.A.B. de C.V.’s management is the responsibility of its Board of Directors and its chief executive officer. The
Mexican Securities Market Law and Cemex, S.A.B. de C.V.’s by-laws (estatutos sociales) together set forth the fiduciary duties of the members of Cemex, S.A.B. de C.V.’s Board of Directors, who are required:
| • | to perform their duties in a value-creating manner for the benefit of Cemex without favoring a specific shareholder or group of shareholders; |
| • | to act diligently and in good faith by adopting informed decisions; |
| • | to maintain the confidentiality of the information and matters of which they become aware in their capacity as directors, when such information or matters are not of public knowledge; |
| • | to abstain from discussions and voting relating to matters in which they have an interest; and |
| • | to abstain from engaging in illicit acts or activities; and to act in a manner consistent with the duty of care and the duty of loyalty. |
The Mexican Securities Market Law also specifies that the duties of surveillance over our business are the responsibility of the board of directors, which are fulfilled by the Corporate Practices and Finance Committee and the Audit Committee, as well as through the external auditor who audits the entity’s financial statements, each within its professional role.
Pursuant to the Mexican Securities Market Law and Cemex, S.A.B. de C.V.’s by-laws, at least 25% of its directors must qualify as independent directors. As of December 31, 2023, Cemex, S.A.B. de C.V.’s Board of Directors was comprised of 13 members, of which ten were independent and three were non-independent under the standards of the Mexican Securities Market Law.
Other than any contractual arrangements entered into with any member of Cemex, S.A.B. de C.V.’s Board of Directors while employed by us, which provide or may provide for retirement and pension benefits or other compensation upon termination of employment, Cemex, S.A.B. de C.V. has not entered into any contracts with its directors that provide for benefits upon termination of their directorship.
During 2023, our Board of Directors met five times to discuss and consider a wide range of relevant issues, with a board meeting attendance of 100%.
The Audit Committee, the Corporate Practices and Finance Committee, and Other Committees
The Mexican Securities Market Law requires Cemex, S.A.B. de C.V.’s Board of Directors to have an audit committee and a corporate practices committee comprised entirely of independent directors. In compliance with such requirement, Cemex, S.A.B. de C.V. has an Audit Committee and a Corporate Practices and Finance Committee.
Based on the Mexican Securities Market Law, our bylaws, and the activities conducted, in 2023, Cemex, S.A.B. de C.V.’s Audit Committee was responsible for:
| • | Evaluating internal controls and procedures and identifying deficiencies; |
| • | Following up with corrective and preventive measures in response to any non-compliance with operation and accounting guidelines and policies; |
| • | Evaluating the performance of external auditors and analyzing the reports, opinions, and other information issued by such external auditors; |
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| • | Describing and valuing non-audit services performed by external auditors; |
| • | Reviewing financial statements and determining if their approval should be recommended to the Board of Directors; |
| • | Informing the Board of Directors of the state of the company’s internal controls, internal audit, and accounting systems, including any breaches detected; |
| • | Supporting the Board of Directors in producing different reports submitted to the shareholders; |
| • | Assessing the effects of any modifications to the accounting policies approved during any fiscal year; |
| • | Overseeing measures adopted as a result of any observations made by shareholders, directors, executive officers, employees or any third parties with respect to accounting, internal controls, and internal and external audit, as well as any complaints regarding management irregularities; |
| • | Supervising complaints raised by employees, third parties and other stakeholders to report ethical, corruption, and/or compliance matters utilizing confidential methods and other whistleblowing mechanisms through Cemex’s reporting system, and of disciplinary measures taken during 2023; |
| • | Identification, evaluation, and follow up on the main risks affecting the company and its subsidiaries; |
| • | Ensuring compliance by the Chief Executive Officer with the resolutions adopted by the shareholders and Board of Directors; |
| • | Analyzing the risks identified by independent auditors, accounting, internal control, and process assessment areas; |
| • | Reviewing and auditing or analyzing specific matters in several Cemex subsidiaries; |
| • | Reviewing main regulatory matters and legal proceedings, measures to enhance compliance with anti-corruption laws, and compliance with applicable securities laws and regulations in Mexico and in the U.S.; |
| • | Reviewing internal audits and deficiencies around operative risks, and approval of 2023 evaluation plan of operative risks and self-audits; |
| • | Approving to propose to the Board of Directors the ratification of our Sanctions, Exports Controls, and Anti-Boycott Compliance Policy; |
| • | Reviewing the disputes regarding the fines imposed by the tax authorities in Spain; |
| • | Review of cybersecurity and ESG-related information as it impacts risks and internal controls; and |
| • | Reviewing the most relevant transactions and matters during the 2023 calendar year. |
During 2023, our Audit Committee met four times to discuss and consider a wide range of relevant issues, with a meeting attendance of 100%.
Based on the Mexican Securities Market Law, our bylaws, and the activities conducted, in 2023, Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee was responsible for:
| • | Performing the role of a nomination and compensation committee, mainly by evaluating the employment and compensation of the Chief Executive Officer and the Chairman of the Board and reviewing the hiring and compensation policies for executive officers; |
| • | Reviewing policies regarding use of corporate assets; |
| • | Reviewing unusual or material transactions; |
| • | Evaluating waivers granted to directors or executive officers regarding participation and benefiting of corporate opportunities; |
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| • | Evaluating merger and acquisitions opportunities as well as asset sales, including financial and related transactions; |
| • | Evaluating the financial results for full year 2022; |
| • | Reviewing relevant tax matters and pension fund status and evaluation; |
| • | Reviewing different matters presented at Cemex’s Ordinary and Extraordinary General Shareholders’ Meeting held in March 2023; |
| • | Reviewing the disputes regarding the fines imposed by the tax authorities in Spain; |
| • | Reviewing the proposals on donations, related party transactions, conflict of interest, derivative transactions, our new Diversity and Inclusion Policy, our new Clawback Policy, the self-evaluation procedure of Cemex, S.A.B. de C.V.’s Board of Directors and the changes to our Insider Trading and Transactions with Cemex Securities Policy; and |
| • | Reviewing the financial plans, financial strategy and its implementation, including our 2023 growth strategy; quarterly results; financial transactions; and the global risk agenda for the period 2023-2024. |
During 2023, our Corporate Practices and Finance Committee met five times to discuss and consider a wide range of relevant issues, with a meeting attendance of approximately 93%.
Under Cemex, S.A.B. de C.V.’s by-laws and the Mexican Securities Market Law, all members of the Audit Committee and the Corporate Practices and Finance Committee, including their respective presidents, are required to be independent directors. The President of the Audit Committee and the Corporate Practices and Finance Committee shall be appointed and removed from his or her position only by a resolution of the shareholders adopted at a duly convened general shareholders’ meeting, and the rest of the members may only be appointed or removed by a resolution of the shareholders adopted at a duly convened general shareholders’ meeting or by resolution of the Board of Directors, following a recommendation from the President of the respective committee.
Set forth below are the names of the members of Cemex, S.A.B. de C.V.’s Audit Committee and Corporate Practices and Finance Committee as of December 31, 2023. For information regarding the individuals that were appointed as members of Cemex S.A.B. de C.V.’s Audit Committee and Corporate Practices and Finance Committee at Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting held on March 22, 2024, see “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.” Each member of the committees is an independent director. The terms of the members of the Committees are indefinite. Everardo Elizondo Almaguer qualifies as an “audit committee financial expert” for purposes of the Sarbanes Oxley Act of 2002. See “Item 16A—Audit Committee Financial Expert.”
AUDIT COMMITTEE:
| Everardo Elizondo Almaguer |
President | |||
| Francisco Javier Fernández Carbajal |
Member | |||
| Gabriel Jaramillo Sanint |
Member | |||
CORPORATE PRACTICES AND FINANCE COMMITTEE:
| Francisco Javier Fernández Carbajal |
President | |||
| Rodolfo García Muriel |
Member | |||
| Armando Garza Sada |
Member | |||
In addition, Cemex, S.A.B. de C.V. has had a Sustainability Committee since 2014. On March 26, 2020, Cemex, S.A.B. de C.V. held an ordinary general shareholders’ meeting in which the shareholders for the first time approved
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the appointment of the members of the Sustainability Committee. Since then, the appointment of the members of the Sustainability Committee (now the Sustainability, Climate Action, Social Impact, and Diversity Committee) has been approved annually at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
Based on our bylaws, and the activities conducted, in 2023, Cemex, S.A.B. de C.V.’s Sustainability, Climate Action, Social Impact, and Diversity Committee was responsible for:
| • | Overseeing sustainability and social responsibility policies, strategies and programs; |
| • | Reviewing the 2023-2024 sustainability risk agenda, Cemex’s “Future in Action” performance during 2023 against updated 2025 and 2030 targets and improvement plans, and diversity and inclusion initiatives and 2023 goals; |
| • | Evaluating the effectiveness of sustainability programs and initiatives; |
| • | Providing assistance to the Chief Executive Officer and senior management team regarding the strategic direction on sustainability and social responsibilities model; |
| • | Identifying the main risks concerning sustainability-related matters and overseeing mitigating actions; |
| • | Endorsing a model of sustainability, priorities, and key indicators, including our “Future in Action” program; |
| • | Reviewing the structure of, content and overall performance set forth in Cemex’s 2022 Integrated Report presented in March 2023; |
| • | Reviewing key sustainability performance indicators (e.g., climate action, H&S, water and biodiversity, circular economy, social impact), benchmarking with industry peers, and Cemex’s ESG rankings and ratings; |
| • | Redefining the focus to create a social impact strategy aligned with the evolution of practices and commercial regulations in force, defining action plans focused on Cemex’s action to advance the UN’s Sustainable Development Goals; |
| • | Reviewing Cemex’s actions and initiatives to consume more clean electricity; and |
| • | Reviewing Cemex’s plans, actions, business models, and 2030 targets regarding circular economy. |
During 2023, our Sustainability, Climate Action, Social Impact, and Diversity Committee met four times to discuss and consider a wide range of relevant issues, with a meeting attendance of 100%.
Set forth below are the names of the members of Cemex, S.A.B. de C.V.’s Sustainability, Climate Action, Social Impact, and Diversity Committee as of December 31, 2023. For information regarding the individuals that were appointed as members of Cemex, S.A.B. de C.V.’s Sustainability, Climate Action, Social Impact, and Diversity Committee at Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting held on March 22, 2024, see “Item 5—Operating and Financial Review and Prospects—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.” The terms of the members of the Committee are indefinite.
SUSTAINABILITY, CLIMATE ACTION, SOCIAL IMPACT, AND DIVERSITY COMMITTEE:
| Armando J. García Segovia |
President | |||
| Marcelo Zambrano Lozano |
Member | |||
| Isabel María Aguilera Navarro |
Member | |||
| María de Lourdes Melgar Palacios |
Member | |||
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Compensation of Cemex, S.A.B. de C.V.’s Directors and Members of Our Senior Management
For the year ended December 31, 2023, the aggregate amount of compensation we paid to all members of Cemex, S.A.B. de C.V.’s management was $71 million, which amount includes compensation paid to the members of our Board of Directors for attending meetings of the Board of Directors and its Committees, the salaries of our senior management, including of our Chief Executive Officer, and the salary of the Chairman of our Board of Directors. Of the $71 million that we paid to members of Cemex, S.A.B. de C.V.’s management, $24 million was paid as base compensation and cash-based performance bonuses, including pension and post-employment benefits, and $47 million corresponds to stock-based long-term compensation. During 2023, we purchased 67 million CPOs to fund current and future requirements of the Restricted Stock Incentive Plan (“RSIP”) described below under “Item 6—Directors, Senior Management, and Employees—Compensation of Cemex, S.A.B. de C.V.’s Directors and Members of Our Senior Management-Restricted Stock Incentive Plan.” For additional information, see “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
The following table discloses the amount of compensation paid to our Senior Management for the years ended December 31, 2023, 2022, and 2021:
| Year |
Average Total Compensation paid to our Senior Management(1)(2) |
Average Adjusted Compensation paid to our Senior Management(1)(3) |
Consolidated (Millions of |
Most significant |
||||||||||||
| 2023 |
5.0 million | 7.6 million | 199 | CVA | ||||||||||||
| 2022 |
3.1 million | 3.4 million | 885 | CVA | ||||||||||||
| 2021 |
3.5 million | 5.1 million | 778 | CVA | ||||||||||||
| (1) | Our Senior Management includes our Executive Committee members, our Vice President of Comptrollership and our Senior Vice President of Legal. |
| (2) | The amount of “Average Total Compensation” paid to our Senior Management includes paid salary, bonuses, stock awards, (including, but not limited to, our Key Value Positions Plan (“KVP Plan”) and the Performance Plan, as defined below), our Variable Compensation Plan (“VCP”), and other compensation benefits. |
| (3) | The “Average Adjusted Compensation” paid to our Senior Management is the Average Total Compensation paid to our Senior Management, adjusted to consider the addition or subtraction, as applicable, of equity award value as follows: (i) for awards granted in the covered fiscal year which are outstanding and unvested at year end, the fair value as of the end of the applicable year; (ii) for awards granted in prior fiscal years that are outstanding and unvested at the end of the applicable year, the amount equal to the change in fair value as of the end of the applicable year (from the end of the prior year); (iii) for awards granted in the applicable year that vest in the year of the grant, the fair value as of the vesting date; and (iv) for awards granted in prior years that vest during the applicable year, the amount equal to the change in fair value as of the vesting date (from the end of the year). |
To calculate the correlation between the compensation paid to our Senior Management and Cemex, S.A.B. de C.V.’s performance for the year ended December 31, 2023, we used the following financial and other measures: (i) cash value added (“CVA”); (ii) total shareholder return; and (iii) our CO2 Emissions Component (as defined below). For the years ended December 31, 2023, 2022, and 2021, CVA was the most significant financial measure that we used to determine the compensation paid to our Senior Management. For more information on our CVA and CO2 Emissions Component, see “Item 6—Directors, Senior Management, and Employees—Compensation of Cemex, S.A.B. de C.V.’s Directors and Members of Our Senior Management—Variable Compensation Plan.”
Variable Compensation Plan
Our Variable Compensation Plan (“VCP”) is a non-equity incentive compensation plan available to our senior management. The terms of the VCP are based on CVA, which is calculated by subtracting depreciation and capital charge from our operating cash flow. A positive CVA means that revenues were greater than costs, including our cost of capital, whereas a negative CVA means that revenues were not sufficient to cover such costs. Members of Senior Management who achieve a positive CVA result with respect to our specific annual target goals will generally receive higher compensation under the VCP.
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Additionally, the terms of our VCP consider performance metrics that include a combination of the employee’s business unit, regional and consolidated global results in comparison to our specific annual target goals, including certain health and safety and sustainability-related factors. Moreover, the evaluation process considers each member of senior management’s individual performance assessment, along with his or her supervisor’s input. Since 2022, our VCP includes a new variable related to carbon reduction goals that could have an impact ranging from -10% to +10% in the total cash payout of the annual VCP (the “CO2 Emissions Component”). Furthermore, in March 2022 we expanded our VCP to cover more than 4,500 executives.
Each senior management position has a target variable compensation payout of his or her budgeted compensation, which is expressed as a percentage of such executive’s annual base pay. This target variable compensation amount varies according to the executive’s level in the Company.
Every year, specific annual target goals are set after considering local business expectations and the volatility of each of our operations. This allows us to maintain an objective criteria across our operations. Depending on our results and executives’ performance in comparison to our objectives and specific annual target goals, the annual target variable compensation incentive can range from 0% for poor results and performance to up to a maximum of 200% for exceptional results and performance.
In 2023, consolidated CVA resulted in a VCP payout of 66.9%, or $79.4 million.
Restricted Stock Incentive Plan
Under the terms of the RSIP, eligible employees are allocated a specific number of restricted CPOs as variable compensation to be vested over a four-year period. CPOs to cover the RSIP are issued or purchased in the secondary market. The CPOs are held in an individual account with a third-party supplier. At the end of each year during such four-year period, the restrictions lapse with respect to 25% of the allocated CPOs and such CPOs become freely transferable and subject to withdrawal from the trust. The RSIP has been applied to applicable participants since 2009. In 2023, the RSIP was amended to allow for the granting and vesting of awards in ADSs, which we expect to begin in 2024. All other terms and conditions of the RSIP remained substantially unchanged. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
As of the date of this annual report, we have four compensation programs that conform the RSIP: the “Ordinary Plan,” the “KVP Plan,” the “Performance Plan,” and the “Extraordinary Management Grant.” Only our most senior executives in key value positions participate in the KVP Plan and the Performance Plan.
As of the date of this annual report, approximately 500 of our employees participate in the Ordinary Plan. The annual award under the Ordinary Plan is calculated based on the result of the gross annual guaranteed compensation of the participants in Dollars as of May 31 of each calendar year, times a management factor, that, depending on the level of the participant, ranges from 12% to 24% and divided by the last 90-day average closing price, converted into Dollars, of CPOs as of June 30 of such calendar year. No member of our senior management participated in the Ordinary Plan.
Our KVP Plan establishes nonqualified deferred compensation earnings. As of December 31, 2023, the KVP Plan included approximately 59 participants, all of which are executives in key value positions. The annual award under the KVP Plan is based on the result of the cash variable compensation bonus in Dollars paid in April 2023 to these participants and divided by the last 90-day average closing price, converted into Dollars, of CPOs as of April 15 of each calendar year. As of December 31, 2023, all members of our senior management participated in the KVP Plan.
The total number of CPOs granted for the Ordinary Plan and the KVP Plan during 2023 were 36 million and 28 million, respectively, of which 14 million were granted to our senior management. In 2023, 30 million net CPOs of the
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Ordinary Plan and 23 million net CPOs of the KVP Plan were purchased in the secondary market, representing the first 25% of the 2023 compensation program, the second 25% of the 2022 compensation program, the third 25% of the 2021 compensation program and the final 25% of the 2020 compensation program. Of these 53 million CPOs, 14 million CPOs corresponded to our senior management.
As of December 31, 2023, 47 employees participated in the Extraordinary Management Grant. The Extraordinary Management Grant entails granting a specific number of CPOs to each of the participants. The CPOs awarded under the Extraordinary Management Grant were calculated based on the result of the gross annual guaranteed compensation of the participants in Dollars as of May 31, 2023, times a management factor, and divided by the last 90-day average closing price, converted into Dollars, of CPOs as of June 30, 2023.
Our Extraordinary Management Grant is a retention program offered at the Company’s sole discretion to a selected number of employees that do not participate in the Ordinary Plan, KVP Plan or the Performance Plan. Under the Extraordinary Management Grant vesting occurs at the end of three years in a single 100% block, at which time the resulting number of CPOs become unrestricted immediately. Since the Extraordinary Management Grant came into effect in 2022 and there is a three-year vesting period, as of December 31, 2023, no CPOs have vested under the Extraordinary Management Grant.
Finally, our executives in key value positions participate in an additional RSIP program known as the Performance Plan. The Performance Plan replaced the Ordinary Plan in 2017 in order to align long-term compensation of our most senior executives with those of our investors. The Performance Plan entails granting a specific target of CPOs for each plan participant. The final payout can range from 0% to 200% of the target of CPOs based on Cemex, S.A.B. de C.V.’s three-year total shareholder return relative to two market references. The first market reference is comprised of seven public companies from the global construction and materials industry. The second market reference is the Morgan Stanley Capital International (MSCI) of Emerging Markets-LATAM Industry Index, which is comprised of 107 companies.
Under the Performance Plan, the vesting period occurs at the end of three years in a single 100% block, at which time the resultant number of CPOs become unrestricted immediately. Approximately 17 million CPOs were granted during 2023 under the Performance Plan, out of which 9 million CPOs were granted to our senior management, with an estimated fair value of 144.9%, which are expected to vest on July 1, 2026. In 2021, 2022 and 2023, 12 million, 16 million and 45 million CPOs, respectively, were vested to our senior management. As of December 31, 2023, the Performance Plan had 54 participants.
For further information, see note 22 to Cemex, S.A.B. de C.V.’s 2023 audited consolidated financial statements included elsewhere in this annual report.
CLH Employee Stock-Ownership Plan
On January 16, 2013, CLH’s board of directors approved, effective as of January 1, 2013, a long-term incentive plan available to eligible executives of CLH, which consisted of an annual compensation plan based on CLH shares. The underlying shares in this long-term incentive plan, which were held in CLH’s treasury and subject to certain restrictions, fully vested under each annual award over a period of four years. During 2022 and 2021, CLH delivered 813,980 shares and 713,927 shares, respectively, corresponding to the vested portion of prior years’ grants, which were subscribed and held in CLH’s treasury. Since 2022, no awards of CLH shares under CLH’s former long-term incentive plan were made. As of December 31, 2023, no CLH shares are expected to vest in future years under the former CLH long-term incentive plan.
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Cemex Holdings Philippines Employee Restricted Stock Incentive Plan
Starting in 2018, a CHP compensation plan was granted to eligible participants in the Philippines. During 2023, 2022 and 2021, executives of CHP received 1,516,657, 19,177,703 and 16,511,882 unrestricted shares in CHP, respectively. Starting July 2023, CHP’s executives no longer receive CHP shares and will instead receive awards of Cemex securities under the RSIP.
Compensation of Cemex, S.A.B. de C.V.’s Chief Executive Officer and Senior Management(1)
| Full Year 2023-Chief Executive Officer |
% | |||
| Salary |
20 | % | ||
| Short-Term Performance Bonus (Cash) |
20 | % | ||
| Long-Term Performance Bonus (Restricted Stock) |
40 | % | ||
| Long-Term Performance Shares |
20 | % | ||
| 100 | % | |||
| Full Year 2023-Senior Management |
% | |||
| Salary |
42 | % | ||
| Short-Term Performance Bonus (Cash) |
23 | % | ||
| Long-Term Performance Bonus (Restricted Stock) |
23 | % | ||
| Long-Term Performance Shares |
12 | % | ||
| 100 | % | |||
| (1) | For purposes of this table, information regarding our Senior Management does not include data pertaining to our Chief Executive Officer. |
For our Chief Executive Officer and our senior management, the short-term variable performance bonus is paid in cash. Long-term restricted shares and the long-term variable performance bonus are paid in the form of restricted shares. As mentioned above, we use CVA to measure short-term performance bonus.
Additionally, all members of our Executive Committee have entered into change of control agreements that have been previously approved by the Corporate Practices and Finance Committee and the Board of Directors. Under these agreements, if during the term of the change of control agreement and while the executive remains an employee of Cemex, we shall be subject to a change in control and (i) within one year following such change in control Cemex terminates the employment of the executive involuntarily or (ii) within six months following such change in control the executive provides notice of intent to resign from employment with Cemex, then the executive would generally receive the executive’s salary and vacation accrued unpaid through his or her termination date, a lump sum equal to two times the executive’s annual salary, a lump sum equal to the executive’s target cash payout opportunity under the annual incentive bonus plan for which the executive is eligible, and vesting of all outstanding restricted stock awards and other equity arrangements and held by the executive through his or her termination date.
The post-employment benefits that our senior management receive are aligned to the local practices in the countries where they are based.
The competitiveness of our executive compensation structure, as well as the mix between base and variable and short-term and long-term compensation, is reviewed every two years. This analysis measures competitiveness versus similar size firms in both U.S. and European markets. The most recent review was performed in November 2023 by WTW (formerly Willis, Towers, Watson), a firm specialized in multinational risk management, insurance brokerage and company advisory.
Cemex, S.A.B. de C.V.’s Board of Directors, other than its Chairman, is compensated in a fixed manner based on participation in board and board committee meetings. The compensation of the Board of Directors is approved each
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year at Cemex, S.A.B. de C.V.’s general ordinary shareholders’ meeting. In 2023, the amount approved by our shareholders was $29,500 per board meeting attended and $7,100 per committee meeting attended, and the actual amount paid for attendance to these meetings was approximately $2.1 million. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
The Chairman of Cemex, S.A.B. de C.V.’s Board of Directors is compensated in a similar manner as Cemex, S.A.B. de C.V.’s senior management, including through the long-term performance plan based on Cemex’s total shareholder return versus peer groups. The base salary of the Chairman of Cemex, S.A.B. de C.V.’s Board of Directors is 27% fixed and the remaining 73% is variable compensation.
The total compensation (including fixed and variable compensation) of the Chairman of Cemex, S.A.B. de C.V.’s Board of Directors and the Chief Executive Officer is approved every year by the Corporate Practices and Finance Committee of the Board of Directors, which is integrated by three independent directors. The Corporate Practices and Finance Committee of the Board of Directors also reviews and approves the annual variable compensation of all members of senior management, key value position participants, and corporate and regional executives who are entitled to this benefit.
Employees
As of December 31, 2023, we had 46,497 employees worldwide, which represented an increase of approximately 6% from the total number of employees we had as of December 31, 2022. The following table sets forth the number of our employees and a breakdown of their geographic location as of December 31, 2021, 2022 and 2023:
| Location |
2021 | 2022 | 2023 | |||||||||
| Mexico |
18,166 | 17,671 | 19,800 | |||||||||
| United States |
9,031 | 8,968 | 9,085 | |||||||||
| EMEAA |
12,483 | 11,877 | 12,303 | |||||||||
| United Kingdom |
1,933 | 1,901 | 1,951 | |||||||||
| France |
1,768 | 1,784 | 1,791 | |||||||||
| Germany |
1,117 | 1,237 | 1,386 | |||||||||
| Spain |
1,774 | 1,155 | 1,236 | |||||||||
| Poland |
1,070 | 1,092 | 1,106 | |||||||||
| Egypt |
505 | 513 | 497 | |||||||||
| Philippines |
775 | 757 | 716 | |||||||||
| Rest of EMEAA |
3,541 | 3,438 | 3,620 | |||||||||
| SCA&C |
6,530 | 5,337 | 5,309 | |||||||||
| Colombia |
2,974 | 2,850 | 2,820 | |||||||||
| Panama |
389 | 456 | 492 | |||||||||
| Costa Rica |
325 | 0 | 0 | |||||||||
| Caribbean TCL |
707 | 870 | 769 | |||||||||
| Rest of SCA&C |
2,135 | 1,161 | 1,228 | |||||||||
| Total |
46,210 | 43,853 | 46,497 | |||||||||
| (1) | For purposes of this table, the employee count for 2021 excludes Sinergia Deportiva, S.A. de C.V., our affiliate responsible for managing and operating a soccer club in Mexico. |
In Mexico, as of December 31, 2023, we have entered into collective bargaining agreements for certain business units. Such collective bargaining agreements are reviewed on an annual basis with respect to wages and every two
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years with respect to benefits. During 2023, we reviewed 103 collective bargaining agreements with different labor unions in Mexico. Workers covered by these agreements vote to approve their terms and conditions after being informed of them by the labor unions to which they belong.
In the United States, as of December 31, 2023, approximately 27.2% of our employees were represented by unions, with the largest number being members of the International Brotherhood of Teamsters, the Laborers’ International Union of North America, United Steelworkers, International Union of Operating Engineers, and the International Brotherhood of Boilermakers. We have entered into or are in the process of negotiating various collective bargaining agreements at many of our U.S. plants, which collective bargaining agreements have various expiration dates through July 1, 2027.
As of December 31, 2023, our subsidiaries in Spain had 1,235 employees with collective bargaining agreements. Additionally, 703 of them, corresponding to employees in the cement business, had a company- specific collective bargaining agreement that has been renewed until December 31, 2025. Within the ready-mix concrete, mortar, aggregates and transport sectors, as well as non-cement office-based employees, 403 employees have industry-specific collective bargaining agreements and are employees of different subsidiaries of ours in the country. Of the 118 employees corresponding to the ready-mix sector, 104 had a company-specific collective agreement effective until December 31, 2023. The renewal of these company-specific agreements is expected to be negotiated during 2024. Furthermore, 14 employees corresponding to our operations’ ready-mix service center have a company-specific collective agreement that has been renewed until December 31, 2025.
In the United Kingdom, as of December 31, 2023, our cement manufacturing and cement supply chain operations had collective bargaining agreements with Unite the Union. The rest of our operations in the United Kingdom are not part of collective bargaining agreements. However, there are local agreements for consultations and employees can be represented by a trade union official at specific types of meetings.
In Germany, as of December 31, 2023, most of our employees are working under collective bargaining agreements with the Industriegewerkschaft Bauen Agrar Umwelt-IG B.A.U. union (the “IG B.A.U.”). Most employees are subject to the in-house bargaining agreement with the IG B.A.U., which means salaries are negotiated between the applicable company and the trade union IG B.A.U. Collective bargaining agreement negotiations for cement operations’ employees occurred between employers’ associations Arbeitgeberverband Zement e.V. and IG B.A.U. during the second quarter of 2023 and resulted in the execution of agreements that will expire in 2024 at the election of any of the parties. Agreed salary increases are in line with our budget assumptions. In addition, there are internal company agreements, negotiated between the works council and the company itself. The next works council elections for most areas will take place during 2026.
In France, as of December 31, 2023, less than 1% of our employees were members of four of the five main unions. At least one representative from one of the five main unions was represented in the following legal entities: Cemex Granulats (one representative), Cemex Bétons Ile de France (one representative), Cemex Bétons Sud-Ouest (one representative), Cemex Granulats Sud-Ouest (two representatives), Cemex Bétons Rhone-Alpes (one representative), and Cemex Bétons Sud Est (one representative). All agreements are negotiated with unions and non-union representatives elected in the local workers council (Comité social et économique) for periods of four years. The current agreements will expire on December 31, 2025.
In Israel, as of December 31, 2023, our aggregates manufacturing operations had existing special collective bargaining agreements with Histadrut, the largest employee organization in Israel (“Histadrut”). In addition, our concrete product landscape plant, Netivei Noy, has an existing special collective bargaining agreement with Histadrut that applies to the plant’s employees and will expire on December 31, 2026. The rest of our operations in Israel are not part of collective bargaining agreements.
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In the Philippines, as of December 31, 2023, approximately 60% and 24% of the non-managerial employees of our cement business were members of, and were represented by, labor unions in Solid Cement and APO, respectively. Their labor conditions including wages and benefits are governed by collective bargaining agreements negotiated at the plant level. The Solid Cement Plant has two unions and the collective bargaining agreements for these unions will expire on December 31, 2027 and February 28, 2028, respectively. APO Cement Plant also has two unions and the collective bargaining agreements for both these unions will expire on December 31, 2026.
In Egypt, as of December 31, 2023, the majority of our eligible employees were represented by the Assiut Cement Labor Union and the General Building Materials Union. The collective bargaining agreement, of which our employees are party to, governs annual profit share and productivity bonus payments. Such agreement will expire on December 31, 2024.
In Panama, as of December 31, 2023, approximately 59% of our workforce were members of the Sindicato de Trabajadores de Cemento Bayano, a union which is a legal entity registered with the Panamanian Ministry of Labor. The union’s board of directors is elected every two to four years through a general voting process. As of the date of this annual report, a collective bargaining agreement covering the period from January 2024 to December 2027 is in effect.
In Colombia, as of December 31, 2023, there were three regional sectionals of a single industry union that represents our employees at the Caracolito, Cúcuta and Maceo cement plants and mills, and a minority part of the logistics operations at the national level. As of the date of this annual report, the Clemencia regional sectional is undergoing a dissolution process. Another two unions represented a minority of the employees in the ready-mix concrete operations. There were also collective agreements with non-union workers at the Santa Rosa cement plant, all aggregates operations and the majority of the logistics and ready-mix concrete operations in Colombia. We consider our relationships with labor unions representing our employees in Colombia to be satisfactory.
In Caribbean TCL, as of December 31, 2023, the majority of our employees are covered under collective bargaining agreements except for those in the Guyana operations. All collective bargaining agreements in Trinidad have expired, however negotiations are currently ongoing with the recognized majority union, Oilfields Workers’ Trade Union. In Barbados, the collective bargaining agreements expired on December 31, 2023. As of December 31, 2023, we expect that proposals for new agreements will be submitted for the union’s consideration. In Jamaica, as of December 31, 2023, approximately 57.78% of our employees were represented by unions, with the largest number being members of the Union of Clerical And Supervisory Employees (“UCASE”), representing the hourly paid employees (24.44%) and the monthly paid technicians and operators (14.67%), and STAFF Association, representing the coordinators and administrative assistants (18.67%). Negotiations were finalized with the UCASE and STAFF Association, and the collective bargaining agreement with these groups will end in June 2024 and December 2024, respectively.
Share Ownership
As of December 31, 2023, to the best of our knowledge, the members of the Board of Directors of Cemex, S.A.B. de C.V. and our Senior Management, including their immediate families, owned, collectively, approximately 1.529% of Cemex, S.A.B. de C.V.’s outstanding shares, including shares underlying stock options and restricted CPOs under our RSIP. This percentage does not include shares held by the extended families of members of our senior management and directors, since, to the best of our knowledge, no voting arrangements or other agreements exist with respect to those shares. As of December 31, 2023, to the best of our knowledge, no individual member of the Board of Directors of Cemex, S.A.B. de C.V. or individual member of our senior management beneficially owned one percent or more of any class of Cemex, S.A.B. de C.V.’s outstanding capital stock and each such individual’s share ownership has not been previously disclosed to shareholders or otherwise made public.
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Item 7—MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
The information contained in Amendment No. 15 to a statement on Schedule 13G, filed with the SEC on January 25, 2024, stated that according to their calculations made as of December 31, 2023, BlackRock beneficially owned 1,331,556,388 CPOs, representing 8.8% of Cemex, S.A.B. de C.V.’s outstanding capital stock. BlackRock does not have voting rights different from our other non-Mexican holders of CPOs. As required by Cemex, S.A.B. de C.V.’s by-laws, Cemex, S.A.B. de C.V.’s Board of Directors is required to approve BlackRock’s beneficial ownership of Cemex, S.A.B. de C.V.’s outstanding capital stock. Pursuant to the authorizations by Cemex, S.A.B. de C.V.’s Board of Directors, BlackRock is authorized to acquire up to 13% of Cemex, S.A.B. de C.V.’s capital stock with voting rights.
As of December 31, 2023, Cemex, S.A.B. de C.V.’s outstanding capital stock consisted of 29,016,656,496 Series A shares and 14,508,328,248 Series B shares, in each case including shares held by our subsidiaries. These numbers are based on our records, which may differ from those recorded by Indeval (as defined below).
As of January 1, 2024, all unvested CPOs were changed to ADRs and all future awards under the RSIP are expected to be granted in ADRs.
As of December 31, 2023, 98.75% of Series A shares and 98.75% of Series B shares outstanding were held by the CPO trust. Each CPO represents two Series A shares and one Series B share. A portion of the CPOs is represented by ADSs. As set forth in the Deposit Agreement, holders of ADSs do not have the right to instruct the depositary as to the exercise of voting rights in respect of Series A shares underlying CPOs held in the CPO trust. Under the terms of the CPO trust agreement, Series A shares underlying CPOs held by non-Mexican nationals, including all Series A shares underlying CPOs represented by ADSs, will be voted by the trustee according to the majority of all Series A shares held by Mexican nationals and Series B shares voted at the meeting. However, holders of ADSs will have the right to instruct the depositary to exercise the voting rights of the Series B shares underlying the CPOs represented by ADSs. Voting instructions may be given only with respect to ADSs representing an integral number of Series B shares. If the depositary shall not have received voting instructions from a holder of ADSs on or prior to the ADS voting instructions deadline, such holder shall be deemed, and the depositary and Cemex, S.A.B. de C.V. shall deem such holder, subject to the terms of the Deposit Agreement, to have instructed the depositary to give a discretionary proxy to a person designated by Cemex, S.A.B. de C.V. (or, if requested by Cemex, S.A.B. de C.V., a person designated by the technical committee appointed pursuant to the CPO trust agreement) to vote the Series B shares underlying the CPOs represented by such holder’s ADSs in his or her discretion. The Series B shares underlying the CPOs represented by ADSs for which no actual or deemed voting instructions have been received will be voted by the trustee for the CPO trust in cooperation with, and under the direction of, a technical committee appointed pursuant to the terms of the CPO trust agreement.
Other than BlackRock and the CPO trust, we are not aware of any person that is the beneficial owner of five percent or more of any class of Cemex, S.A.B. de C.V.’s voting securities.
As of December 31, 2023, Cemex, S.A.B. de C.V.’s subsidiaries owned approximately 6.3 million CPOs, representing approximately 0.0434% of Cemex, S.A.B. de C.V.’s outstanding voting stock. These CPOs are voted at the direction of our management. The voting rights of our subsidiaries over those CPOs are the same as those of any other CPO holder. As of the same date, we did not hold any CPOs in derivative instruments hedging expected cash flows of stock options exercises.
Cemex, S.A.B. de C.V.’s by-laws provide that its Board of Directors must authorize in advance any transfer of voting shares of its capital stock that would result in any person or group of persons acting in concert, becoming a holder of
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2% or more of Cemex, S.A.B. de C.V.’s voting shares. In the event this requirement is not met, the persons acquiring such shares will not be entitled to any corporate rights with respect to such shares, such shares will not be taken into account for purposes of determining a quorum for shareholders’ meetings, Cemex, S.A.B. de C.V. will not record such persons as holders of such shares in its share registry and the registry undertaken by Indeval (as defined below) shall not have any effect.
Mexican securities regulations provide that our majority-owned subsidiaries may neither directly nor indirectly invest in Cemex, S.A.B. de C.V.’s CPOs nor other securities representing Cemex, S.A.B. de C.V.’s capital stock. The Mexican securities authority could require any disposition of the CPOs or of other securities representing our capital stock so owned and/or impose fines on us if it were to determine that the ownership of Cemex, S.A.B. de C.V.’s CPOs or of other securities representing Cemex, S.A.B. de C.V.’s capital stock by Cemex, S.A.B. de C.V.’s subsidiaries, in most cases, negatively affects the interests of Cemex, S.A.B. de C.V.’s shareholders. Notwithstanding the foregoing, the exercise of all rights pertaining to Cemex, S.A.B. de C.V.’s CPOs or to other securities representing our capital stock in accordance with the instructions of Cemex, S.A.B. de C.V.’s subsidiaries does not violate any provisions of Cemex, S.A.B. de C.V.’s by-laws or the by-laws of its subsidiaries. The holders of these CPOs or of other securities representing Cemex, S.A.B. de C.V.’s capital stock are entitled to exercise the same rights relating to their CPOs or their other securities representing Cemex, S.A.B. de C.V.’s capital stock, including all voting rights, as any other holder of the same series.
As of December 31, 2023, we had 445 ADS holders of record, holding 554,643,879 ADRs, representing 5,546,438,790 CPOs, or approximately 38.27% of Cemex, S.A.B. de C.V.’s outstanding capital stock as of such date.
Related Party Transactions
Broadly, the definition of related parties includes entities or individuals who, as it relates to Cemex, are in a specific situation which may enable them to enter into transactions that may confer upon them an undue benefit from Cemex or a benefit which would have not been conferred by Cemex had such entity or individual not been in the corresponding situation. Likewise, an individual or entity may be considered a related party where the individual’s or entity’s specific situation, as it relates to Cemex, may enable Cemex to enter into transactions that may confer upon Cemex an undue benefit from the corresponding individual or entity or a benefit which would have not been conferred to Cemex had such individual or entity not been in the corresponding situation.
Pursuant to Mexican law, except when a transaction entered into by Cemex with a related party is executed pursuant to the policies and procedures approved by the Board of Directors of Cemex, S.A.B. de C.V. and (a) the transaction is not material for Cemex, (b) the transaction is entered into in the ordinary course of business on arm’s length terms or supported by specialized third-party valuations, and/or (c) the transaction is entered into with an employee of Cemex on terms similar to those available to any client or pursuant to compensation schemes generally available to employees, the transaction must be approved by Cemex, S.A.B. de C.V.’s Board of Directors with the prior opinion of its Corporate Practices and Finance Committee. In addition to any approvals required by applicable law, pursuant to the policies and procedures approved by the Board of Directors of Cemex, S.A.B. de C.V., a transaction between Cemex and a related party may require approval or ratification by Cemex, S.A.B. de C.V.’s Board of Directors with the prior opinion of its Corporate Practices and Finance Committee (or, in certain circumstances, its President) if such transaction can be valued at $120,000 annually or more.
From January 1, 2023 through December 31, 2023, Cemex entered into transactions with related parties for the sale and/or purchase of products, the sale and/or purchase of services and/or the lease of assets, none of which were material to Cemex, and, except for the transactions set forth below, to the best of Cemex’s knowledge, were not material to the related party, were incurred for non-material amounts for Cemex, and were executed under conditions following the same authorizations applied to other third parties.
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These identified transactions, which involved members of Cemex, S.A.B. de C.V.’s Board of Directors and senior management, as applicable, are reviewed by the Corporate Practices and Finance Committee of Cemex, S.A.B. de C.V.’s Board of Directors and approved or ratified at least annually by Cemex, S.A.B. de C.V.’s Board of Directors, as per Cemex’s applicable policies on conflicts of interest and related party transactions. These transactions with related parties also include transactions with subsidiaries with significant non-controlling interests, including TCL, Caribbean Cement Company Limited, and CHP; with other companies in which Cemex has a non-controlling position, including Neoris, GCC, and Lehigh White Cement Company; with companies in which Cemex, S.A.B. de C.V.’s Board of Director members are members of such company’s board of directors, including Carza, S.A.P.I. de C.V., Nemak, S.A.B. de C.V., NEG Natural, S.A. de C.V., Inmovitur, S.A. de C.V., Guarda Express, S.A.P.I., or have family members in ownership positions like Villarreal, García Campuzano, Gómez y Fernández, S.C.; and with companies at which members of Cemex’s senior management have family members, like Cementos Españoles de Bombeo, S. de R.L. de C.V., HSBC, all of which, for the year ended December 31, 2023, were reviewed by the Corporate Practices and Finance Committee of Cemex, S.A.B. de C.V.’s Board of Directors and approved or ratified by the Cemex, S.A.B. de C.V.’s Board of Directors, as per Cemex’s applicable policies on conflicts of interest and related party transactions. Except as set forth below, none of these transactions proposed or executed in 2023 are material to Cemex or, to the best of our knowledge, the related party.
The most important transactions with related parties during 2023 included in Cemex’s financial statements were as follows:
| • | Cemex entered into a Master Services Agreement with Neoris, pursuant to which Cemex receives information technology services and solutions globally from Neoris. During 2023, Cemex received consulting services from Neoris for $94,000,000. Cemex holds a 34.78% equity interest in Neoris, and some of Cemex’s employees are members of the board of directors of Neoris. We consider this transaction to have been entered into on an arm’s length basis. |
| • | During 2023, Cementos Españoles de Bombeo, S. de R.L. (“CEB”) provided ready-mix pumping services to Cemex’s customers in Mexico for $55,000,000. A brother of one of Cemex’s Executive Vice Presidents is the Commercial Director of CEB. The Executive Vice President in question is not involved in the negotiation of the services provided by CEB. We consider this transaction to have been entered into on an arm’s length basis. |
During the same period, we did not have any outstanding loans to any of Cemex, S.A.B. de C.V.’s Directors or members of Senior Management. For purposes of this analysis, the following transactions were excluded: (i) the sale and purchase of goods between subsidiaries of Cemex, S.A.B. de C.V.; (ii) the sale and/or acquisition of subsidiaries’ shares within subsidiaries of Cemex, S.A.B. de C.V.; (iii) the invoicing of administrative services, rentals, trademarks, and commercial name rights, royalties and other services rendered between two subsidiaries; and (iv) loans between related parties. When market prices and/or market conditions are not readily available, we conduct transfer pricing studies in the countries in which we operate, aiming to comply with regulations applicable to transactions between related parties.
Item 8—FINANCIAL INFORMATION
Consolidated Financial Statements and Other Financial Information
See “Item 18—Financial Statements.”
Legal Proceedings
See “Item 4—Information on the Company—Regulatory Matters and Legal Proceedings.”
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Dividends
A declaration of any dividend can be made by Cemex, S.A.B. de C.V.’s shareholders at any ordinary general shareholders’ meeting. Any dividend declaration is usually based upon the recommendation of Cemex, S.A.B. de C.V.’s Board of Directors. However, Cemex, S.A.B. de C.V.’s shareholders are not obligated to follow the Board of Director’s recommendation. Cemex, S.A.B. de C.V. may only pay dividends from retained earnings included in financial statements that have been approved by Cemex, S.A.B. de C.V.’s shareholders and after all losses have been paid, at least 5% of annual earnings have been set aside in a legal reserve until such reserve equals 20% of its paid-in capital and Cemex, S.A.B. de C.V.’s shareholders have approved the relevant dividend payment. See “Item 10—Additional Information—Taxation—Mexican Tax Considerations—General.” Since Cemex, S.A.B. de C.V. conducts its operations mainly through its subsidiaries, its most significant assets are its investments in those subsidiaries. Consequently, Cemex, S.A.B. de C.V.’s ability to pay dividends to its shareholders is largely dependent upon its ability to receive funds from its subsidiaries in the form of dividends, management fees or otherwise. The Credit Agreements and the indentures governing our outstanding Notes contain certain limitations on Cemex, S.A.B. de C.V.’s ability to declare and pay cash dividends or make other cash distributions to its shareholders. See “Item 3—Key Information—Risk Factors—Risks Relating to Our Indebtedness and Certain Other Obligations—Cemex, S.A.B. de C.V.’s ability to repay debt and pay dividends is highly dependent on our subsidiaries’ ability to transfer income and dividends to us. As of the date of this annual report, we control three publicly listed companies, where this risk is heightened.”
The recommendation of Cemex, S.A.B. de C.V.’s Board of Directors as to whether to pay and the amount of any annual dividends has been, and is expected to continue to be, in absence of contractual restrictions to pay or declare dividends, based upon, among other things, earnings, cash flow, capital requirements, contractual restrictions, and our financial condition and other relevant factors.
Owners of ADSs on the applicable record date will be entitled to receive any dividends payable in respect of the Series A shares and the Series B shares underlying the CPOs represented by those ADSs. However, as permitted by the Deposit Agreement, Cemex, S.A.B. de C.V. may instruct the ADS depositary not to extend the option to elect to receive cash in lieu of the stock dividend to the holders of ADSs. The ADS depositary will fix a record date for the holders of ADSs with respect to each dividend distribution. Unless otherwise stated, the ADS depositary has agreed to convert cash dividends received by it with respect to the Series A shares and the Series B shares underlying the CPOs represented by ADSs from Mexican Pesos into Dollars and, after deduction or after payment of expenses of the ADS depositary, to pay those dividends to holders of ADSs in Dollars. Cemex, S.A.B. de C.V. cannot assure holders of its ADSs that the ADS depositary will be able to convert dividends received in Mexican Pesos into Dollars or that any such conversion would be made using any particular exchange rate.
Cemex, S.A.B. de C.V. did not declare a dividend in fiscal years 2021, 2022, or 2023. See “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
Significant Changes
Except as described herein, no significant change has occurred since the date of our 2023 consolidated financial statements included elsewhere in this annual report.
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Item 9—OFFER AND LISTING
Listing Details
Cemex, S.A.B. de C.V.’s CPOs are listed on the Mexican Stock Exchange (“MSE”) and trade under the symbol “CEMEX.CPO.” Cemex, S.A.B. de C.V.’s ADSs, evidenced by ADRs, are listed on the NYSE and trade under the symbol “CX.”
Other Securities Regarding our reporting obligations, we present quarterly and annual financial reports, as well as corporate information and events relevant to the regulatory authorities of Mexico and the United States simultaneously and with the periodicity and comparisons established in the applicable legislation. Throughout the last three fiscal years, we have presented reports on relevant events in a complete and timely manner, as well as other financial and legal information that we are obliged to present periodically in accordance with the applicable laws in Mexico and the United States. From time to time, we present reports in jurisdictions outside of Mexico and the United States where our other securities may be listed. Such reports contain substantially similar information to the reports presented in Mexico and the United States.
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Stock Performance in the Securities Market
The following table sets forth, for the periods indicated, the reported high and low market quotations in Pesos for the CPOs on the Mexican Stock Exchange and the Mexican Institutional Stock Exchange (“BIVA”), and the high and low sales prices in Dollars for the ADSs on the NYSE. BIVA publishes quotations for our CPOs even though our CPOs are not listed on that stock exchange.
| CPOs(1)(2) | ADSs | |||||||||||||||||||||||
| Calendar Period |
High | Low | Closing | High | Low | Closing | ||||||||||||||||||
| Annual |
||||||||||||||||||||||||
| 2019 |
10.78 | 5.53 | 7.08 | 5.63 | 2.82 | 3.78 | ||||||||||||||||||
| 2020 |
11.6 | 4.21 | 10.27 | 5.63 | 1.63 | 5.17 | ||||||||||||||||||
| 2021 |
17.64 | 10.39 | 13.99 | 8.89 | 5.16 | 6.78 | ||||||||||||||||||
| 2022 |
13.96 | 6.52 | 7.88 | 6.82 | 3.20 | 4.05 | ||||||||||||||||||
| 2023 |
14.01 | 7.96 | 13.22 | 8.37 | 4.12 | 7.75 | ||||||||||||||||||
| Quarterly |
||||||||||||||||||||||||
| 2022 |
||||||||||||||||||||||||
| First quarter |
13.96 | 9.54 | 10.69 | 6.82 | 4.43 | 5.29 | ||||||||||||||||||
| Second quarter |
10.58 | 6.82 | 7.83 | 5.29 | 3.32 | 3.92 | ||||||||||||||||||
| Third quarter |
9.21 | 6.74 | 6.94 | 4.66 | 3.28 | 3.43 | ||||||||||||||||||
| Fourth quarter |
8.98 | 6.52 | 7.88 | 4.59 | 3.2 | 4.05 | ||||||||||||||||||
| 2023 |
||||||||||||||||||||||||
| First quarter |
10.28 | 7.96 | 9.89 | 5.67 | 4.12 | 5.53 | ||||||||||||||||||
| Second quarter |
12.54 | 9.58 | 12.10 | 7.3 | 5.24 | 7.08 | ||||||||||||||||||
| Third quarter |
14.01 | 11.35 | 11.37 | 8.37 | 6.5 | 6.5 | ||||||||||||||||||
| Fourth quarter |
13.92 | 10.67 | 13.22 | 8.21 | 5.81 | 7.75 | ||||||||||||||||||
| Monthly |
||||||||||||||||||||||||
| 2024 |
||||||||||||||||||||||||
| January |
14.38 | 12.67 | 14.30 | 8.35 | 7.41 | 8.28 | ||||||||||||||||||
| February |
14.86 | 13.02 | 13.03 | 8.74 | 7.57 | 7.64 | ||||||||||||||||||
| March |
14.67 | 13.1 | 14.67 | 9.01 | 7.69 | 9.01 | ||||||||||||||||||
| April(3) |
15.15 | 14.15 | 14.15 | 9.15 | 8.58 | 8.58 | ||||||||||||||||||
Source: Based on information from the BMV, BIVA, and NYSE.
| (1) | As of December 31, 2023, the 98.75% of Cemex, S.A.B. de C.V.’s outstanding share capital was represented by CPOs. |
| (2) | Takes into consideration the highest and lowest market quotations either on the BMV or the BIVA, as applicable. |
| (3) | CPO and ADS prices are as of April 10, 2024. |
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The following table sets forth, for the periods indicated, the total traded volume of CPOs on the BMV and the BIVA and ADSs on the NYSE.
| Calendar Period |
CPOs(1)(2) | ADSs(1) | ||||||
| Annual |
||||||||
| 2019 |
9,022 | 1,749 | ||||||
| 2020 |
9,342 | 2,301 | ||||||
| 2021 |
8,231 | 2,203 | ||||||
| 2022 |
8,987 | 1,587 | ||||||
| 2023 |
11,526 | 1,631 | ||||||
| Quarterly |
||||||||
| 2022 |
||||||||
| First quarter |
2,738 | 582 | ||||||
| Second quarter |
2,551 | 500 | ||||||
| Third quarter |
1,767 | 237 | ||||||
| Fourth quarter |
1,932 | 268 | ||||||
| 2023 |
||||||||
| First quarter |
2,455 | 411 | ||||||
| Second quarter |
3,066 | 385 | ||||||
| Third quarter |
3,036 | 466 | ||||||
| Fourth quarter |
2,968 | 370 | ||||||
| Monthly |
||||||||
| 2024 |
||||||||
| January |
1,053 | 116 | ||||||
| February |
1,127 | 130 | ||||||
| March |
951 | 152 | ||||||
| April(3) |
474 | 67 | ||||||
Source: Based on information from the BMV, BIVA, and NYSE.
| (1) | Amounts in millions. |
| (2) | Amounts include trading volumes on the BMV and on the BIVA |
| (3) | CPO and ADS prices are as of April 10, 2024. |
Item 10—ADDITIONAL INFORMATION
Articles of Association and By-laws
General
Pursuant to the requirements of Mexican corporation law, Cemex, S.A.B. de C.V.’s articles of association and by-laws (estatutos sociales) have been registered with the Mercantile Section of the Public Registry of Property and Commerce in Monterrey, Nuevo León, Mexico, under entry number 21, since June 11, 1920.
Cemex, S.A.B. de C.V. is an operating and a holding company engaged directly or indirectly, through its operating subsidiaries, primarily in the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates, clinker and other construction materials, and Urbanization Solutions throughout the world. Cemex, S.A.B. de C.V.’s corporate purpose can be found in Article 2 of Cemex, S.A.B. de C.V.’s by-laws.
Cemex, S.A.B. de C.V. has two series of common stock, the Series A common stock, with no par value (“Series A shares”), which can only be owned by Mexican nationals, and the Series B common stock, with no par value (“Series
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B shares”), which can be owned by both Mexican and non-Mexican nationals. Cemex, S.A.B. de C.V.’s by-laws state that the Series A shares may not be held by non-Mexican individuals, corporations, groups, units, trusts, associations or governments that are foreign or have participation by foreign governments or their agencies. Cemex, S.A.B. de C.V.’s by-laws also state that the Series A shares shall at all times account for a minimum of 64% of Cemex, S.A.B. de C.V.’s total outstanding voting stock and that the Series B shares shall at all times account for a minimum of 36% of Cemex, S.A.B. de C.V.’s total outstanding voting stock. Other than as described herein, holders of the Series A shares and the Series B shares have the same rights and obligations.
On March 28, 2019, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved, among other items, changes to Articles 2 and 28 of Cemex, S.A.B. de C.V.’s by-laws, incorporating additional provisions and removing some restrictions. The changes, among other items, are the following: broadening Cemex, S.A.B. de C.V.’s corporate purpose, which would permit Cemex to transport goods; amending the provision regarding seaport related services for its marine terminals; the manufacture and commercialization of cement bags, etc.; and clarifying that Cemex, S.A.B. de C.V.’s Relevant Executives (as defined under the laws of Mexico) are entitled to indemnification and liability protection only for liability arising from the lack of diligence when acting in good faith and pursuant to our best interests.
On March 25, 2021, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved changes to Article 2 of Cemex, S.A.B. de C.V.’s by-laws to further broaden Cemex, S.A.B. de C.V.’s corporate purpose. The changes, among other things, adjust our written corporate purpose in order to allow us to conduct certain activities, directly or indirectly through third parties, in line with our current needs and corporate vision.
Lastly, on March 24, 2022, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, in which its shareholders approved changes to Article 2 of Cemex, S.A.B. de C.V.’s by-laws to detail Cemex, S.A.B. de C.V.’s corporate purpose so that it will list only those activities it currently carries out, and cease contemplating those activities it does not perform or that are already included in another part of the by-laws. For more information, see “Item 5—Operating and Financial Review and Prospects—Recent Developments—Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.”
Changes in Capital Stock and Preemptive Rights
Subject to certain exceptions discussed below, Cemex, S.A.B. de C.V.’s by-laws allow for a decrease or increase in its capital stock if it is approved by its shareholders at a shareholders’ meeting. Additional shares of Cemex, S.A.B. de C.V.’s capital stock, having no voting rights or limited voting rights, are authorized by its by-laws and may be issued upon the approval of its shareholders at a shareholders’ meeting, with the prior approval of the Mexican securities authority. Cemex, S.A.B. de C.V.’s by-laws provide that, subject to certain exceptions, shareholders have preemptive rights with respect to the class and in proportion to the number of shares of our capital stock they hold, in connection with any capital increase in the number of outstanding Series A shares, Series B shares or any other existing series of shares, as the case may be. Subject to certain requirements: (i) under article 53 of the Mexican Securities Market Law, this preemptive right to subscribe is not applicable to increases of Cemex, S.A.B. de C.V.’s capital through public offers and (ii) under article 210-bis of the General Law of Negotiable Instruments and Credit Operations (Ley General de Títulos y Operaciones de Crédito), this preemptive right to subscribe is not applicable when issuing shares under convertible notes. Preemptive rights give shareholders the right, upon any issuance of shares by us, to purchase a sufficient number of shares to maintain their existing ownership percentages. Preemptive rights must be exercised within the period and under the conditions established for that purpose by the shareholders, and Cemex, S.A.B. de C.V.’s by-laws and applicable law provide that this period must be 15 days following the publication of the notice of the capital increase through the electronic system established by the Ministry of Economy (Secretaría de Economía) or, in its absence, in the Official Gazette of the State of Nuevo León (Periódico Oficial del Estado de Nuevo León) or in any major newspaper published and distributed in the city of Monterrey, Nuevo León, Mexico.
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Holders of ADSs that are U.S. persons or are located in the United States may be restricted in their ability to participate in the exercise of such preemptive rights. See “Item 3—Key Information—Risk Factors—Risks Relating to Ownership of our Securities—Preemptive rights generally available under Mexican law may be unavailable to ADS holders.”
Pursuant to Cemex, S.A.B. de C.V.’s by-laws, significant acquisitions of shares of Cemex, S.A.B. de C.V.’s capital stock and changes of control of Cemex, S.A.B. de C.V. require prior approval from Cemex, S.A.B. de C.V.’s Board of Directors. Cemex, S.A.B. de C.V.’s Board of Directors must authorize in advance any transfer of, or creation of any encumbrance or lien on, voting shares of Cemex, S.A.B. de C.V.’s capital stock that would result in any person or group becoming a holder of 2% or more of Cemex, S.A.B. de C.V.’s shares. Cemex, S.A.B. de C.V.’s Board of Directors shall consider the following when determining whether to authorize such transfer of voting shares: a) the type of investors involved; b) if stock prices may be affected or if the number of Cemex, S.A.B. de C.V.’s shares outstanding would be reduced in such way that marketability may be affected; c) whether the acquisition would result in the potential acquirer exercising a significant influence or being able to obtain control; d) whether all applicable rules and Cemex, S.A.B. de C.V.’s by-laws have been observed by the potential acquirer; e) whether the potential acquirers are our competitors or are persons or legal entities participating in companies, entities or persons that are our competitors and whether there is a risk of affecting market competition, or the potential acquirers could have access to confidential and privileged information; f) the morality and economic solvency of the potential acquirers; g) the protection of minority rights and the rights of our employees; and h) whether an adequate base of investors would be maintained. If Cemex, S.A.B. de C.V.’s Board of Directors denies the authorization, or the transfer had been authorized on the basis of false or incorrect information or information had been withheld or the requirements established in Cemex, S.A.B. de C.V.’s by-laws are not complied with, the persons involved in the transfer shall not be entitled to exercise the voting rights corresponding to the transferred shares, such shares shall not be taken into account for the determination of the quorums of attendance and voting at shareholders’ meetings and the transfers shall not be recorded or have any effect in our share registry and the registry undertaken by S.D. Indeval, Institución para el Depósito de Valores, S.A. de C.V. (“Indeval”), the Mexican securities depositary.
Any acquisition of shares of Cemex, S.A.B. de C.V.’s capital stock representing 30% or more of its capital stock by a person or group of persons requires prior approval from Cemex, S.A.B. de C.V.’s Board of Directors and, in the event approval is granted, the acquirer has an obligation to make a public offer to purchase all of the outstanding shares of Cemex, S.A.B. de C.V.’s capital stock.
In the event the requirements for significant acquisitions of shares of Cemex, S.A.B. de C.V.’s capital stock are not met, the persons acquiring such shares will not be entitled to any corporate rights with respect to such shares, such shares will not be taken into account for purposes of determining a quorum for shareholders’ meetings, Cemex, S.A.B. de C.V. will not record such persons as holders of such shares in its share registry and the registry undertaken by Indeval shall not have any effect. Cemex, S.A.B. de C.V.’s by-laws require the stock certificates representing shares of its capital stock to make reference to the provisions in its by-laws relating to the prior approval of the Cemex, S.A.B. de C.V. Board of Directors for significant share transfers and the requirements for recording share transfers in its share registry. In addition, shareholders are responsible for informing Cemex, S.A.B. de C.V. within five business days whenever their shareholdings exceed 5%, 10%, 15%, 20%, 25%, and 30% of Cemex, S.A.B. de C.V.’s capital stock. If a person acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”)) of 20% or more in voting power of the outstanding voting stock of Cemex, S.A.B. de C.V., a change of control will be deemed to have occurred under the Credit Agreements and other debt agreements of Cemex.
Cemex, S.A.B. de C.V. is required to maintain a share registry to record the names, nationalities and domiciles of all significant shareholders, and any shareholder that meets or exceeds these thresholds must be recorded in this
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registry if such shareholder is to be recognized or represented at any shareholders’ meeting. If a shareholder fails to inform Cemex, S.A.B. de C.V. of its shareholdings reaching a threshold as described above, we will not record the transactions that cause such threshold to be met or exceeded in Cemex, S.A.B. de C.V.’s share registry, and such transaction will have no legal effect and will not be binding on us.
Cemex, S.A.B. de C.V.’s by-laws also require that its shareholders comply with legal provisions regarding acquisitions of securities and certain shareholders’ agreements that require disclosure to the public.
Repurchase Obligation
In accordance with Mexican securities regulations, Cemex, S.A.B. de C.V. is obligated to make a public offer for the purchase of stock to its shareholders if Cemex, S.A.B. de C.V.’s registration with the Mexican securities registry is canceled, either by resolution of its shareholders or by an order of the Mexican securities authority. The minimum price at which we must purchase the stock is the higher of:
| • | the weighted average price per share based on the weighted average trading price of Cemex, S.A.B. de C.V.’s CPOs on the MSE during the latest period of 30 trading days preceding the date of the offer, for a period not to exceed six months; or |
| • | the book value per share, as reflected in the last quarterly report filed with the Mexican securities authority and the MSE before the date of the offer. |
Cemex, S.A.B. de C.V.’s Board of Directors shall prepare and disclose to the public through the MSE, within 10 business days after the day the public offer begins, and after consulting the Corporate Practices and Finance Committee, its opinion regarding the price of the offer and any conflicts of interests that each of its members may have regarding such offer. This opinion may be accompanied by an additional opinion issued by an independent expert that we may hire.
Following the cancelation of Cemex, S.A.B. de C.V.’s registration with the Mexican securities registry, it must place in a trust set up for that purpose for a six-month period an amount equal to that required to purchase the remaining shares held by investors who did not participate in the offer.
Shareholders’ Meetings and Voting Rights
Shareholders’ meetings may be called by:
| • | Cemex, S.A.B. de C.V.’s Board of Directors or the Corporate Practices and Finance Committee and Audit Committee; |
| • | shareholders representing at least 10% of outstanding and fully paid shares, by making a request to the Chairman of Cemex, S.A.B. de C.V.’s Board of Directors or Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee and Audit Committee; or |
| • | any shareholder (i) if no meeting has been held for two consecutive years or when the matters referred to in Article 181 of the General Law of Commercial Companies of Mexico (Ley General de Sociedades Mercantiles – “LGSM”) have not been dealt with or (ii) when, for any reason, the required quorum for valid sessions of the Corporate Practices and Finance Committee and Audit Committee was not reached and the board of directors failed to make the appropriate provisional appointments; or |
| • | a Mexican court of competent jurisdiction, in the event Cemex, S.A.B. de C.V.’s Board of Directors or the Corporate Practices and Finance Committee and Audit Committee do not comply with the valid shareholders’ request described above. |
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Notice of shareholders’ meetings must be published through the electronic system established by the Ministry of Economy (Secretaría de Economía) or, in its absence, in the Official Gazette of the State of Nuevo León (Periódico Oficial del Estado de Nuevo León), Mexico or in any major newspaper published and distributed in the city of Monterrey, Nuevo León, Mexico. The notice must be published at least 15 days prior to the date of any shareholders’ meeting. Consistent with Mexican law, Cemex, S.A.B. de C.V.’s by-laws further require that all information and documents relating to the shareholders’ meeting be available to shareholders at least 15 days prior to the date of the shareholders’ meeting.
General shareholders’ meetings can be ordinary or extraordinary. At every general shareholders’ meeting, each qualified holder of Series A shares and Series B shares is entitled to one vote per share. Shareholders may vote by proxy duly appointed in writing. Under the CPO trust agreement, holders of CPOs who are not Mexican nationals cannot exercise voting rights corresponding to the Series A shares represented by their CPOs, in which case, the CPO trustee will vote the underlying Series A shares in the same manner as the holders of the majority of the voting shares.
An annual ordinary general shareholders’ meeting must be held during the first four months after the end of each of Cemex, S.A.B. de C.V.’s fiscal year to consider the approval of a report of its Board of Directors regarding Cemex, S.A.B. de C.V.’s performance and its financial statements for the preceding fiscal year and to determine the allocation of profits from the preceding year. In addition, Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting must:
| • | review the annual reports of each of Cemex, S.A.B. de C.V.’s Chief Executive Officer, the Board of Directors, and the Corporate Practices and Finance Committee and Audit Committee of the Board of Directors; |
| • | elect, remove, or substitute the members of Cemex, S.A.B. de C.V.’s Board of Directors, which are voted on an individual basis; |
| • | determine the level of independence of the members of Cemex, S.A.B. de C.V.’s Board of Directors; |
| • | elect or remove the Chairman of Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee and the Audit Committee; |
| • | approve any transaction that represents 20% or more of Cemex, S.A.B. de C.V.’s consolidated assets; and |
| • | resolve any issues not reserved for extraordinary shareholders’ meetings. |
A general extraordinary shareholders’ meeting may be called at any time to deal with any of the matters specified by Article 182 of the LGSM, which include, among other things:
| • | extending Cemex, S.A.B. de C.V.’s corporate existence; |
| • | Cemex, S.A.B. de C.V.’s voluntary dissolution; |
| • | increasing or reducing Cemex, S.A.B. de C.V.’s fixed capital stock; |
| • | changing Cemex, S.A.B. de C.V.’s corporate purpose; |
| • | changing Cemex, S.A.B. de C.V.’s country of incorporation; |
| • | changing Cemex, S.A.B. de C.V.’s form of organization; |
| • | a proposed merger; |
| • | issuing preferred shares; |
| • | redeeming Cemex, S.A.B. de C.V.’s own shares; |
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| • | any amendment to Cemex, S.A.B. de C.V.’s by-laws; |
| • | issuing bonds to be registered in the Mexican National Securities Registry; and |
| • | any other matter for which a special quorum is required by law or by Cemex, S.A.B. de C.V.’s by-laws. |
In order to vote at a meeting of shareholders, shareholders must (i) appear on the list that Indeval and Indeval participants holding shares on behalf of the shareholders prepare prior to the meeting, or (ii) prior to the meeting, deposit the certificates representing their shares at Cemex, S.A.B. de C.V.’s offices or in a Mexican credit institution or brokerage house that operates in accordance with applicable laws in Mexico. The certificate of deposit with respect to the share certificates must be presented to Cemex, S.A.B. de C.V.’s company secretary at least 48 hours before a meeting of shareholders. Cemex, S.A.B. de C.V.’s company secretary verifies that the person in whose favor any certificate of deposit was issued is named in Cemex, S.A.B. de C.V.’s share registry and issues an admission pass authorizing that person’s attendance at the meeting of shareholders. See “Item 3—Key Information—Risk Factors—Risks Relating to Ownership of Our Securities—ADS holders may only vote the Series B shares represented by the CPOs deposited with the ADS depositary through the ADS depositary and are not entitled to vote the Series A shares represented by the CPOs deposited with the ADS depositary.”
Cemex, S.A.B. de C.V.’s by-laws provide that a shareholder may only be represented by proxy in a shareholders’ meeting with a duly completed form provided by Cemex, S.A.B. de C.V. authorizing the proxy’s presence. In addition, Cemex, S.A.B. de C.V.’s by-laws require that the secretary acting at the shareholders’ meeting publicly affirm the compliance by all proxies with this requirement. A shareholders’ resolution is required to take action on any matter presented at a shareholders’ meeting.
At an ordinary shareholders’ meeting, the affirmative vote of the holders of a majority of the shares present at the meeting is required to adopt a shareholders’ resolution. At an extraordinary meeting of shareholders, the affirmative vote of at least 50% of the capital stock is required to adopt a shareholders’ resolution, except that when amending Article 7 (with respect to measures limiting shareholding ownership), Article 10 (relating to the register of shares and significant participations), or Article 22 (specifying the impediments to being appointed a member of Cemex, S.A.B. de C.V.’s Board of Directors) of Cemex, S.A.B. de C.V.’s by-laws, the affirmative vote of at least 75% of the voting stock is required.
The attendance quorum for an ordinary general shareholders’ meeting upon the first call is 50% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares and, for the second call, is any number of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares. If the quorum is not met upon the first call, a subsequent meeting may be called and the quorum for the second ordinary shareholders’ meeting is any number of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares represented at the meeting. The attendance quorum for the extraordinary shareholders’ meeting upon the first call is 75% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares and, upon the second and subsequent calls, is 50% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares.
Rights of Minority Shareholders
At Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting, any shareholder or group of shareholders representing 10% or more of its voting stock has the right to appoint or remove one member of Cemex, S.A.B. de C.V.’s Board of Directors, in addition to the directors appointed by the majority. Such appointment may only be revoked by other shareholders when the appointment of all other directors is also revoked. Cemex, S.A.B. de C.V.’s by-laws provide that holders of at least 10% of its outstanding capital stock are entitled to demand the postponement of the voting on any resolution of which they deem they have not been sufficiently informed.
Under Mexican law, holders of at least 20% of Cemex, S.A.B. de C.V.’s outstanding capital stock entitled to vote on a particular matter may oppose any resolution reached at a shareholders’ meeting by filing a petition with a court of law
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for a court order to suspend the resolution temporarily within 15 days after the adjournment of the meeting at which that action was taken and showing that the challenged action violates Mexican law or Cemex, S.A.B. de C.V.’s by-laws, provided the opposing shareholders deliver a bond to the court to secure payment of any damages that we suffer as a result of suspending the resolution in the event that the court ultimately rules against the opposing shareholders. Relief under these provisions is only available to holders who were entitled to vote on, or whose rights as shareholders were adversely affected by, the challenged shareholder action and whose shares were not represented when the action was taken or, if represented, voted against it.
Under Mexican law, an action for civil liabilities against directors may be initiated by a shareholders’ resolution for violation of their fiduciary duties to the corporation. In the event shareholders decide to bring an action of this type, the persons against whom that action is brought will immediately cease to be directors. Additionally, shareholders representing not less than 33% of the outstanding shares may directly exercise that action against the directors; provided that:
| • | those shareholders shall not have voted against exercising such action at the relevant shareholders’ meeting; and |
| • | the claim covers all of the damage alleged to have been caused to us and not merely the damage suffered by the plaintiffs. |
Under Cemex, S.A.B. de C.V.’s by-laws, shareholders representing 5% or more of its outstanding capital stock may initiate actions exclusively on behalf of Cemex, S.A.B. de C.V. against members of its Board of Directors, its Corporate Practices and Finance Committee and Audit Committee, its Chief Executive Officer, or any relevant executives, for breach of their duty of care or duty of loyalty to the corporation or for committing illicit acts or activities. The only requirement is that the claim covers all of the damage alleged to have been caused to us or any entities on which we have a significant influence and not merely the damage suffered by the plaintiffs. Actions initiated on these grounds have a five-year statute of limitations from the day of the act or action that caused the damage.
Any recovery of damages with respect to these actions will be for Cemex, S.A.B. de C.V.’s benefit and not that of the shareholders bringing the action.
Registration and Transfer
Cemex, S.A.B. de C.V.’s common stock is evidenced by share certificates in registered form with registered dividend coupons attached. Shareholders who have not deposited their shares into the CPO trust may hold their shares in the form of physical certificates or through institutions that have accounts with Indeval. Accounts may be maintained at Indeval by brokers, banks and other entities approved by the Mexican securities authority. Cemex, S.A.B. de C.V. maintains a stock registry, and, in accordance with Mexican law, only those holders listed in Cemex, S.A.B. de C.V.’s stock registry and those holding certificates issued by Indeval and by Indeval participants indicating ownership are recognized as Cemex, S.A.B. de C.V. shareholders.
Pursuant to Mexican law, any transfer of shares must be registered in Cemex, S.A.B. de C.V.’s stock registry, if effected physically, or through book entries that may be tracked back from Cemex, S.A.B. de C.V.’s stock registry to the records of Indeval.
Redemption
Cemex, S.A.B. de C.V.’s capital stock is subject to redemption upon approval of our shareholders at an extraordinary shareholders’ meeting.
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Share Repurchases
If approved by Cemex, S.A.B. de C.V.’s shareholders at a general shareholders’ meeting, we may purchase Cemex, S.A.B. de C.V.’s outstanding shares. The economic and voting rights corresponding to repurchased shares cannot be exercised during the period the shares are owned by us and the shares will be deemed outstanding for purposes of calculating any quorum or vote at any shareholders’ meeting. We may also repurchase our equity securities on the MSE at the then prevailing market prices in accordance with the Mexican Securities Market Law. If we intend to repurchase shares representing more than 1% of Cemex, S.A.B. de C.V.’s outstanding shares at a single trading session, we must inform the public of such intention at least 10 minutes before submitting our bid. If we intend to repurchase shares representing 3% or more of Cemex, S.A.B. de C.V.’s outstanding shares during a period of 20 trading days, we are required to conduct a public tender offer for such shares. We must conduct share repurchases as per the framework authorized by Cemex, S.A.B. de C.V.’s Board of Directors and through the person or persons approved by Cemex, S.A.B. de C.V.’s Board of Directors, through a single broker dealer during the relevant trading session and without submitting bids during the first and the last 30 minutes of each trading session. We must inform the MSE of the results of any share repurchase no later than the business day following any such share repurchase.
Directors’ and Shareholders’ Conflict of Interest
Under Mexican law, any shareholder who has a conflict of interest with Cemex, S.A.B. de C.V. with respect to any transaction is obligated to disclose such conflict and is prohibited from voting on that transaction. A shareholder who violates this prohibition may be liable for damages if the relevant transaction would not have been approved without that shareholder’s vote.
Under Mexican law, any director who has a conflict of interest with Cemex, S.A.B. de C.V. in any transaction must disclose that fact to the other directors and is prohibited from participating and being present during the deliberations and voting on that transaction. A director who violates this prohibition will be liable for damages and lost profits. Additionally, Cemex, S.A.B. de C.V.’s directors may not represent shareholders in our shareholders’ meetings.
Withdrawal Rights
Whenever Cemex, S.A.B. de C.V.’s shareholders approve a change of corporate purpose, change of nationality or transformation from one form of corporate organization to another, Mexican law provides that any shareholder entitled to vote on that change who has voted against it may withdraw from Cemex, S.A.B. de C.V. and receive an amount equal to the book value (in accordance with the latest statement of financial position approved by the annual ordinary general shareholders’ meeting) attributable to such shareholder’s shares; provided that such shareholder exercises that right within 15 days following the meeting at which the change was approved.
Dividends
At each annual ordinary general shareholders’ meeting, Cemex, S.A.B. de C.V.’s Board of Directors submits, for approval by its shareholders, its financial statements together with a report on them prepared by its Board of Directors and the statutory auditors. Cemex, S.A.B. de C.V.’s shareholders, once they have approved the financial statements, determine the allocation of our net income, after provision for income taxes, legal reserve and statutory employee profit sharing payments, for the preceding year. All shares of Cemex, S.A.B. de C.V.’s capital stock outstanding at the time a dividend or other distribution is declared are entitled to share equally in that dividend or other distribution.
Liquidation Rights
In the event Cemex, S.A.B. de C.V. is liquidated, the surplus assets remaining after payment of all its creditors will be divided among Cemex, S.A.B. de C.V.’s shareholders in proportion to the respective shares held by them. The
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liquidator may, with the approval of Cemex, S.A.B. de C.V.’s shareholders, distribute the surplus assets in kind among Cemex, S.A.B. de C.V.’s shareholders, sell the surplus assets and divide the proceeds among Cemex, S.A.B. de C.V.’s shareholders or put the surplus assets to any other uses agreed to by a majority of Cemex, S.A.B. de C.V.’s shareholders voting at an extraordinary shareholders’ meeting.
Differences Between Our Corporate Governance Practices and NYSE Standards for Domestic Companies
For a description of significant ways in which Cemex, S.A.B. de C.V.’s corporate governance practices differ from those required of domestic companies under NYSE standards, see “Item 16G—Corporate Governance.”
You may find additional information in the corporate governance section of our website www.cemex.com, or you may contact our investor relations team, by writing to or telephoning us as follows:
Cemex, S.A.B. de C.V.
Avenida Ricardo Margáin Zozaya #325
Colonia Valle del Campestre
San Pedro Garza García, Nuevo León, 66265, Mexico
Attn: Louisa P. Rodriguez-Investor Relations
Telephone: +1 (212) 317-6011
Email: ir@cemex.com
The information on our website is not, and is not intended to be, part of this annual report and is not incorporated into this annual report by reference.
Capital Stock
At our annual ordinary general shareholders’ meeting held on March 25, 2021, we approved (a) a decrease in our capital stock, in its variable part, for the amount of Ps 3,150,021.51, through the cancellation of 1,134,484,680 shares owned, ordinary, nominative and without par value, of which 756,323,120 were Series A shares and 378,161,560 were Series B shares, which were acquired through the repurchase program for the fiscal year 2020; and (b) a decrease in our capital stock, in its variable part, for the amount of Ps 9,466,882.27, through the cancellation of 3,409,510,974 treasury shares, common, nominative and without par value, of which 2,273,007,316 were Series A shares and 1,136,503,658 were Series B shares, which supported new issues of convertible securities and/or to be subscribed and issued through public offering or private subscription, both in Mexico and abroad. The capital stock reductions were made at a theoretical value of Ps 0.00277661 per share.
During 2021, Cemex did not use the repurchase program authorized at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meetings held on March 26, 2020 and March 25, 2021. As a result, as no repurchases of CPOs took place during 2021. Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meeting held on March 24, 2022 did not include on its agenda the cancellation of shares repurchased by Cemex, S.A.B. de C.V.
During 2022, under the repurchase programs authorized at Cemex, S.A.B. de C.V.’s ordinary general shareholders’ meetings held on March 25, 2021 and March 24, 2022, Cemex, S.A.B. de C.V. repurchased 220.6 million CPOs, at a weighted average price in Mexican pesos equivalent to $0.5026 per CPO, which was equivalent to an amount of $110.9 million. The shares repurchased during 2022 under such repurchase programs were proposed and subsequently approved for cancellation at Cemex, S.A.B. de C.V.’s annual ordinary general shareholders’ meeting held on March 23, 2023.
Cemex, S.A.B. de C.V. did not declare a dividend in fiscal years 2022 or 2023. See “Item 8—Financial Information—Dividends” for a description of Cemex, S.A.B. de C.V.’s policy on dividend distributions and dividend restrictions and
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“Item 5—Operating and Financial Review and Prospects—Recent Developments— Recent Developments Relating to Cemex, S.A.B. de C.V.’s Shareholders’ Meetings.” As of December 31, 2023, Cemex, S.A.B. de C.V.’s common stock was represented as follows:
| December 31, 2023 | ||||||||
| Shares(1) |
Series A(2) | Series B(2) | ||||||
| Subscribed and paid shares |
29,016,656,496 | 14,508,328,248 | ||||||
| Unissued shares authorized for stock compensation programs |
881,442,830 | 440,721,415 | ||||||
| 29,898,099,326 | 14,949,049,663 | |||||||
| (1) | As of December 31, 2023, 13,068,000,000 shares correspond to the fixed portion, and 31,779,148,989 shares correspond to the variable portion. |
| (2) | Series A or Mexican shares must represent at least 64% of Cemex, S.A.B. de C.V.’s capital stock and Series B or free subscription shares must represent at most 36% of Cemex, S.A.B. de C.V.’s capital stock. |
Material Contracts
For a description of the material terms relating to the Notes, see “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments Notes.”
For a description of the material terms relating to the Credit Agreements, see “Item 5—Operating and Financial
Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments.”
For a description of the material terms relating to the Subordinated Notes, see “Item 5—Operating and Financial Review and Prospects—Summary of Material Contractual Obligations and Commercial Commitments—Subordinated Notes.”
Exchange Controls
Not applicable.
Taxation
Mexican Tax Considerations
General
The following is a summary of certain Mexican federal income tax considerations relating to the ownership and disposition of Cemex, S.A.B. de C.V.’s CPOs or ADSs.
This summary is based on provisions of the Mexican Federal Income Tax Law (Ley del Impuesto Sobre la Renta, or the “Mexican Income Tax Law”) in effect on the date hereof, which is subject to change (possibly with retroactive effect) or to new or different interpretations, which could affect the continued validity or correctness of this summary. This summary is limited to non-residents of Mexico, as defined below, who own Cemex, S.A.B. de C.V.’s CPOs or ADSs. This summary does not constitute tax advice and does not address all aspects of Mexican Income Tax Law. This summary does not describe any tax consequences arising under the laws, rules or regulations of any state or municipality of Mexico. Holders should consult their tax counsel as to the tax consequences that the purchase, ownership and disposition of Cemex, S.A.B. de C.V.’s CPOs or ADSs may have.
Tax residency is a highly technical definition that involves the application of a number of factors that are specified in the Mexican Tax Code (Código Fiscal de la Federación). An individual is a resident of Mexico if he or she has
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established his or her home in Mexico. If the individual also has a home in another country, he or she will be considered a resident of Mexico if his or her center of vital interests is in Mexico. Under Mexican law, an individual’s center of vital interests is in Mexico if, among other things:
| • | more than 50% of the individual’s total income in the calendar year comes from Mexican sources; or |
| • | the individual’s main center of professional activities is in Mexico. |
A Mexican national that is employed by the Mexican government is deemed resident of Mexico, even if his or her center of vital interests is located outside of Mexico. Unless otherwise proven, Mexican nationals are deemed residents of Mexico for tax purposes.
A legal entity is a resident of Mexico if it is organized under the laws of Mexico or if it maintains the principal administration of its business or the effective location of its management in Mexico. A Mexican citizen is presumed to be a resident of Mexico for tax purposes unless such person can demonstrate otherwise. If a legal entity or an individual is deemed to have a permanent establishment in Mexico for tax purposes, all income attributable to such permanent establishment will be subject to Mexican taxes, in accordance with relevant tax provisions.
A non-resident of Mexico is a legal entity or individual that does not satisfy the requirements to be considered a resident of Mexico for Mexican tax purposes.
Taxation of Dividends
Dividends from earnings generated before January 1, 2014, either in cash or in any other form, paid to non-residents of Mexico with respect to Series A shares or Series B shares represented by the CPOs (or in the case of holders who hold CPOs represented by ADSs), will not be subject to withholding tax in Mexico.
As a result of the enactment of certain tax provisions in Mexico, as of January 1, 2014, dividends in cash from identified pre-tax retained earnings generated after January 1, 2014 will be subject to a 10% withholding tax. This tax is considered as a definitive payment.
Disposition of CPOs or ADSs
As a result of the enactment of certain tax provisions in Mexico, as of January 1, 2014, in the case of Mexican individuals, capital gains on the sale or other disposition of shares issued by Mexican companies on the MSE will be subject to a 10% withholding tax, which will be withheld by the intermediary acting as a withholding agent.
Under Mexican tax law, gains on the sale or disposition of CPOs or ADSs by a holder who is a non-resident of Mexico will not be subject to Mexican income tax, to the extent such sale is carried out through the MSE or other recognized securities market, as determined by Mexican tax authorities, and the non-resident’s country of tax residency has a tax treaty in force with Mexico. An affidavit stating that the non-resident of Mexico is entitled to tax treaty benefits should be delivered to the intermediary operating the disposition. Gains realized on sales or other dispositions of CPOs or ADSs by non-residents of Mexico made in other circumstances would be subject to a 10% capital gain withholding tax.
In addition, under the terms of the Convention Between the United States and Mexico for Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Income Taxes, and a protocol thereto (together, the “Tax Treaty”), gains obtained by a U.S. Holder (as defined below) eligible for benefits under the Tax Treaty on the disposition of CPOs or ADSs will generally not be subject to Mexican tax; provided that such gains are not attributable to a permanent establishment of such U.S. Holder in Mexico and that the eligible U.S. Holder did not own, directly or indirectly, 25% or more of our outstanding stock during the 12-month period preceding the disposition. Furthermore, in the case of non-residents of Mexico eligible for the benefits of a tax treaty, gains derived from the disposition of ADSs or CPOs may also be exempt, in whole or in part, from Mexican taxation under a treaty to which Mexico is a party.
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The term “U.S. Holder” shall have the same meaning ascribed below under the section “Item 10-Additional Information-U.S. Federal Income Tax Considerations.”
As of January 1, 2022, transfers of shares issued by Mexican entities between non-residents of Mexico should be informed to the Mexican Tax Authorities by the Mexican issuer entity within the following month of the transaction. However, this new obligation is not applicable to shares or CPOs traded in the MSE.
Estate and Gift Taxes
There are no Mexican inheritance or succession taxes applicable to the ownership, transfer or disposition of ADSs or CPOs by holders that are non-residents of Mexico, although gratuitous transfers of CPOs may, in some circumstances, cause a Mexican federal tax to be imposed upon a recipient. There are no Mexican stamp, issue, registration or similar taxes or duties payable by holders of ADSs or CPOs.
U.S. Federal Income Tax Considerations
General
The following is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of Cemex, S.A.B. de C.V.’s CPOs and ADSs.
This summary is limited to U.S. Holders (as defined below) that hold CPOs or ADSs as “capital assets” (generally, property held for investment) for U.S. federal income tax purposes. This summary is based on the U.S. Internal Revenue Code of 1986, as amended, U.S. Treasury Regulations promulgated thereunder (“Treasury Regulations”), administrative pronouncements, judicial decisions and other relevant authorities, all as in effect as of the date hereof and all of which are subject to change or differing interpretations, possibly with retroactive effect.
This summary does not address U.S. federal estate, gift or other non-income tax considerations, the alternative minimum tax, the Medicare tax on certain net investment income, or any state, local or non-U.S. tax considerations, relating to the ownership or disposition of CPOs or ADSs, nor does it address all aspects of U.S. federal income taxation that may be relevant to a particular U.S. Holder in light of its particular circumstances or that may be relevant to certain types of U.S. Holders subject to special treatment under U.S. federal income tax law, such as banks and other financial institutions, pension plans, cooperatives, real estate investment trusts, regulated investment companies, insurance companies, broker-dealers, traders in securities that elect to use a mark-to-market method of accounting, certain former citizens or long-term residents of the United States, tax-exempt entities (including private foundations), persons that actively or constructively own 10% or more of our voting stock (by vote or value), persons that acquire CPOs or ADSs pursuant to any employee share option or otherwise as compensation, persons that hold CPOs or ADSs as part of a straddle, hedge, conversion, constructive sale or other integrated transaction, persons whose functional currency is not the Dollar, or partnerships or other entities or arrangements subject to tax as partnerships for U.S. federal income tax purposes.
For purposes of this summary, a “U.S. Holder” is a beneficial owner of CPOs or ADSs that is, for U.S. federal income tax purposes:
| • | a citizen or individual resident of the United States; |
| • | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created in, or organized in or under, the laws of the United States or any political subdivision thereof; |
| • | an estate the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source; or |
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| • | a trust if (i) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more U.S. persons have the authority to control all of the trust’s substantial decisions, or (ii) the trust has validly elected to be treated as a domestic trust for U.S. federal income tax purposes. |
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of CPOs or ADSs, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships that hold CPOs or ADSs and their partners should consult their tax advisors regarding an investment in CPOs or ADSs.
The information set forth below is of a general nature only and is not intended to be tax advice. Prospective investors should consult their tax advisors with respect to the U.S. federal, state, local, and non-U.S. income and other tax considerations relevant to the ownership and disposition of CPOs or ADSs in light of their particular circumstances.
Ownership of CPOs or ADSs
In general, for U.S. federal income tax purposes, U.S. Holders that own ADSs will be treated as the beneficial owners of the CPOs represented by those ADSs, and each CPO will represent a beneficial interest in two Series A shares and one Series B share.
Distributions
The gross amount of any distribution received by a U.S. Holder with respect to the Series A shares or Series B shares represented by CPOs, including CPOs represented by ADSs (without reduction for Mexican withholding tax) will generally be subject to tax as ordinary dividend income to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, and will be includible in the gross income of such U.S. Holder on the day actually or constructively received. Distributions in excess of our current and accumulated earnings and profits will first be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in the CPOs or ADSs, as applicable, and thereafter generally as capital gain. Any such dividend will not be eligible for the dividends-received deduction generally allowed to corporate U.S. Holders. We do not intend to determine our earnings and profits in accordance with U.S. federal income tax principles. Therefore, any distributions we pay will generally be treated as dividends for U.S. federal income tax purposes.
The gross amount of any dividends paid in Mexican Pesos will be includible in the income of a U.S. Holder in a Dollar amount calculated by reference to the exchange rate in effect the day the Mexican Pesos are actually or constructively received by the CPO trustee or successor thereof whether or not the Mexican Pesos are converted into Dollars on that day. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date such payment is converted into Dollars will be treated as ordinary income or loss. Such gain or loss will generally be income from sources within the United States for U.S. foreign tax credit purposes.
An individual or other non-corporate U.S. Holder of CPOs or ADSs will generally be subject to tax on dividend income received on the CPOs or ADSs at the lower capital gains tax rate applicable to “qualified dividend income,” provided that certain holding period requirements are met. “Qualified dividend income” includes dividends paid on shares of a “qualified foreign corporation” if, among other things: (i) the shares of the foreign corporation are “readily tradable” on an “established securities market” in the United States, or (ii) the foreign corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the United States which contains an exchange of information program.
We believe that we are a “qualified foreign corporation” because (i) the ADSs trade on the NYSE and (ii) we are eligible for the benefits of the Tax Treaty, which constitutes a comprehensive income tax treaty with the United States
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that includes an exchange of information program. Accordingly, we believe that any dividends we pay should constitute “qualified dividend income” for U.S. federal income tax purposes. However, we cannot assure you that we will continue to be considered a “qualified foreign corporation” or that our dividends will continue to constitute “qualified dividend income.”
For U.S. foreign tax credit purposes, dividends received on CPOs or ADSs will generally be treated as income from sources outside the United States and will generally constitute passive category income. Depending on the individual facts and circumstances and subject to certain complex conditions and limitations, a U.S. Holder may be eligible to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on CPOs or ADSs. A U.S. Holder that elects not to claim a U.S. foreign tax credit for foreign taxes withheld may instead elect to deduct such taxes in computing its taxable income for U.S. federal income tax purposes. A U.S. Holder’s election to deduct foreign taxes instead of claiming U.S. foreign tax credits applies to all creditable foreign income taxes paid or accrued in the relevant taxable year. The rules regarding U.S. foreign tax credits and the deductibility of foreign taxes are complex and the application thereof depends in large part on the U.S. Holder’s individual facts and circumstances. All U.S. Holders, whether or not they are Tax Treaty-eligible, should consult their tax advisors regarding the availability of U.S. foreign tax credits and the deductibility of foreign taxes in light of their particular circumstances.
Sale or Other Disposition of CPOs or ADSs
A U.S. Holder will generally recognize gain or loss on the sale or other disposition of CPOs or ADSs in an amount equal to the difference between the amount realized on the disposition and the U.S. Holder’s adjusted tax basis in the CPOs or ADSs. Any such gain or loss will generally be long-term capital gain or loss if the U.S. Holder’s holding period in the CPOs or ADSs exceeds one year at the time of the disposition. Long-term capital gains of individuals and certain other non-corporate U.S. Holders are generally eligible for a reduced rate of taxation. The deductibility of capital losses may be subject to limitations.
Gain recognized by a U.S. Holder on the sale or other disposition of CPOs or ADSs will generally be treated as from sources within the United States for U.S. foreign tax credit purposes. Consequently, a U.S. Holder may not be able to claim a credit for any Mexican or other non-U.S. tax imposed on such gain unless the credit can be applied (subject to applicable limitations) against tax due on other income treated as derived from foreign sources. The rules governing the U.S. foreign tax credit are complex and the application thereof depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, all U.S. Holders, whether or not they are Tax Treaty-eligible, should consult their tax advisors regarding the availability of U.S. foreign tax credit and the deductibility of foreign taxes in light of their particular circumstances.
THE PRECEDING SUMMARY OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS INTENDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE. U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. TAX CONSIDERATIONS GENERALLY APPLICABLE TO THE OWNERSHIP AND DISPOSITION OF OUR CPOS OR ADSS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES.
Documents on Display
We are subject to the informational requirements of the Exchange Act and, in accordance with these requirements, file reports and information statements and other information with the SEC. These reports and information statements and other information filed by us with the SEC are available at the SEC’s website www.sec.gov.
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In reviewing the agreements included as exhibits to this annual report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements.
The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
| • | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| • | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; and |
| • | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; |
| • | and were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
The documentation submitted by Cemex, S.A.B. de C.V., to the Mexican Banking and Securities Commission, including this annual report translated into Spanish, may be consulted at the Mexican Stock Exchange, at its offices, or on its website at www.bmv.com.mx. Copies of such documentation may be obtained upon request by any investor, by contacting our investor relations team at our offices located at Avenida Ricardo Margáin Zozaya #325, Colonia Valle del Campestre, San Pedro Garza García, Nuevo León, 66265, Mexico, or by calling +52 81 8888-4327, attention to Fabián Orta, or by emailing ir@cemex.com. Additionally, certain information presented by Cemex, S.A.B. de C.V., to the Mexican Banking and Securities Commission and the Mexican Stock Exchange, and information related to Cemex, S.A.B. de C.V., can be found on its website at https://www.cemex.com/es/inversionistas/reportes/home#navigate.
Item 11—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See “Item 5—Operating and Financial Review and Prospects—Quantitative and Qualitative Market Disclosure.”
Item 12—DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Item 12A—Debt Securities
Not applicable.
Item 12B—Warrants and Rights
Not applicable.
Item 12C—Other Securities
Not applicable.
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Item 12D—American Depositary Shares
Depositary Fees and Charges
Under the terms of the Deposit Agreement for Cemex, S.A.B. de C.V.’s ADSs, an ADS holder may have to pay the following service fees to the depositary:
| Services |
Fees | |
| Issuance of ADSs upon deposit of eligible securities |
Up to 5¢ per ADS issued. | |
| Surrender of ADSs for cancelation and withdrawal of deposited securities |
Up to 5¢ per ADS surrendered. | |
| Exercise of rights to purchase additional ADSs |
Up to 5¢ per ADS issued. | |
| Distribution of cash (i.e., upon sale of rights and other entitlements) |
Up to 2¢ per ADS held. |
An ADS holder also is responsible to pay fees and expenses incurred by the ADS depositary and taxes and governmental charges including, but not limited to:
| • | transfer and registration fees charged by the registrar and transfer agent for eligible and deposited securities, such as upon deposit of eligible securities and withdrawal of deposited securities; |
| • | expenses incurred for converting foreign currency into Dollars; |
| • | expenses for cable, telex, and fax transmissions and for delivery of securities; |
| • | expenses incurred in connection with compliance with exchange control regulations and other applicable regulatory requirements; |
| • | fees and expenses incurred in connection with the delivery of deposited securities; and |
| • | taxes and duties upon the transfer of securities, such as when eligible securities are deposited or withdrawn from deposit. |
We have agreed to pay some of the other charges and expenses of the ADS depositary. Note that the fees and charges that a holder of ADSs is required to pay may vary over time and may be changed by us and by the ADS depositary. ADS holders will receive notice of the changes. The fees described above may be amended from time to time.
Depositary Payments for the Year Ended December 31, 2023
In 2023, we received $2,478,900.58 (after applicable U.S. taxes and including payments to third parties) from our Depositary Bank, Citibank, N.A., to reimburse us for contributions towards our investor relations activities (including, but not limited to, investor meetings, conferences, and fees to investor relations service vendors) and other miscellaneous expenses related to the listing of our ADSs on the NYSE.
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PART II
Item 13—DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
Item 14—MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
Item 15—CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management has evaluated, with the participation of Cemex, S.A.B. de C.V.’s CEO and CFO, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this annual report, and has concluded that our disclosure controls and procedures were effective as of December 31, 2023.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting refers to a process designed by, or under the supervision of, the CEO and CFO and effected by Cemex, S.A.B. de C.V.’s Board of Directors and our management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| • | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
| • | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and members of Cemex, S.A.B. de C.V.’s Board of Directors; and |
| • | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. |
Under the supervision and with the participation of our management, including the CEO and CFO and principal financial and accounting officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, using the criteria established in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023.
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Attestation Report of the Independent Registered Public Accounting Firm
The report on the audit of the effectiveness of our internal control over financial reporting issued by KPMG Cárdenas Dosal, S.C., a registered public accounting firm appears on page F-65 of this annual report.
Changes in Internal Control Over Financial Reporting
We have not identified changes in our internal control over financial reporting during 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16—RESERVED
Item 16A—Audit Committee Financial Expert
Cemex, S.A.B. de C.V.’s Board of Directors has determined that it has at least one “audit committee financial expert” (as defined in Item 16A of Form 20-F) serving on its Audit Committee. Mr. Everardo Elizondo Almaguer meets the requisite qualifications.
Item 16B—Code of Ethics
We have adopted a written code of ethics that applies to all board members, employees, including our principal executive officer, principal financial officer and principal accounting officer, third parties (including, but not limited to, customers, suppliers, and contractors) and other stakeholders. All of our employees are expected to comply with this code in their daily interactions.
Our code of ethics provides the following main guidelines:
(i) Our purpose and scope: we look to act with integrity in our day-to-day work. This is important for Cemex’s sustained success and to create a workplace in which our people can thrive. Our code of ethics aims to provide guidance on what is expected from all of us as part of Cemex;
(ii) Our people: we believe our people are our competitive advantage and the reason for our success. Therefore, we aim to provide a great place to work, we encourage an atmosphere of openness, courage, generosity and respect, so that all employees feel free to come forward with their questions, ideas, and concerns;
(iii) Health and safety in the workplace: we plan to prevent incidents and safeguard the health and safety of our workforce and are committed to carrying out our business activities in a safe and efficient manner to care for the well-being of all those on our sites and those who may be impacted by our activities;
(iv) Human rights: we look to support and respect the protection of internationally proclaimed human rights principles and we do not tolerate any violation of human rights in our business, our supply chain, or partnerships;
(v) Harassment and workplace respect: we look to foster an environment of mutual respect, and we promote supporting and encouraging each other;
(vi) Diversity and inclusion: we seek to support differences and provide an inclusive work environment for everyone. Recruitment, promotion, training, compensation and benefits should be based on ability, career experience and alignment with our values;
(vii) Customer relations: we work to be our customers’ best option and aim to conduct our business dealings fairly, professionally, and with integrity. We expect our customers to act with the same integrity;
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(viii) Supplier relations: we look to manage our supplier relationships with honesty, respect, and integrity, offering equal opportunities for all parties;
(ix) Government relations: our operations require a wide range of interactions with government agencies in many countries; these agencies may act as regulators, customers, suppliers, stockholders, and/or promoters. We seek to always conduct our interactions with these agencies in a manner consistent with our values, with a particular emphasis on integrity;
(x) Community relations: we are committed to promoting and contributing to the development of our communities by preserving the environment, fostering mutually beneficial relationships and maintaining open lines of communication. When considering Cemex’s participation in economic, social, and environmental programs, we should always comply with applicable law;
(xi) Environment: our business should be carried out in an environmentally responsible and sustainable manner, aiming to mitigate the environmental and social impacts of our business;
(xii) Antitrust compliance: we operate in many countries and are subject to different antitrust laws and regulations. Therefore, we are committed to conducting our business activities in compliance with local laws and regulations and our policies;
(xiii) Anti-corruption: we forbid our personnel from promising or providing anything of value to government officials or any third parties to secure any undue advantage or unduly influence any decisions;
(xiv) Preventing money laundering: in order to prevent money laundering, we must recognize the signs of money laundering and procure that we do not facilitate or support the process of covering up the source of illicit funds of criminal activities through our legitimate business;
(xv) Conflicts of interest and corporate opportunities: our employees, officers and directors have an obligation to conduct themselves in an honest and ethical manner and to act in our best interest. Our employees, officers and directors should not engage in situations that present or could present a potential or actual conflict between their personal interests and our interests;
(xvi) Gifts and hospitalities: we do not accept nor give hospitalities of any kind that may influence, or appear to compromise, decision-making on current or future negotiations. We should never seek or structure a negotiation on the basis of any gift, service or hospitality from a customer, supplier, consultant, service provider, or other third-party;
(xvii) Use of Cemex’s assets: employees should never use Cemex assets for their own benefit, and seek that the Company’s assets are not misused by others, stolen or damaged. When using company devices it is prohibited for employees to create, view, store, request, or distribute anything of an offensive, illegal, or inappropriate nature;
(xviii) Political activities: we acknowledge and respect the right of our employees to participate in activities external to the company, such as politics, provided that they are legal in their jurisdiction. Employees are not allowed to conduct political activities at company facilities, use company resources for these activities or engage in these activities on company time. We can make political contributions as long as the contributions are allowed by local law and pre-approved internally;
(xix) Data privacy and protection: we are committed to protecting the confidentiality and integrity of personal data to foster trustworthy business relationships. We aim to process personal data fairly and lawfully and provide access to such data within our organization only on a need-to-know basis;
(xx) Insider trading: we should never transact with Cemex securities while in possession of material non-public information about the company. We should never “tip” others or share material non-public information even if we do not intend to obtain profits for ourselves or others;
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(xxi) Intellectual property: we seek the protection of Cemex’s intellectual property and capture innovation to achieve added value and freedom to operate. Cemex recognizes and respects the intellectual property of third parties and intends to prevent and avoid consequences of potential infringement of third parties’ rights;
(xxii) Accurate records: we look to provide our stakeholders with correct and complete information in a timely manner. Anyone responsible for financial records, or any other Cemex records or reporting, must seek that those records accurately reflect our business activities, are supported by evidence, and are complete, accurate, and timely; and
(xxiii) Communication and use of social media: we should not make any statements outside of Cemex about company performance, initiatives or any other internal matters. We look to keep all confidential matters safe.
We promote awareness and enforcement of our code of ethics through our ethics committees, training programs and secured internal communications channels. We periodically evaluate and update the provisions of our code of ethics.
You may view our code of ethics in the corporate governance section of our website (www.cemex.com), or you may request a copy of our code of ethics, at no cost, by writing to or calling us at:
Cemex, S.A.B. de C.V.
Avenida Ricardo Margáin Zozaya #325
Colonia Valle del Campestre
San Pedro Garza García, Nuevo León, 66265, Mexico
Attn: Guillermo Francisco Hernandez Morales
Telephone: +52 81 8888-8888
Item 16C—Principal Accountant Fees and Services
Audit Fees: KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $16 million in fiscal year 2023 in connection with the professional services rendered for the audit of our annual financial statements and services normally provided by them relating to statutory and regulatory filings or engagements. In fiscal year 2022, KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $15 million for these services.
Audit-Related Fees: KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $1 million in fiscal year 2023 for assurance and related services reasonably related to the performance of our audit. In fiscal year 2022, KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $1 million for audit-related services.
Tax Fees: KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $2 million in fiscal year 2023 for tax compliance, tax advice and tax planning. In fiscal year 2022, KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $1 million for tax-related services.
All other fees: KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $1 million in fiscal year 2023 for products and services other than those comprising audit fees, audit-related fees and tax fees. In fiscal year 2022, KPMG Cárdenas Dosal, S.C. in Mexico and KPMG firms worldwide charged us $1 million for products and services in this category. These fees relate mainly to services provided by KPMG to us with respect to our sustainability report assurance and other services.
Audit Committee Pre-Approval Policies and Procedures
Our Audit Committee is responsible for, among other things, the appointment, compensation and oversight of our independent external auditors. To assure the independence of our independent external auditors, our Audit Committee pre-approves annually a catalog of specific audit and non-audit services in the categories Audit Services, Audit-Related Services, Tax-Related Services and Other Services that may be performed by our auditors, as well as
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the budgeted fee levels for each of these categories. All other permitted services must receive a specific approval from our Audit Committee. Our external auditor periodically provides a report to our Audit Committee in order for our Audit Committee to review the services that our external auditor is providing, as well as the status and cost of those services.
During 2023, there were no services provided to us by our external auditors that were performed pursuant to the de minimis exception.
Item 16D—Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E—Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
Item 16F—Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G—Corporate Governance
Section 303A.11 of the NYSE Listed Company Manual (“LCM”) requires that listed foreign private issuers, such as Cemex, disclose any significant ways in which their corporate governance practices differ from those followed by U.S. companies under NYSE listing standards.
Cemex’s corporate governance practices are governed by its by-laws, by the corporate governance provisions set forth in the Mexican Securities Market Law (Ley del Mercado de Valores), the Mexican Regulation for Issuers (Disposiciones de Carácter General aplicables a las Emisoras de Valores y a otros Participantes del Mercado de Valores) issued by the Mexican Banking and Securities Commission (Comisión Nacional Bancaria y de Valores) and the MSE Rules (Reglamento Interior de la Bolsa Mexicana de Valores) and by applicable U.S. securities laws. Cemex is also subject to the rules of the NYSE to the extent they apply to foreign private issuers. Except for those specific rules, foreign private issuers are permitted to follow home country practice in lieu of the provisions of Section 303A of the LCM.
Cemex, on a voluntary basis, also complies with the Mexican Code of Best Corporate Practices (Código de Mejores Prácticas Corporativas) which, as indicated below, was promulgated by a committee established by the Mexican Corporate Coordination Board (Consejo Coordinador Empresarial). The Mexican Corporate Coordination Board provides recommendations for better corporate governance practices for listed companies in Mexico, and the Mexican Code of Best Corporate Practices has been endorsed by the Mexican Banking and Securities Commission.
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The following is a summary of significant ways in which our corporate governance practices differ from those required to be followed by U.S. domestic companies under the NYSE’s listing standards.
| NYSE LISTING STANDARDS | CEMEX CORPORATE GOVERNANCE PRACTICE | |
| 303A.01 |
||
| Listed companies must have a majority of independent directors on its board of directors. | Pursuant to the Mexican Securities Market Law, Cemex, S.A.B. de C.V. is required to have a board of directors with a maximum of 21 members, of which at least 25% must be independent. Consistent with the provisions of the Mexican Securities Market Law, determination as to the independence of Cemex, S.A.B. de C.V.’s directors is made by Cemex, S.A.B. de C.V.’s shareholders at the time of their election at the corresponding shareholders’ meeting. As of December 31, 2023, and as of the date of this annual report, Cemex, S.A.B. de C.V.’s Board of Directors had 13 members, of which 77% are independent under the Mexican Securities Market Law. | |
| 303A.02 |
||
| A listed company’s board of directors must perform director independence tests and affirmatively determine a director has no material relationship with the listed company, either directly or as a partner, shareholder or officer of an organization that has a relationship with the listed company, after broadly considering all relevant facts and circumstances. | The Mexican Securities Market Law sets forth, in article 26, the definition of “independence,” which differs from the one set forth in Section 303A.02 of the LCM. Generally, under the Mexican Securities Market Law, a director is not independent if such director is an employee or officer of the company or its subsidiaries; an individual that has significant influence over the company or its subsidiaries; a shareholder that is part of a group that controls the company; or, if there exist certain relationships between a company and a director, entities with which the director is associated or family members of the director. Consistent with the provisions of the Mexican Securities Market Law, determination as to the independence of Cemex, S.A.B. de C.V.’s directors is made by Cemex, S.A.B. de C.V.’s shareholders at the time of their election at the corresponding shareholders’ meeting. | |
| 303A.03 |
||
| Non-management directors must meet at regularly scheduled executive meetings that are not attended by management. | Under Cemex, S.A.B. de C.V.’s by-laws and Mexican laws and regulations, our non-management and independent directors are not required to meet in executive sessions. Cemex, S.A.B. de C.V.’s Board of Directors must meet at least once every three months. | |
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| NYSE LISTING STANDARDS | CEMEX CORPORATE GOVERNANCE PRACTICE | |
| 303A.04 |
||
| Listed companies must have a nominating/corporate governance committee comprised entirely of independent directors. | Under Cemex, S.A.B. de C.V.’s by-laws and Mexican laws and regulations, we are not required to have a nominating/corporate governance committee. However, Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee performs substantially similar functions as would be performed by a nominating/corporate governance committee.
Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee operates pursuant to the provisions of the Mexican Securities Market Law and Cemex, S.A.B. de C.V.’s by-laws. As of December 31, 2023 and as of the date of this annual report, Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee is composed of three independent directors under the Mexican Securities Market Law.
Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee is responsible for performing the role of a nominating/corporate governance committee, mainly by evaluating the employment and compensation of the Chief Executive Officer and the Chairman of the Board of Directors; reviewing the hiring and compensation policies for executive officers; reviewing related party transactions and any conflicts of interest; reviewing policies regarding use of corporate assets; reviewing unusual or material transactions; evaluating waivers granted to directors or executive officers regarding participation and benefitting of corporate opportunities; evaluating financial plans; reviewing the financial strategy and its implementation; evaluating merger and acquisitions opportunities as well as asset sales, including financial and related transactions; and carrying out other activities described under Mexican law. Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee meets as required by Cemex, S.A.B. de C.V.’s by-laws and by Mexican laws and regulations. For more information on our Corporate Practices and Finance Committee, see “Item 6—Directors, Senior Management, and Employees—Board Practices—The Audit Committee, the Corporate Practices and Finance Committee, and Other Committees.” | |
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| NYSE LISTING STANDARDS | CEMEX CORPORATE GOVERNANCE PRACTICE | |
| 303A.05 |
||
| Listed companies must have a compensation committee comprised entirely of independent directors. | Under Cemex, S.A.B. de C.V.’s by-laws and Mexican laws and regulations, we are not required to have a compensation committee. However, Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee performs substantially similar functions as would be performed by a compensation committee. For more information on Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee, see above and “Item 6—Directors, Senior Management, and Employees—Board Practices—The Audit Committee, the Corporate Practices and Finance Committee, and Other Committees.” | |
| Compensation committee members must satisfy additional independence requirements specific to compensation committee membership. | See above. | |
| Listed companies must have an audit committee that satisfies the requirements of Rule 10A-3 under the Exchange Act. Listed companies must have an audit committee comprised entirely of independent directors. All of its members shall be financially literate or must acquire such financial knowledge within a reasonable period and at least one of its members shall have experience in accounting or financial administration. | Cemex, S.A.B. de C.V.’s Audit Committee operates pursuant to the provisions of the Mexican Securities Market Law and Cemex, S.A.B. de C.V.’s by-laws.
As of December 31, 2023 and as of the date of this annual report, Cemex, S.A.B. de C.V.’s Audit Committee is composed of three independent members under the Mexican Securities Market Law. According to Cemex, S.A.B. de C.V.’s by-laws and the Mexican Securities Market Law, all of the members must be independent under the Mexican Securities Market Law.
Cemex, S.A.B. de C.V.’s Audit Committee is responsible for evaluating internal controls and procedures and identifying deficiencies; following up with corrective and preventive measures in response to any non-compliance with operation and accounting guidelines and policies; evaluating the performance of external auditors and analyzing the reports, opinions, and other information issued by such external auditors; describing and valuing non-audit services performed by external auditors; reviewing financial statements and determining if their approval should be recommended to the Board of Directors; informing the Board of Directors of the state of the company’s internal controls, internal audit, and accounting systems, including any breaches detected; supporting the Board of Directors in producing different reports submitted to the shareholders; assessing the effects of any modifications to the accounting policies approved during any fiscal year; identification, evaluation, and follow up on the main risks affecting the company and its subsidiaries; overseeing measures adopted as a result of any | |
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| NYSE LISTING STANDARDS | CEMEX CORPORATE GOVERNANCE PRACTICE | |
| observations made by shareholders, directors, executive officers, employees, or any third parties with respect to accounting, internal controls, and internal and external audit, as well as any complaints regarding management irregularities; supervising complaints raised by employees, third parties and other stakeholders to report ethical, corruption, and/or compliance matters utilizing confidential methods and other whistleblowing mechanisms; ensuring compliance by the Chief Executive Officer with the resolutions adopted by the shareholders and Board of Directors; and analyzing the risks identified by independent auditors, accounting, internal control, and process assessment areas.
Cemex, S.A.B. de C.V.’s Board of Directors has determined that it has an “audit committee financial expert,” for purposes of the Sarbanes-Oxley Act of 2002, serving on its Audit Committee. We believe all of the members of the Audit Committee of Cemex, S.A.B. de C.V.’s Board of Directors are financially literate and have experience in accounting and financial administration. See “Item 6—Directors, Senior Management, and Employees—Senior Management and Directors—Board of Directors Skill Matrix.”
Cemex, S.A.B. de C.V.’s Audit Committee meets as required by Cemex, S.A.B. de C.V.’s by-laws and by Mexican laws and regulations. | ||
| 303A.09 |
||
| Listed companies must adopt and disclose corporate governance guidelines and to include such information on the company’s website. | Under Cemex, S.A.B. de C.V.’s by-laws and Mexican laws and regulations, we are not required to adopt corporate governance guidelines, but, on an annual basis, we file a report with the MSE regarding our compliance with the Mexican Code of Best Corporate Practices. | |
| 303A.10 |
||
| Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. | Cemex, S.A.B. de C.V. has adopted and disclosed a written code of business conduct and ethics that applies to all of our directors, officers and employees. | |
| Equity compensation plans. Equity compensation plans require shareholder approval, subject to limited exemptions. | Shareholder approval is not expressly required under Cemex, S.A.B. de C.V.’s by-laws for the adoption and amendment of an equity compensation plan. However, at our annual shareholders’ meeting held on March 22, 2024, Cemex, S.A.B. de C.V.’s shareholders resolved to extend the RSIP until December 31, 2028. | |
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Item 16H—Mine Safety Disclosure
The information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 15.1 to this annual report.
Item 16I—Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
Item 16J—Insider Trading Policies
Not applicable.
Item 16K—Cybersecurity
Risk Management and Strategy
We regularly assess risks from cybersecurity threats, monitor our information systems for potential vulnerabilities and test those systems pursuant to our cybersecurity policies, processes, and practices, which are integrated into our overall risk management system. We strive to mitigate these risks through cybersecurity risk management, strategy, and governance efforts, which include the safeguarding of systems and electronic information through a set of cybersecurity controls, processes, proactive monitoring, and disaster recovery plans that seek to minimize business disruptions. To protect our information systems from cybersecurity threats, we use various security tools that help us identify, escalate, investigate, resolve and recover from cybersecurity incidents in an appropriate manner. These efforts include our risk management process, which comprises frameworks such as the International Organization for Standardization (“ISO”) 27001:2022 and standards published by the National Institute of Standards and Technology. We also perform periodic scans, network vulnerability assessments, penetration tests, adversary simulations and risk assessments. Additionally, we engage third-party service providers such as IBM, Microsoft, and HCL Technologies to assist us in managing risks associated with cybersecurity threats. We have established processes for third party management which includes risk assessment to identify, assess and mitigate risks related to our service providers. We have a Security Operations Center that provides cybersecurity monitoring, correlation, and response to protect our digital assets, assisted with artificial intelligence tools and cyberthreat intelligence services. We have an established cybersecurity incident response plan and disaster recovery plans with the objective of handling incidents across the organization that could cause major disruptions to our business. These plans are periodically tested with a view to improvement based on findings, environment changes, and external assessment. Our employees are encouraged to contribute to our cybersecurity efforts. We have implemented awareness and education programs that include phishing simulation campaigns, global webinars, informative material about threats and best practices and a formal security training path.
Risks from cybersecurity threats have not materially affected the company in the past. For more information about these risks, see “Item 3—Key Information—Risk Factors—Risks Relating to Our Business and Operations—We are increasingly dependent on information technology and our systems and infrastructure, as well as those provided by third-party service providers, face certain risks, including cyber-security risks.”
Governance
Our Board of Directors oversees our risk management process, including cybersecurity risks, directly and through its Audit Committee. The Audit Committee of our Board of Directors oversees our risk management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term timeframes. Audit Committee
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meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity, and reports on our enterprise risk profile on an annual basis. We have a dedicated function for cybersecurity management that oversees information security strategy, program, governance, and operations, reporting directly to the Vice President of Information Technology (“VP IT”). Our VP IT has over 20 years of experience in various information technology and information security roles and a professional certification as Chief Technology Officer from the Massachusetts Institute of Technology. The VP IT reports to the Audit Committee on cybersecurity risks and strategy on a regular basis. For more information on our Board of Director’s Audit Committee’s responsibilities, including those regarding cybersecurity risk management, please see “Item 6—Senior Management and Directors—Directors, Senior Management, and Employees—The Audit Committee, the Corporate Practices and Finance Committee, and Other Committees.” Our management takes a risk-based approach in cybersecurity matters and has implemented cybersecurity policies throughout our operations that are designed to address cybersecurity threats and incidents, including those described under “—Risk Management and Strategy” above. Our cybersecurity function is mainly responsible for performing regular risk assessments to identify threats to Cemex’s areas and processes. Cemex’s Information Security Committee is a multidisciplinary team, headed by our cybersecurity function, which evaluates performance metrics, risk mitigation tactics, security policies, and procedures on a regular basis. It reports to the VP IT every six months on metrics, risks, and strategies to be presented to our Board of Director’s Audit Committee.
CEMEX • 2023 20-F REPORT • 336
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Years ended December 31, |
||||||||||||||||||
Notes |
2023 |
2022 |
2021 |
|||||||||||||||
Revenues |
3 |
$ |
||||||||||||||||
Cost of sales |
5 |
( |
) |
( |
) |
( |
) | |||||||||||
Gross profit |
||||||||||||||||||
Operating expenses |
6 |
( |
) |
( |
) |
( |
) | |||||||||||
Operating earnings before other expenses, net |
2 |
|||||||||||||||||
Other expenses, net |
7 |
( |
) |
( |
) |
( |
) | |||||||||||
Operating earnings |
||||||||||||||||||
Financial expense |
8.1, 17 |
( |
) |
( |
) |
( |
) | |||||||||||
Financial income and other items, net |
8.2 |
( |
) | |||||||||||||||
Share of profit of equity accounted investees |
14.1 |
|||||||||||||||||
Earnings before income tax |
||||||||||||||||||
Income tax |
20 |
( |
) |
( |
) |
( |
) | |||||||||||
Net income from continuing operations |
||||||||||||||||||
Discontinued operations |
4.2 |
( |
) | |||||||||||||||
CONSOLIDATED NET INCOME |
||||||||||||||||||
Non-controlling interest net income |
||||||||||||||||||
CONTROLLING INTEREST NET INCOME |
$ |
|||||||||||||||||
Basic earnings per share |
23 |
$ |
||||||||||||||||
Basic earnings per share from continuing operations |
23 |
$ |
|
|||||||||||||||
Diluted earnings per share |
23 |
$ |
||||||||||||||||
Diluted earnings per share from continuing operations |
23 |
$ |
||||||||||||||||
Years ended December 31, |
||||||||||||||||||
Notes |
2023 |
2022 |
2021 |
|||||||||||||||
CONSOLIDATED NET INCOME |
$ |
|||||||||||||||||
Items that will not be reclassified subsequently to the statement of income |
||||||||||||||||||
Net actuarial (losses) gains from remeasurements of defined benefit pension plans |
19 |
( |
) |
|||||||||||||||
Effects from strategic equity investments |
14.2 |
( |
) |
( |
) |
( |
) | |||||||||||
Income tax benefit (expense) recognized directly in other comprehensive income |
20 |
( |
) |
( |
) | |||||||||||||
( |
) |
|||||||||||||||||
Items that are or may be reclassified subsequently to the statement of income |
||||||||||||||||||
Results from derivative financial instruments designated as cash flow hedges |
17.4 |
( |
) |
|||||||||||||||
Currency translation results of foreign subsidiaries |
21.2 |
( |
) |
( |
) | |||||||||||||
Income tax benefit recognized directly in other comprehensive income |
20 |
|||||||||||||||||
( |
) |
( |
) | |||||||||||||||
Total items of other comprehensive income (loss), net |
( |
) |
( |
) | ||||||||||||||
CONSOLIDATED COMPREHENSIVE INCOME |
||||||||||||||||||
Non-controlling interest comprehensive income (loss) |
( |
) | ||||||||||||||||
CONTROLLING INTEREST COMPREHENSIVE INCOME |
$ | |||||||||||||||||
As of December 31, |
||||||||||||||||||||
Notes |
2023 |
2022 |
||||||||||||||||||
ASSETS |
||||||||||||||||||||
CURRENT ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
9 |
$ |
||||||||||||||||||
Trade accounts receivable |
10 |
|||||||||||||||||||
Other accounts receivable |
11 |
|||||||||||||||||||
Inventories |
12 |
|||||||||||||||||||
Other current assets |
13 |
|||||||||||||||||||
Total current assets |
||||||||||||||||||||
NON-CURRENT ASSETS |
||||||||||||||||||||
Investments in associates and joint ventures |
14.1 |
|||||||||||||||||||
Other investments and non-current accounts receivable |
14.2 |
|||||||||||||||||||
Property, machinery and equipment, net and assets for the right-of-use, |
15 |
|||||||||||||||||||
Goodwill and intangible assets, net |
16 |
|||||||||||||||||||
Deferred income tax assets |
20.2 |
|||||||||||||||||||
Total non-current assets |
||||||||||||||||||||
TOTAL ASSETS |
$ |
|||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||||||
CURRENT LIABILITIES |
||||||||||||||||||||
Current debt |
17.1 |
$ |
||||||||||||||||||
Other current financial obligations |
17.2 |
|||||||||||||||||||
Trade accounts payable |
||||||||||||||||||||
Income tax payable |
||||||||||||||||||||
Other current liabilities |
18.1 |
|||||||||||||||||||
Total current liabilities |
||||||||||||||||||||
NON-CURRENT LIABILITIES |
||||||||||||||||||||
Non-current debt |
17.1 |
|||||||||||||||||||
Other non-current financial obligations |
17.2 |
|||||||||||||||||||
Pensions and other post-employment benefits |
19 |
|||||||||||||||||||
Deferred income tax liabilities |
20.2 |
|||||||||||||||||||
Other non-current liabilities |
18.2 |
|||||||||||||||||||
Total non-current liabilities |
||||||||||||||||||||
TOTAL LIABILITIES |
||||||||||||||||||||
STOCKHOLDERS’ EQUITY |
||||||||||||||||||||
Controlling interest: |
||||||||||||||||||||
Common stock and additional paid-in capital |
21.1 |
|||||||||||||||||||
Other equity reserves and subordinated notes |
21.2 |
( |
) |
( |
) | |||||||||||||||
Retained earnings |
21.3 |
|||||||||||||||||||
Total controlling interest |
||||||||||||||||||||
Non-controlling interest |
21.4 |
|||||||||||||||||||
TOTAL STOCKHOLDERS’ EQUITY |
||||||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ | |||||||||||||||||||
Years ended December 31, |
||||||||||||||||||||||||
Notes |
2023 |
2022 |
2021 |
|||||||||||||||||||||
OPERATING ACTIVITIES |
||||||||||||||||||||||||
Consolidated net income |
$ |
|||||||||||||||||||||||
Discontinued operations |
( |
) | ||||||||||||||||||||||
Net income from continuing operations |
||||||||||||||||||||||||
Adjustments for: |
||||||||||||||||||||||||
Sale of emission allowances |
2.15, 7 |
( |
) | |||||||||||||||||||||
Depreciation and amortization of assets |
5, 6 |
|||||||||||||||||||||||
Impairment losses of longed-lived assets |
7 |
|||||||||||||||||||||||
Share of profit of equity accounted investees |
14.1 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Results on sale of subsidiaries, other disposal groups and others |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Financial expense, financial income and other items, net |
||||||||||||||||||||||||
Income taxes |
20 |
|||||||||||||||||||||||
Changes in working capital, excluding income taxes |
( |
) |
( |
) | ||||||||||||||||||||
Cash flows provided by operating activities from continuing operations |
||||||||||||||||||||||||
Interest paid |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Income taxes paid |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net cash flows provided by operating activities from continuing operations |
||||||||||||||||||||||||
Net cash flows provided by operating activities from discontinued operations |
||||||||||||||||||||||||
Net cash flows provided by operating activities after interest and income taxes |
||||||||||||||||||||||||
INVESTING ACTIVITIES |
||||||||||||||||||||||||
Purchase of property, machinery and equipment, net |
15 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Acquisition of intangible assets, net |
16.1 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Disposal (acquisition) of subsidiaries, net |
4, 14.1 |
( |
) |
|||||||||||||||||||||
Proceeds from the sale of emission allowances |
2.15, 7 |
|||||||||||||||||||||||
Non-current assets and others, net |
( |
) |
( |
) | ||||||||||||||||||||
Cash flows used in investing activities from continuing operations |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net cash flows used in investing activities from discontinued operations |
( |
) | ( |
) | ||||||||||||||||||||
Net cash flows used in investing activities |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
FINANCING ACTIVITIES |
||||||||||||||||||||||||
Proceeds from new debt instruments |
17.1 |
|||||||||||||||||||||||
Debt repayments |
17.1 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Issuance of subordinated notes |
21.2 |
|||||||||||||||||||||||
Other financial obligations, net |
17.2 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Own shares repurchase program |
21.1 |
( |
) |
|||||||||||||||||||||
Shares in trust for future deliveries under share-based compensation |
22 |
( |
) |
( |
) |
|||||||||||||||||||
Changes in non-controlling interests and repayment of perpetual debentures |
21.4 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Derivative financial instruments |
17.4 |
( |
) |
( |
) | |||||||||||||||||||
Coupons on subordinated notes and coupons on perpetual debentures |
21.2, 21.4 |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Non-current liabilities, net |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Net cash flows used in financing activities |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Increase (decrease) in cash and cash equivalents from continuing operations |
( |
) |
( |
) | ||||||||||||||||||||
Increase in cash and cash equivalents from discontinued operations |
||||||||||||||||||||||||
Foreign currency translation effect on cash |
( |
) | ||||||||||||||||||||||
Cash and cash equivalents at beginning of period |
||||||||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
9 |
$ | ||||||||||||||||||||||
Changes in working capital, excluding income taxes: |
||||||||||||||||||||||||
Trade accounts receivable |
$ |
( |
) |
( |
) |
( |
) | |||||||||||||||||
Other accounts receivable and other assets |
( |
) |
||||||||||||||||||||||
Inventories |
( |
) |
( |
) | ||||||||||||||||||||
Trade accounts payable |
( |
) |
||||||||||||||||||||||
Other accounts payable and accrued expenses |
( |
) | ||||||||||||||||||||||
Changes in working capital, excluding income taxes |
$ |
( |
) |
( |
) | |||||||||||||||||||
Notes |
Common stock |
Additional paid-in capital |
Other equity reserves and subordinated notes |
Retained earnings |
Total controlling interest |
Non- controlling interest |
Total stockholders’ equity |
|||||||||||||||||||||||
Balance as of December 31, 2020 |
$ | ( |
) |
|||||||||||||||||||||||||||
Net income for the period |
– | – | – | |||||||||||||||||||||||||||
Other comprehensive loss for the period |
– |
– |
( |
) |
– |
( |
) |
( |
) |
( |
) | |||||||||||||||||||
Total of other comprehensive income (loss) for the period |
21.2 |
– |
– |
( |
) |
|||||||||||||||||||||||||
Cancellation of own shares by shareholders’ resolution |
21.1 |
– |
( |
) |
– |
– |
– |
– |
||||||||||||||||||||||
Issuance of subordinated notes |
21.2 |
– |
– |
– |
– |
|||||||||||||||||||||||||
Changes in non-controlling interest and repayment of perpetual debentures |
21.4 |
– |
– |
– |
– |
– |
( |
) |
( |
) | ||||||||||||||||||||
Share-based compensation |
22 |
– |
– |
– |
||||||||||||||||||||||||||
Coupons paid on subordinated notes and perpetual debentures |
21.2, 21.4 |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | |||||||||||||||||||
Balance as of December 31, 2021 |
( |
) |
||||||||||||||||||||||||||||
Net income for the period |
– |
– |
– |
|||||||||||||||||||||||||||
Other comprehensive loss for the period |
– |
– |
( |
) |
– |
( |
) |
( |
) |
( |
) | |||||||||||||||||||
Total of other comprehensive income (loss) for the period |
21.2 |
– |
– |
( |
) |
( |
) |
|||||||||||||||||||||||
Own shares purchased under shares repurchase program |
21.1 |
– |
( |
) |
– |
( |
) |
– |
( |
) | ||||||||||||||||||||
Shares in trust for future deliveries under share-based compensation |
22 |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | |||||||||||||||||||
Changes in non-controlling interest |
21.4 |
– |
– |
– |
||||||||||||||||||||||||||
Share-based compensation |
22 |
– |
– |
– |
– |
|||||||||||||||||||||||||
Coupons paid on subordinated notes |
21.2 |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | |||||||||||||||||||
Balance as of December 31, 2022 |
( |
) |
||||||||||||||||||||||||||||
Net income for the period |
– |
– |
– |
|||||||||||||||||||||||||||
Other comprehensive income for the period |
– |
– |
– |
|||||||||||||||||||||||||||
Total of other comprehensive income for the period |
21.2 |
– |
– |
|||||||||||||||||||||||||||
Cancellation of own shares by shareholders’ resolution |
21.1 |
– |
( |
) |
– |
– |
– |
– |
||||||||||||||||||||||
Shares in trust for future deliveries under share-based compensation |
22 |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | |||||||||||||||||||
Issuance of subordinated notes |
21.2 |
– |
– |
– |
– |
|||||||||||||||||||||||||
Changes in non-controlling interest |
21.4 |
– |
– |
– |
( |
) |
( |
) | ||||||||||||||||||||||
Share-based compensation |
22 |
– |
– |
– |
– |
|||||||||||||||||||||||||
Coupons paid on subordinated notes |
21.2 |
– |
– |
( |
) |
– |
( |
) |
– |
( |
) | |||||||||||||||||||
Balance as of December 31, 2023 |
$ | ( |
) |
|||||||||||||||||||||||||||
1) |
DESCRIPTION OF BUSINESS |
2) |
BASIS OF PRESENTATION AND DISCLOSURE |
| • | In 2023, 2022 and 2021, the increases in other financing obligations in connection with lease contracts negotiated during the year for $ |
| • | In 2023, 2022 and 2021, in connection with the leases negotiated during the year, the increases in assets for the right-of-use |
Standard |
Main topic | |
Amendments to IAS 8, Definition of Accounting Estimates |
The amendment makes a distinction between how an entity should present and disclose different types of accounting changes in its financial statements. Changes in accounting policies must be applied retrospectively, while changes in accounting estimates are accounted for prospectively. | |
Amendments to IAS 12, Income Taxes |
The amendment clarifies that companies should account for deferred tax assets and liabilities on transactions such as leases and decommissioning obligations. Cemex has always applied these criteria. | |
Amendments to IFRS 16, Leases |
The amendments mentioned that on initial recognition, the seller-lessee would include variable payments when it measures a lease liability arising from a sale-and-leaseback | |
3) |
REVENUES |
2023 |
2022 |
2021 |
||||||||||||
From the sale of goods associated to Cemex’s main activities 1 |
$ |
|||||||||||||
From the sale of other goods and services 2 |
||||||||||||||
$ |
||||||||||||||
1 |
During the reported periods, revenues recognized over time under construction contracts were not significant. |
2 |
Refers mainly to revenues generated by subsidiaries not individually significant operating in different lines of business. |
2023 |
2022 |
2021 |
||||||||||||
Opening balance of contract liabilities with customers |
$ |
|||||||||||||
Increase during the period for new transactions |
||||||||||||||
Decrease during the period for exercise or expiration of incentives |
( |
) | ( |
) | ( |
) | ||||||||
Currency translation effects |
||||||||||||||
Closing balance of contract liabilities with customers |
$ |
|||||||||||||
4) |
BUSINESS COMBINATIONS, DIVESTITURES AND DISCONTINUED OPERATIONS AND SELECTED FINANCIAL INFORMATION BY REPORTABLE SEGMENT AND LINE OF BUSINESS |
4.1) |
BUSINESS COMBINATIONS |
4.2) |
DIVESTITURES AND DISCONTINUED OPERATIONS |
2022 |
2021 |
|||||||||
Revenues |
$ |
|||||||||
Cost of sales and operating expenses |
( |
) | ( |
) | ||||||
Other expenses, net |
( |
) | ( |
) | ||||||
Financial expenses, net and others |
||||||||||
Earnings before income tax |
||||||||||
Income tax |
( |
) | ( |
) | ||||||
Result of discontinued operations |
( |
) | ||||||||
Net disposal result |
( |
) | ||||||||
Net result of discontinued operations |
$ |
( |
) | |||||||
4.3) |
SELECTED FINANCIAL INFORMATION BY REPORTABLE SEGMENT AND LINE OF BUSINESS |
2023 |
Sales (including intragroup transactions) |
Less: Intragroup transactions |
External revenues |
Operating EBITDA |
Less: Depreciation and amortization |
Operating earnings (loss) before other expenses, net |
Other expenses, net |
Financial expense |
Other financing items, net |
|||||||||||||||||||||||||||||||||||
Mexico |
$ | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
United States |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||||||||||||||
United Kingdom |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
France |
– | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||
Germany |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Poland |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Spain |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Philippines 1 |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
Israel |
– | ( |
) | |||||||||||||||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||||||||||||||
Colombia 2 |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
Panama 2 |
( |
) | ( |
) | – | – | ||||||||||||||||||||||||||||||||||||||
Caribbean TCL 3 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Dominican Republic |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
Rest of SCA&C 2 |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
Reportable segments |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Other activities 4 |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
Consolidated |
$ | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
2022 |
Sales (including intragroup transactions) |
Less: Intragroup transactions |
External revenues |
Operating EBITDA |
Less: Depreciation and amortization |
Operating earnings (loss) before other expenses, net |
Other expenses, net |
Financial expense |
Other financing items, net |
|||||||||||||||||||||||||||||||||||
Mexico |
$ | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
United States |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||||||||||||||
United Kingdom |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
France |
– | ( |
) | |||||||||||||||||||||||||||||||||||||||||
Germany |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
Poland |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Spain |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Philippines 1 |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
Israel |
– | ( |
) | – | ||||||||||||||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||||||||||||||
Colombia 2 |
– | ( |
) | |||||||||||||||||||||||||||||||||||||||||
Panama 2 |
( |
) | ( |
) | – | – | ||||||||||||||||||||||||||||||||||||||
Caribbean TCL 3 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Dominican Republic |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Rest of SCA&C 2 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Reportable segments |
( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
Other activities 4 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Consolidated |
$ | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
2021 |
Sales (including intragroup transactions) |
Less: Intragroup transactions |
External revenues |
Operating EBITDA |
Less: Depreciation and amortization |
Operating earnings (loss) before other expenses, net |
Other expenses, net |
Financial expense |
Other financing items, net |
|||||||||||||||||||||||||||||||||||
Mexico |
$ | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
United States |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||||||||||||||
United Kingdom |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
France |
– | ( |
) | ( |
) | – | ||||||||||||||||||||||||||||||||||||||
Germany |
( |
) | – | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
Poland |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
Spain |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||
Philippines 1 |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
Israel |
– | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||||||||||||||
Colombia 2 |
– | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
Panama 2 |
( |
) | ( |
) | – | – | ||||||||||||||||||||||||||||||||||||||
Caribbean TCL 3 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Dominican Republic |
( |
) | – | ( |
) | |||||||||||||||||||||||||||||||||||||||
Rest of SCA&C 2 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Reportable segments |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
Other activities 4 |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
Consolidated |
$ | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||
1 |
Cemex’s operations in the Philippines are mainly conducted through Cemex Holdings Philippines, Inc. (“CHP”), a Philippine company whose shares trade on the Philippines Stock Exchange. As of December 31, 2023 and 2022, there is a non-controlling interest in CHP of |
2 |
Until June 2023, after the conclusion of a tender offer and delisting process, Cemex Latam Holdings, S.A. (“CLH”), a company incorporated in Spain, traded its ordinary shares on the Colombian Stock Exchange. CLH is the indirect holding company of Cemex’s operations in Colombia, Panama, Guatemala and Nicaragua, and until August 31, 2022, of the operations in Costa Rica and El Salvador. As of December 31, 2023 and 2022, there was a non-controlling interest in CLH of |
3 |
The shares of TCL trade on the Trinidad and Tobago Stock Exchange. As of December 31, 2023 and 2022, there was a non-controlling interest in TCL of |
4 |
In the caption of external revenues, refers mainly to trade maritime transactions of cement and clinker carried by Cemex’s trading unit and, in the rest of the captions, refers to Cemex’s corporate activities. |
2023 |
Associates and joint ventures |
Other segment assets |
Total assets |
Total liabilities |
Net assets by segment |
Capital expenditures 1 |
||||||||||||||||||||||||||
Mexico |
$ | – | ||||||||||||||||||||||||||||||
United States |
||||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||||||||||
France |
||||||||||||||||||||||||||||||||
Germany |
||||||||||||||||||||||||||||||||
Poland |
||||||||||||||||||||||||||||||||
Spain |
– | |||||||||||||||||||||||||||||||
Philippines |
– | |||||||||||||||||||||||||||||||
Israel |
– | |||||||||||||||||||||||||||||||
Rest of EMEAA |
||||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||
Colombia |
– | |||||||||||||||||||||||||||||||
Panama |
– | |||||||||||||||||||||||||||||||
Caribbean TCL |
– | |||||||||||||||||||||||||||||||
Dominican Republic |
– | |||||||||||||||||||||||||||||||
Rest of SCA&C |
– | |||||||||||||||||||||||||||||||
Reportable segments |
||||||||||||||||||||||||||||||||
Other activities |
( |
) | ||||||||||||||||||||||||||||||
Assets held for sale |
– | – | – | |||||||||||||||||||||||||||||
Total consolidated |
$ | |
|
|||||||||||||||||||||||||||||
2022 |
Associates and joint ventures |
Other segment assets |
Total assets |
Total liabilities |
Net assets by segment |
Capital expenditures 1 |
||||||||||||||||||||||||||
Mexico |
$ | – | ||||||||||||||||||||||||||||||
United States |
||||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||||||||||
France |
||||||||||||||||||||||||||||||||
Germany |
||||||||||||||||||||||||||||||||
Poland |
||||||||||||||||||||||||||||||||
Spain |
– | |||||||||||||||||||||||||||||||
Philippines |
– | |||||||||||||||||||||||||||||||
Israel |
– | |||||||||||||||||||||||||||||||
Rest of EMEAA |
||||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||
Colombia |
– | |||||||||||||||||||||||||||||||
Panama |
– | |||||||||||||||||||||||||||||||
Caribbean TCL |
– | |||||||||||||||||||||||||||||||
Dominican Republic |
– | |||||||||||||||||||||||||||||||
Rest of SCA&C |
– | |||||||||||||||||||||||||||||||
Reportable segments |
||||||||||||||||||||||||||||||||
Other activities |
|
( |
) | |||||||||||||||||||||||||||||
Assets held for sale |
– | – | – | |||||||||||||||||||||||||||||
Total consolidated |
$ | |
||||||||||||||||||||||||||||||
1 |
Capital expenditures represent: a) the purchases of property, machinery and equipment, b) stripping costs, as well as c) assets for the right-of-use |
2023 |
Cement |
Concrete |
Aggregates |
Urbanization solutions |
Others |
Eliminations |
External revenues |
|||||||||||||||||||||||||
Mexico |
$ | ( |
) | |||||||||||||||||||||||||||||
United States |
( |
) | ||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||
United Kingdom |
( |
) | ||||||||||||||||||||||||||||||
France |
– | – | ( |
) | ||||||||||||||||||||||||||||
Germany |
( |
) | ||||||||||||||||||||||||||||||
Poland |
– | ( |
) | |||||||||||||||||||||||||||||
Spain |
– | ( |
) | |||||||||||||||||||||||||||||
Philippines |
– | – | ( |
) | ||||||||||||||||||||||||||||
Israel |
– | ( |
) | |||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||
Colombia |
( |
) | ||||||||||||||||||||||||||||||
Panama |
( |
) | ||||||||||||||||||||||||||||||
Caribbean TCL |
( |
) | ||||||||||||||||||||||||||||||
Dominican Republic |
– | ( |
) | |||||||||||||||||||||||||||||
Rest of SCA&C |
( |
) | ||||||||||||||||||||||||||||||
Reportable segments |
|
( |
) | |||||||||||||||||||||||||||||
Other activities |
– | – | – | – | – | |||||||||||||||||||||||||||
Consolidated |
$ | |||||||||||||||||||||||||||||||
2022 |
Cement |
Concrete |
Aggregates |
Urbanization solutions |
Others |
Eliminations |
External revenues |
|||||||||||||||||||||||||
Mexico |
$ | |
( |
) | ||||||||||||||||||||||||||||
United States |
( |
) | ||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||
United Kingdom |
( |
) | ||||||||||||||||||||||||||||||
France |
– | – | ( |
) | ||||||||||||||||||||||||||||
Germany |
( |
) | ||||||||||||||||||||||||||||||
Poland |
( |
) | ||||||||||||||||||||||||||||||
Spain |
– | ( |
) | |||||||||||||||||||||||||||||
Philippines |
– | – | – | ( |
) | |||||||||||||||||||||||||||
Israel |
– | ( |
) | |||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||
Colombia |
( |
) | ||||||||||||||||||||||||||||||
Panama |
( |
) | ||||||||||||||||||||||||||||||
Caribbean TCL |
( |
) | ||||||||||||||||||||||||||||||
Dominican Republic |
( |
) | ||||||||||||||||||||||||||||||
Rest of SCA&C |
( |
) | ||||||||||||||||||||||||||||||
Reportable segments |
( |
) | ||||||||||||||||||||||||||||||
Other activities |
– | – | – | – | – | |||||||||||||||||||||||||||
Consolidated |
$ | |||||||||||||||||||||||||||||||
2021 |
Cement |
Concrete |
Aggregates |
Urbanization solutions |
Others |
Eliminations |
External revenues |
|||||||||||||||||||||||||
Mexico |
$ | ( |
) | |||||||||||||||||||||||||||||
United States |
( |
) | ||||||||||||||||||||||||||||||
EMEAA |
||||||||||||||||||||||||||||||||
United Kingdom |
( |
) | ||||||||||||||||||||||||||||||
France |
– | – | ( |
) | ||||||||||||||||||||||||||||
Germany |
( |
) | ||||||||||||||||||||||||||||||
Poland |
( |
) | ||||||||||||||||||||||||||||||
Spain |
– | ( |
) | |||||||||||||||||||||||||||||
Philippines |
– | – | ( |
) | ||||||||||||||||||||||||||||
Israel |
– | ( |
) | |||||||||||||||||||||||||||||
Rest of EMEAA |
( |
) | ||||||||||||||||||||||||||||||
SCA&C |
||||||||||||||||||||||||||||||||
Colombia |
( |
) | ||||||||||||||||||||||||||||||
Panama |
( |
) | ||||||||||||||||||||||||||||||
Caribbean TCL |
( |
) | ||||||||||||||||||||||||||||||
Dominican Republic |
– | ( |
) | |||||||||||||||||||||||||||||
Rest of SCA&C |
( |
) | ||||||||||||||||||||||||||||||
Reportable segments |
|
( |
) | |||||||||||||||||||||||||||||
Other activities |
– | – | – | – | – | |||||||||||||||||||||||||||
Consolidated |
$ | |||||||||||||||||||||||||||||||
5) |
COST OF SALES |
2023 |
2022 |
2021 |
||||||||||||||
Raw materials and goods for resale |
$ | |||||||||||||||
Payroll |
||||||||||||||||
Electricity, fuels and other services |
||||||||||||||||
Depreciation and amortization |
||||||||||||||||
Maintenance, repairs and supplies |
||||||||||||||||
Transportation costs |
||||||||||||||||
Other production costs and change in inventory |
||||||||||||||||
| $ | |
|
||||||||||||||
6) |
OPERATING EXPENSES |
2023 |
2022 |
2021 |
||||||||||||||
Administrative expenses 1, 2 |
$ | |||||||||||||||
Selling expenses 2 |
||||||||||||||||
Total administrative and selling expenses |
||||||||||||||||
Distribution and logistics expenses |
||||||||||||||||
Total operating expenses |
$ | |
|
|||||||||||||
1 |
All significant research and development activities are executed by several internal areas of Cemex as part of their daily activities. In 2023, 2022 and 2021, the total combined expenses of these departments recognized within administrative expenses were $ |
2 |
In 2023, 2022 and 2021, administrative expenses include depreciation and amortization of $ |
2023 |
2022 |
2021 |
||||||||||||||
Transportation costs |
$ | |||||||||||||||
Payroll |
||||||||||||||||
Depreciation and amortization |
||||||||||||||||
Professional legal, accounting and advisory services |
||||||||||||||||
Maintenance, repairs and supplies |
||||||||||||||||
Other operating expenses |
||||||||||||||||
| $ | |
|
||||||||||||||
7) |
OTHER EXPENSES, NET |
2023 |
2022 |
2021 |
||||||||||||||
Results from the sale of assets and others 1 |
$ | ( |
) | ( |
) | |||||||||||
Impairment losses (notes 15.1, 16.1 and 16.2) |
( |
) | ( |
) | ( |
) | ||||||||||
Restructuring costs 2 |
( |
) | ( |
) | ( |
) | ||||||||||
Incremental expenses related to the COVID-19 Pandemic 3 |
( |
) | ( |
) | ( |
) | ||||||||||
Sale of CO2 allowances (note 28.13) 4 |
|
|
||||||||||||||
| $ | ( |
) | ( |
) | ( |
) | ||||||||||
1 |
In 2023, 2022 and 2021, includes $ |
2 |
Restructuring costs mainly refer to severance payments and the definitive closing of operating sites. |
3 |
Refers to certain incremental expenses that Cemex considers of non-recurring nature related to the maintenance of some hygiene measures related to the Coronavirus SARS-CoV-2 “COVID-19 Pandemic”). From the beginning of the COVID-19 Pandemic and to the present day, attending official dispositions of the authorities, Cemex has followed strict hygiene, sanitary and security protocols in all its operations and has modified its manufacturing, selling and distribution processes aiming to protect the health and safety of its employees and their families, customers and communities. |
4 |
In connection with the EU’s Emissions Trading System (“EU ETS”), during March 2021, considering Cemex’s targets for the reduction of CO 2 emissions (note 24.4), as well as the innovative technologies and considerable capital investments that have to be deployed to achieve such goals, Cemex sold 2 emission allowances (“Allowances”) for an aggregate amount of $ |
8) |
FINANCIAL ITEMS |
8.1) |
FINANCIAL EXPENSE |
8.2) |
FINANCIAL INCOME AND OTHER ITEMS, NET |
2023 |
2022 |
2021 |
||||||||||||||
Foreign exchange results |
$ | ( |
) | |||||||||||||
Financial income |
|
|||||||||||||||
Results from financial instruments, net (notes 14.2 and 17.4) 1 |
( |
) | ( |
) | ||||||||||||
Net interest cost of defined benefit liabilities (note 19) |
( |
) | ( |
) | ( |
) | ||||||||||
Effects of amortized cost on assets and liabilities |
( |
) | ( |
) | ( |
) | ||||||||||
Others |
( |
) | ||||||||||||||
| $ | |
( |
) | |||||||||||||
1 |
For the years 2022 and 2021, includes the reclassification described in note 8.1. |
9) |
CASH AND CASH EQUIVALENTS |
2023 |
2022 |
|||||||||||
Cash and bank accounts |
$ | |||||||||||
Fixed-income securities and other cash equivalents |
|
|||||||||||
| $ | |
|||||||||||
10) |
TRADE ACCOUNTS RECEIVABLE |
2023 |
2022 |
|||||||||||
Trade accounts receivable |
$ | |||||||||||
Allowances for expected credit losses |
( |
) | ( |
) | ||||||||
| $ | |
|
||||||||||
Accounts receivable |
ECL allowance |
ECL average rate |
||||||||||||||
Mexico |
$ | % | ||||||||||||||
United States |
% | |||||||||||||||
EMEAA |
% | |||||||||||||||
SCA&C |
% | |||||||||||||||
Others |
||||||||||||||||
| $ | ||||||||||||||||
2023 |
2022 |
2021 |
||||||||||||||
Allowances for expected credit losses at beginning of period |
$ | |
||||||||||||||
Charged to selling expenses |
||||||||||||||||
Deductions |
( |
) | ( |
) | ( |
) | ||||||||||
Reclassification to assets held for sale |
( |
) | ||||||||||||||
Foreign currency translation effects |
|
( |
) | |||||||||||||
Allowances for expected credit losses at end of period |
$ | |||||||||||||||
11) |
OTHER ACCOUNTS RECEIVABLE |
2023 |
2022 |
|||||||||||
Advances of income taxes and other refundable taxes |
$ | |||||||||||
Non-trade accounts receivable 1 |
||||||||||||
Interest and notes receivable |
||||||||||||
Loans to employees and others |
||||||||||||
Current portion of assets from valuation of derivative financial instruments |
||||||||||||
| $ | |
|
||||||||||
1 |
Non-trade accounts receivable are mainly attributable to the sale of assets. |
12) |
INVENTORIES |
2023 |
2022 |
|||||||||||
Materials and spare parts |
$ | |||||||||||
Finished goods |
||||||||||||
Raw materials |
||||||||||||
Work-in-process |
||||||||||||
Inventory in transit |
||||||||||||
| $ | |
|
||||||||||
13) |
OTHER CURRENT ASSETS |
2023 |
2022 |
|||||||||||
Other current assets |
$ | |||||||||||
Assets held for sale |
||||||||||||
| $ | |
|
||||||||||
14) |
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES, OTHER INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE |
14.1) |
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES |
Associates |
Activity |
Country |
% |
2023 |
2022 |
|||||||||||||||||||
| $ | ||||||||||||||||||||||||
Joint ventures |
||||||||||||||||||||||||
| — | — | — | ||||||||||||||||||||||
| $ | ||||||||||||||||||||||||
Out of which: |
||||||||||||||||||||||||
Acquisition cost |
$ | |||||||||||||||||||||||
Equity method recognition |
|
|||||||||||||||||||||||
1 |
In connection with the sale of Cemex’s |
2023 |
2022 |
|||||||||||
Current assets |
$ | |||||||||||
Non-current assets |
||||||||||||
Total assets |
||||||||||||
Current liabilities |
||||||||||||
Non-current liabilities |
||||||||||||
Total liabilities |
||||||||||||
Total net assets |
$ | |
|
|||||||||
2023 |
2022 |
2021 |
||||||||||||||
Revenues |
$ | |||||||||||||||
Operating earnings |
||||||||||||||||
Income before income tax |
||||||||||||||||
Net income |
|
|
||||||||||||||
2023 |
2022 |
2021 |
||||||||||||||
Mexico |
$ | |||||||||||||||
United States |
||||||||||||||||
EMEAA |
||||||||||||||||
Corporate and others |
( |
) | ||||||||||||||
| $ | |
|
||||||||||||||
14.2) |
OTHER INVESTMENTS AND NON-CURRENT ACCOUNTS RECEIVABLE |
2023 |
2022 |
|||||||||||
Non-current accounts receivable 1 |
$ | |||||||||||
Non-current portion of assets from valuation of derivative financial instruments (note 17.4) |
||||||||||||
Investments in strategic equity securities |
||||||||||||
Investments at fair value through the statements of income |
||||||||||||
| $ | |
|
||||||||||
1 |
Includes, among other items: a) accounts receivable from investees and joint ventures of $ |
15) |
PROPERTY, MACHINERY AND EQUIPMENT, NET AND ASSETS FOR THE RIGHT-OF-USE, |
2023 |
2022 |
|||||||||||
Property, machinery and equipment, net |
$ | |||||||||||
Assets for the right-of-use, |
||||||||||||
| $ | |
|
||||||||||
15.1) |
PROPERTY, MACHINERY AND EQUIPMENT, NET |
Years | ||
Administrative buildings |
||
Industrial buildings |
||
Machinery and equipment in plant |
||
Ready-mix trucks and motor vehicles |
| |
Office equipment and other assets |
||
2023 |
||||||||||||||||||||||||
Land and mineral reserves |
Building |
Machinery and equipment |
Construction in progress 2 |
Total |
||||||||||||||||||||
Cost at beginning of period |
$ | |||||||||||||||||||||||
Accumulated depreciation and depletion |
( |
( |
( |
– | ( |
|||||||||||||||||||
Net book value at beginning of period |
||||||||||||||||||||||||
Capital expenditures |
||||||||||||||||||||||||
Stripping costs 1 |
– | – | – | |||||||||||||||||||||
Total capital expenditures |
||||||||||||||||||||||||
Disposals 3 |
( |
( |
( |
– | ( |
|||||||||||||||||||
Business combinations (note 4.1) |
||||||||||||||||||||||||
Depreciation and depletion for the period |
( |
( |
( |
– | ( |
|||||||||||||||||||
Impairment losses (note 7) |
( |
( |
( |
( |
||||||||||||||||||||
Asset retirement obligations (note 18.2) |
– | |||||||||||||||||||||||
Foreign currency translation effects |
||||||||||||||||||||||||
Cost at end of period |
|
|||||||||||||||||||||||
Accumulated depreciation and depletion |
( |
( |
( |
– | ( |
|||||||||||||||||||
Net book value at end of period |
$ | |||||||||||||||||||||||
2022 |
||||||||||||||||||||||||
Land and mineral reserves |
Building |
Machinery and equipment |
Construction in progress 2 |
Total |
||||||||||||||||||||
Cost at beginning of period |
$ | |||||||||||||||||||||||
Accumulated depreciation and depletion |
( |
) | ( |
) | ( |
) | – | ( |
||||||||||||||||
Net book value at beginning of period |
||||||||||||||||||||||||
Capital expenditures |
||||||||||||||||||||||||
Stripping costs 1 |
– | – | – | |||||||||||||||||||||
Total capital expenditures |
||||||||||||||||||||||||
Disposals 3 |
( |
) | ( |
) | ( |
) | – | ( |
||||||||||||||||
Business combinations (note 4.1) |
||||||||||||||||||||||||
Depreciation and depletion for the period |
( |
) | ( |
) | ( |
) | – | ( |
||||||||||||||||
Impairment losses (note 7) |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Asset retirement obligations (note 18.2) |
– | |||||||||||||||||||||||
Foreign currency translation effects |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Cost at end of period |
||||||||||||||||||||||||
Accumulated depreciation and depletion |
( |
) | ( |
) | ( |
) | – | ( |
||||||||||||||||
Net book value at end of period |
$ | |||||||||||||||||||||||
1 |
All waste removal costs or stripping costs incurred in the operative phase of a surface mine to access the mineral reserves are recognized as part of its carrying amount. The capitalized amounts are further amortized over the expected useful life of exposed ore body based on the units-of-production |
2 |
As of December 31, 2023, the Maceo plant in Colombia with an annual capacity of |
3 |
In 2023 includes sales of non-strategic fixed assets in the United States and France for $non-strategic fixed assets in the United States and the United Kingdom for $ |
2023 |
2022 |
2021 |
||||||||||||||
Colombia |
$ | |
|
|||||||||||||
Caribbean TCL |
|
|||||||||||||||
France |
||||||||||||||||
United Kingdom |
||||||||||||||||
United States |
||||||||||||||||
Spain |
||||||||||||||||
Others |
||||||||||||||||
| $ | ||||||||||||||||
15.2) |
ASSETS FOR THE RIGHT-OF-USE, NET |
2023 |
||||||||||||||||||||||||
Land |
Buildings |
Machinery and equipment |
Others |
Total |
||||||||||||||||||||
Assets for the right-of-use |
$ | |||||||||||||||||||||||
Accumulated depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Net book value at beginning of period |
|
|||||||||||||||||||||||
Additions of new leases |
||||||||||||||||||||||||
Cancellations and remeasurements, net |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Foreign currency translation effects |
( |
) | ( |
) | ( |
|||||||||||||||||||
Assets for the right-of-use |
||||||||||||||||||||||||
Accumulated depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Net book value at end of period |
$ | |||||||||||||||||||||||
2022 |
||||||||||||||||||||||||
Land |
Buildings |
Machinery and equipment |
Others |
Total |
||||||||||||||||||||
Assets for the right-of-use |
$ | |||||||||||||||||||||||
Accumulated depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Net book value at beginning of period |
||||||||||||||||||||||||
Additions of new leases |
||||||||||||||||||||||||
Cancellations and remeasurements, net |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Foreign currency translation effects |
||||||||||||||||||||||||
Assets for the right-of-use |
||||||||||||||||||||||||
Accumulated depreciation |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||
Net book value at end of period |
$ | |||||||||||||||||||||||
16) |
GOODWILL AND INTANGIBLE ASSETS, NET |
16.1) |
BALANCES AND CHANGES DURING THE PERIOD |
2023 |
2022 |
|||||||||||||||||||||||||||||||
Cost |
Accumulated amortization |
Carrying amount |
Cost |
Accumulated amortization |
Carrying amount |
|||||||||||||||||||||||||||
Intangible assets of indefinite useful life: |
||||||||||||||||||||||||||||||||
Goodwill |
$ | – | $ | – | ||||||||||||||||||||||||||||
Intangible assets of definite useful life: |
||||||||||||||||||||||||||||||||
Extraction rights |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Internally developed software |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Customer relationships |
( |
) | – | ( |
) | – | ||||||||||||||||||||||||||
Mining projects |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Industrial property and trademarks |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Other intangible assets |
( |
) | ( |
) | ||||||||||||||||||||||||||||
| $ | |
( |
) | $ | |
( |
) | |||||||||||||||||||||||||
2023 |
2022 |
|||||||||||
Balance at beginning of period |
$ | |
|
|||||||||
Impairment losses (notes 7 and 16.2) |
( |
|||||||||||
Business combinations (note 4.1) |
||||||||||||
Foreign currency translation effects |
( |
|||||||||||
Balance at end of period |
$ | |||||||||||
2023 |
||||||||||||||||||||||||||||
Extraction rights |
Internally developed software 1 |
Mining projects |
Industrial property and trademarks |
Others |
Total |
|||||||||||||||||||||||
Balance at beginning of period |
$ | |
|
|
|
|
|
|||||||||||||||||||||
Amortization for the period |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
Impairment losses (note 7) |
( |
) | – | – | – | – | ( |
|||||||||||||||||||||
Additions (decreases), net 1 |
||||||||||||||||||||||||||||
Business combinations |
– | – | – | – | ||||||||||||||||||||||||
Foreign currency translation effects |
( |
) | ( |
) | ||||||||||||||||||||||||
Balance at the end of period |
$ | |||||||||||||||||||||||||||
2022 |
||||||||||||||||||||||||||||
Extraction rights |
Internally developed software 1 |
Mining projects |
Industrial property and trademarks |
Others |
Total |
|||||||||||||||||||||||
Balance at beginning of period |
$ | |
|
|
|
|
|
|||||||||||||||||||||
Amortization for the period |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
Additions (decreases), net 1 |
( |
) | ( |
) | – | |||||||||||||||||||||||
Foreign currency translation effects |
( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||
Balance at the end of period |
$ | |||||||||||||||||||||||||||
1 |
Includes the capitalized direct costs incurred in the development stage of internal-use software, such as professional fees, direct labor and related travel expenses. The capitalized amounts are amortized to the statement of income over a period ranging from |
16.2) |
ANALYSIS OF GOODWILL IMPAIRMENT |
2023 |
2022 |
|||||||||||
Mexico |
$ | |||||||||||
United States |
|
|
||||||||||
EMEAA |
||||||||||||
United Kingdom |
||||||||||||
France |
||||||||||||
Spain |
||||||||||||
Philippines |
||||||||||||
Rest of EMEAA 1 |
||||||||||||
SCA&C |
||||||||||||
Colombia |
||||||||||||
Caribbean TCL |
||||||||||||
Rest of SCA&C 2 |
||||||||||||
| $ | ||||||||||||
1 |
This caption refers to the operating segments in Israel, the Czech Republic, Egypt and Germany. |
2 |
This caption refers to the operating segments in the Dominican Republic, the Caribbean and Panama. |
Discount rates |
Long-term growth rates 1 | |||||||||||
Groups of CGUs |
2023 |
2022 |
2021 |
2023 |
2022 |
2021 | ||||||
United States |
||||||||||||
United Kingdom |
||||||||||||
France |
||||||||||||
Spain |
||||||||||||
Mexico |
||||||||||||
Colombia |
||||||||||||
Range of rates in other countries |
||||||||||||
1 |
The long-term growth rates are generally based on projections issued by the International Monetary Fund (“IMF”). |
Impairment effects from the sensitivity analyses to changes in assumptions as of December 31, 2023 |
||||||||||||||||||||
Operating segment |
Impairment losses recognized |
Discount rate + |
Long-term growth rate – |
Multiples Operating EBITDA |
||||||||||||||||
United States |
$ | |
|
|
– | |||||||||||||||
17) |
FINANCIAL INSTRUMENTS |
17.1) |
CURRENT AND NON-CURRENT DEBT |
2023 |
2022 |
|||||||||||||||||||||||||||||||
Current |
Non-current |
Total 1, 2 |
Current |
Non-current |
Total 1, 2 |
|||||||||||||||||||||||||||
Floating rate debt |
$ | $ | ||||||||||||||||||||||||||||||
Fixed rate debt |
||||||||||||||||||||||||||||||||
| $ | |
|
|
$ | |
|
|
|||||||||||||||||||||||||
Effective rate 3 |
||||||||||||||||||||||||||||||||
Floating rate |
||||||||||||||||||||||||||||||||
Fixed rate |
||||||||||||||||||||||||||||||||
2023 |
2022 |
|||||||||||||||||||||||||||||||||||||||
Currency |
Current |
Non-current |
Total |
Effective rate 3 |
Current |
Non-current |
Total |
Effective rate 3 |
||||||||||||||||||||||||||||||||
Dollars |
$ | $ | |
|
||||||||||||||||||||||||||||||||||||
Euros |
||||||||||||||||||||||||||||||||||||||||
Pesos |
|
|||||||||||||||||||||||||||||||||||||||
Philippine Pesos |
||||||||||||||||||||||||||||||||||||||||
Other currencies |
|
|||||||||||||||||||||||||||||||||||||||
| $ | |
|
|
$ | ||||||||||||||||||||||||||||||||||||
1 |
As of December 31, 2023 and 2022, from the total debt of $ |
2 |
As of December 31, 2023 and 2022, cumulative discounts, fees and other direct costs incurred in Cemex’s outstanding debt borrowings and the issuance of notes payable (jointly “Issuance Costs”) for $ |
3 |
In 2023 and 2022, represents the weighted-average effective interest rate of the related debt agreements determined at the end of each period. |
2023 |
Current |
Non-current |
2022 |
Current |
Non-current |
|||||||||||||||||||||
Bank loans |
Bank loans |
|||||||||||||||||||||||||
| Loans in foreign countries, |
$ | Loans in foreign countries, |
$ | |||||||||||||||||||||||
| Syndicated loans, |
– | Syndicated loans, |
– | |
||||||||||||||||||||||
Notes payable |
Notes payable |
|||||||||||||||||||||||||
| Medium-term notes, |
– | Medium-term notes, |
– | |||||||||||||||||||||||
| Other notes payable, |
Other notes payable, |
|||||||||||||||||||||||||
| Total bank loans and notes payable | Total bank loans and notes payable | |
||||||||||||||||||||||||
| Current maturities | ( |
Current maturities | ( |
|||||||||||||||||||||||
| $ | |
|
$ | |||||||||||||||||||||||
2023 |
2022 |
2021 |
||||||||||||||
Debt at beginning of year |
$ | |||||||||||||||
Proceeds from new debt instruments |
||||||||||||||||
Debt repayments |
( |
( |
( |
|||||||||||||
Foreign currency translation and accretion effects |
( |
|||||||||||||||
Debt at end of year |
$ | |
|
|
||||||||||||
Description |
Date of issuance |
Issuer 1 |
Currency |
Principal amount |
Rate |
Maturity date |
Redeemed amount 2 $ |
Outstanding amount 2 $ |
2023 |
2022 |
||||||||||||||||||||||||||||||||
| 2023 CEBURES variable rate 3 |
$ | |||||||||||||||||||||||||||||||||||||||||
| 2023 CEBURES fixed rate 3 |
||||||||||||||||||||||||||||||||||||||||||
| July 2031 Notes 4 |
( |
|||||||||||||||||||||||||||||||||||||||||
| September 2030 Notes 4 |
( |
|||||||||||||||||||||||||||||||||||||||||
| November 2029 Notes 4 |
( |
|||||||||||||||||||||||||||||||||||||||||
| June 2027 Notes 5 |
( |
– | – | |||||||||||||||||||||||||||||||||||||||
| March 2026 Notes | – | |||||||||||||||||||||||||||||||||||||||||
| July 2025 Notes | – | |||||||||||||||||||||||||||||||||||||||||
Other notes payable |
||||||||||||||||||||||||||||||||||||||||||
| $ | ||||||||||||||||||||||||||||||||||||||||||
1 |
As of December 31, 2023, these issuances are fully and unconditionally guaranteed by Cemex Concretos, S.A. de C.V., Cemex Operaciones México, S.A. de C.V., Cemex Innovation Holding Ltd. and Cemex Corp. |
2 |
Presented net of all notes repurchased by Cemex. As of December 31, 2023, all repurchased notes have been canceled. |
3 |
On October 5, 2023, Cemex issued sustainability-linked long-term notes ( certificados bursátiles de largo plazo |
4 |
During 2022, pursuant to tender offers and other market transactions, Cemex partially repurchased several series of its notes for an aggregate notional amount of $ |
5 |
On June 5, 2023, Cemex fully redeemed the June 2027 Notes. The difference between the amount paid for such notes and the notional amount redeemed, net of transactional cost, generated a repurchase loss of $ |
Bank loans |
Notes payable |
Total |
||||||||||||||
| 2025 | $ | |||||||||||||||
| 2026 | ||||||||||||||||
| 2027 | ||||||||||||||||
| 2028 | – | |||||||||||||||
| 2029 and thereafter | ||||||||||||||||
| $ | |
|
|
|||||||||||||
Lines of credit |
Available |
|||||||||||
| Other lines of credit in foreign subsidiaries 1 |
$ | |||||||||||
| Other lines of credit from banks 1 |
||||||||||||
| Revolving credit facility 2023 Credit Agreement | ||||||||||||
| $ | |
|
||||||||||
1 |
Uncommitted amounts subject to the banks’ availability. |
1 |
The Secured Overnight Financing Rate (“SOFR”) is a measure of the cost of borrowing cash overnight collateralized by Treasury securities. As of December 31, 2023, SOFR rate was |
2 |
The Tasa de Inter é s Interbancaria de Equilibrio Pesos . As of December 31, 2023 and 2022, the 28-day TIIE rate was |
| • | Under the 2023 Credit Agreement and the 2021 Credit Agreement, the ratio is calculated by dividing “Consolidated Net Debt” by “Consolidated EBITDA” for the last twelve months as of the calculation date. Consolidated Net Debt equals debt, as reported in the statement of financial position, net of cash and cash equivalents, excluding any existing or future obligations under any securitization program, and any subordinated debt of Cemex, adjusted for net mark-to-market |
| • | Under the 2023 Credit Agreement and the 2021 Credit Agreement, the ratio is calculated by dividing Consolidated EBITDA by the financial expense for the last twelve months as of the calculation date. |
Consolidated financial ratios |
Refers to the compliance limits and calculations that were effective on each date |
|||||||||||||
2023 |
2022 |
2021 |
||||||||||||
| Leverage ratio | Limit |
<= |
<= |
<= |
||||||||||
Calculation |
||||||||||||||
| Coverage ratio | Limit |
>= |
>= |
>= |
||||||||||
Calculation |
||||||||||||||
17.2) |
OTHER FINANCIAL OBLIGATIONS |
2023 |
2022 |
|||||||||||||||||||||||||||||||
Current |
Non-current |
Total |
Current |
Non-current |
Total |
|||||||||||||||||||||||||||
| I. Leases | $ | |
|
|
$ | |
|
|
||||||||||||||||||||||||
| II. Liabilities secured with accounts receivable | – | – | ||||||||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||||||||||
I. |
Leases (notes 8.1, 15.2, 24.1 and 28.4) |
2023 |
2022 |
2021 |
||||||||||||||
| Lease financial liability at beginning of year | $ | |||||||||||||||
Additions from new leases |
||||||||||||||||
Reductions from payments |
( |
) | ( |
) | ( |
|||||||||||
Cancellations and liability remeasurements |
( |
) | ||||||||||||||
Foreign currency translation and accretion effects |
( |
) | ( |
|||||||||||||
| Lease financial liability at end of year | $ | |
|
|
||||||||||||
Total |
||||||||
| 2025 | $ | |||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 and thereafter | ||||||||
| $ | |
|||||||
II. |
Liabilities secured with accounts receivable |
17.3) |
FAIR VALUE OF FINANCIAL INSTRUMENTS |
2023 |
2022 |
|||||||||||||||||||||||
Carrying amount |
Fair value |
Carrying amount |
Fair value |
|||||||||||||||||||||
Financial assets |
||||||||||||||||||||||||
Derivative financial instruments (notes 14.2 and 17.4) |
$ | $ | ||||||||||||||||||||||
Other investments and non-current accounts receivable (note 14.2) |
||||||||||||||||||||||||
| $ | |
$ | |
|||||||||||||||||||||
Financial liabilities |
||||||||||||||||||||||||
Long-term debt (note 17.1) |
$ | $ | ||||||||||||||||||||||
Other financial obligations (note 17.2) |
||||||||||||||||||||||||
Derivative financial instruments (notes 17.4 and 18.2) |
||||||||||||||||||||||||
| $ | $ | |||||||||||||||||||||||
2023 |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||
Assets measured at fair value |
||||||||||||||||||||
Derivative financial instruments (notes 14.2 and 17.4) |
$ | – | – | |||||||||||||||||
Investments in strategic equity securities (note 14.2) |
– | – | ||||||||||||||||||
Other investments at fair value through earnings (note 14.2) |
– | – | ||||||||||||||||||
| $ | – | |||||||||||||||||||
Liabilities measured at fair value |
||||||||||||||||||||
Derivative financial instruments (notes 17.4 and 18.2) |
$ | – | – | |||||||||||||||||
2022 |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||
Assets measured at fair value |
||||||||||||||||||||
Derivative financial instruments (notes 14.2 and 17.4) |
$ | – | – | |||||||||||||||||
Investments in strategic equity securities (note 14.2) |
– | – | ||||||||||||||||||
Other investments at fair value through earnings (note 14.2) |
– | – | ||||||||||||||||||
| $ | – | |||||||||||||||||||
Liabilities measured at fair value |
||||||||||||||||||||
Derivative financial instruments (notes 17.4 and 18.2) |
$ | – | – | |||||||||||||||||
17.4) |
DERIVATIVE FINANCIAL INSTRUMENTS |
2023 |
2022 |
|||||||||||||||||||
Notional amount |
Fair value |
Notional amount |
Fair value |
|||||||||||||||||
I. Net investment hedges |
$ | ( |
) | ( |
) | |||||||||||||||
II. Cross currency swaps |
– | – | ||||||||||||||||||
III. Interest rate swaps |
||||||||||||||||||||
IV. Fuel price hedging |
||||||||||||||||||||
V. Foreign exchange options |
||||||||||||||||||||
| $ | |
( |
) | |
||||||||||||||||
I. |
Net investment hedges |
II. |
Cross currency swaps |
III. |
Interest rate swap contracts |
IV. |
Fuel price hedging |
V. |
Foreign exchange options |
17.5) |
RISK MANAGEMENT |
2023 |
||||||||||||||||||||||||||||
Mexico |
United States |
EMEAA |
SCA&C |
Others 1 |
Total |
|||||||||||||||||||||||
Monetary assets |
$ | ( |
) | |||||||||||||||||||||||||
Monetary liabilities |
|
|||||||||||||||||||||||||||
Net monetary assets (liabilities) |
$ | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
||||||||||||||||
Out of which: |
||||||||||||||||||||||||||||
Dollars |
$ | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
||||||||||||||||
Pesos |
( |
) | – | – | – | ( |
) | ( |
||||||||||||||||||||
Euros |
– | – | ( |
) | ( |
) | ( |
|||||||||||||||||||||
Pounds |
– | – | ( |
) | – | ( |
||||||||||||||||||||||
Other currencies |
( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||
| $ | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
2022 |
||||||||||||||||||||||||||||
Mexico |
United States |
EMEAA |
SCA&C |
Others 1 |
Total |
|||||||||||||||||||||||
Monetary assets |
$ | |||||||||||||||||||||||||||
Monetary liabilities |
||||||||||||||||||||||||||||
Net monetary assets (liabilities) |
$ | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
||||||||||||||||
Out of which: |
||||||||||||||||||||||||||||
Dollars |
$ | ( |
) | ( |
) | ( |
) | ( |
||||||||||||||||||||
Pesos |
( |
) | – | – | – | ( |
) | ( |
||||||||||||||||||||
Euros |
– | – | ( |
) | ( |
) | ( |
|||||||||||||||||||||
Pounds |
– | – | ( |
) | – | ( |
||||||||||||||||||||||
Other currencies |
– | ( |
) | ( |
) | ( |
) | ( |
||||||||||||||||||||
| $ | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
1 |
Includes the Parent Company, Cemex’s financing subsidiaries, among other entities. |
18) |
OTHER CURRENT AND NON-CURRENT LIABILITIES |
18.1) |
OTHER CURRENT LIABILITIES |
2023 |
2022 |
|||||||||||
Other accounts payable and accrued expenses 1 |
$ | |||||||||||
Provisions 2 |
||||||||||||
Contract liabilities with customers (note 3) 3 |
||||||||||||
Interest payable |
||||||||||||
| $ | |
|
||||||||||
1 |
Other accounts payable and accrued expenses mainly refer to accrued fixed and variable employee benefits, insurance payments and accruals for public services. These amounts are revolving in nature and are expected to be settled and replaced by similar amounts within the next 12 months. |
2 |
Current provisions are detailed by concept in note 18.2 below. |
3 |
As of December 31, 2023 and 2022, contract liabilities with customers included $ |
18.2) |
OTHER NON-CURRENT LIABILITIES |
2023 |
2022 |
|||||||||||
Asset retirement obligations 1 |
$ | |||||||||||
Environmental liabilities 2 |
||||||||||||
Accruals for legal assessments and other responsibilities 3 |
||||||||||||
Non-current liabilities for valuation of derivative instruments |
||||||||||||
Other non-current liabilities and provisions 4 |
||||||||||||
| $ | |
|
||||||||||
1 |
Provisions for asset retirement include future estimated costs for demolition, cleaning and reforestation of production sites at the end of their operation, which are initially recognized against the related assets and are depreciated over their estimated useful life. |
2 |
Environmental liabilities include future estimated costs arising from legal or constructive obligations, related to cleaning, reforestation and other remedial actions to remediate damage caused to the environment. The expected average period to settle these obligations is greater than |
3 |
Provisions for legal claims and other responsibilities include items related to tax contingencies. |
4 |
As of December 31, 2023 and 2022, the balance includes deferred revenues of $ |
2023 |
||||||||||||||||||||||||||||||||
Asset retirement obligations |
Environmental liabilities |
Accruals for legal proceedings |
Valuation of derivative instruments |
Other liabilities and provisions |
Total |
2022 |
||||||||||||||||||||||||||
Balance at beginning of period |
$ | |||||||||||||||||||||||||||||||
Additions or increase in estimates |
||||||||||||||||||||||||||||||||
Releases or decrease in estimates |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
Business combinations |
||||||||||||||||||||||||||||||||
Accretion expense |
– | – | ||||||||||||||||||||||||||||||
Foreign currency translation |
( |
) | ( |
) | ||||||||||||||||||||||||||||
Balance at end of period |
$ | |||||||||||||||||||||||||||||||
Out of which: |
||||||||||||||||||||||||||||||||
Current provisions |
$ | |||||||||||||||||||||||||||||||
Other non-current liabilities |
||||||||||||||||||||||||||||||||
19) |
PENSIONS AND POST-EMPLOYMENT BENEFITS |
Pensions |
Other benefits |
Total |
||||||||||||||||||||||||||||||||||||||
Net period cost (income): |
2023 |
2022 |
2021 |
2023 |
2022 |
2021 |
2023 |
2022 |
2021 |
|||||||||||||||||||||||||||||||
Recorded in operating costs and expenses |
||||||||||||||||||||||||||||||||||||||||
Service cost |
$ | |||||||||||||||||||||||||||||||||||||||
Past service cost |
||||||||||||||||||||||||||||||||||||||||
Settlements, curtailments and other changes |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||
| ( |
) | |||||||||||||||||||||||||||||||||||||||
Recorded in other financial expenses |
||||||||||||||||||||||||||||||||||||||||
Net interest cost |
||||||||||||||||||||||||||||||||||||||||
Recorded in other comprehensive income |
||||||||||||||||||||||||||||||||||||||||
Actuarial losses (gains) for the period |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||||||||
| $ | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||||||||||||||
Pensions |
Other benefits |
Total |
||||||||||||||||||||||||||
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
|||||||||||||||||||||||
Change in benefits obligation: |
||||||||||||||||||||||||||||
Projected benefit obligation at beginning of the period |
$ | |||||||||||||||||||||||||||
Service cost |
||||||||||||||||||||||||||||
Interest cost |
||||||||||||||||||||||||||||
Actuarial losses (gains) |
( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||
Initial valuation from new plan |
||||||||||||||||||||||||||||
Reduction from disposal of assets |
( |
) | ( |
|||||||||||||||||||||||||
Settlements and curtailments |
( |
) | ( |
) | ||||||||||||||||||||||||
Plan amendments |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Benefits paid |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
Foreign currency translation |
( |
) | ( |
|||||||||||||||||||||||||
Projected benefit obligation at end of the period |
||||||||||||||||||||||||||||
Change in plan assets: |
||||||||||||||||||||||||||||
Fair value of plan assets at beginning of the period |
||||||||||||||||||||||||||||
Return on plan assets |
||||||||||||||||||||||||||||
Actuarial losses |
( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||||||
Employer contributions |
||||||||||||||||||||||||||||
Initial valuation from new plan |
||||||||||||||||||||||||||||
Settlements |
( |
) | ( |
) | ||||||||||||||||||||||||
Benefits paid |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
|||||||||||||||||
Foreign currency translation |
( |
) | ( |
|||||||||||||||||||||||||
Fair value of plan assets at end of the period |
|
|
||||||||||||||||||||||||||
Net projected liability in the statement of financial position |
$ | |
|
|
|
|||||||||||||||||||||||
2023 |
2022 |
2021 |
||||||||||||||
Actuarial (gains) losses due to experience |
$ | ( |
) | |||||||||||||
Actuarial (gains) losses due to demographic assumptions |
( |
) | ( |
) | ||||||||||||
Actuarial (gains) losses due to financial assumptions |
( |
) | ( |
) | ||||||||||||
| $ | |
( |
) | ( |
) | |||||||||||
2023 |
2022 |
|||||||||||||||||||||||||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||||||||||||||||||||||
Cash |
$ | – | – | $ | – | – | ||||||||||||||||||||||||||||||||||
Investments in corporate bonds |
– | – | ||||||||||||||||||||||||||||||||||||||
Investments in government bonds |
– | – | ||||||||||||||||||||||||||||||||||||||
Total fixed-income securities |
– | – | ||||||||||||||||||||||||||||||||||||||
Investment in marketable securities |
– | – | ||||||||||||||||||||||||||||||||||||||
Other investments and private funds |
||||||||||||||||||||||||||||||||||||||||
Total variable-income securities |
|
|
||||||||||||||||||||||||||||||||||||||
Total plan assets |
$ | $ | ||||||||||||||||||||||||||||||||||||||
2023 |
2022 | |||||||||||||||||||
Mexico |
United States |
United Kingdom |
Range of rates in other countries |
Mexico |
United States |
United Kingdom |
Range of rates in other countries | |||||||||||||
Discount rates |
% | |||||||||||||||||||
Rate of return on plan assets |
% | |||||||||||||||||||
Rate of salary increases |
% | – | – | |||||||||||||||||
Estimated payments |
||||||||
2024 |
$ | |||||||
2025 |
||||||||
2026 |
||||||||
2027 |
||||||||
2028 – 2033 |
|
|||||||
2023 |
2022 |
|||||||||||||||||||||||||||||||
PBO |
Assets |
Deficit |
PBO |
Assets |
Deficit |
|||||||||||||||||||||||||||
Mexico |
$ | $ | ||||||||||||||||||||||||||||||
United States |
( |
) | ||||||||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||||||||||
Germany |
||||||||||||||||||||||||||||||||
Other countries |
||||||||||||||||||||||||||||||||
| $ | |
|
$ | |
|
|||||||||||||||||||||||||||
Pensions |
Other benefits |
Total |
||||||||||||||||||||||||||
Assumptions: |
+50 bps |
-50 bps |
+50 bps |
-50 bps |
+50 bps |
-50 bps |
||||||||||||||||||||||
Discount Rate Sensitivity |
$ | ( |
) | ( |
) | ( |
) | |
||||||||||||||||||||
Salary Increase Rate Sensitivity |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||
Pension Increase Rate Sensitivity |
|
( |
) | – | – | ( |
) | |||||||||||||||||||||
| a) | Assets contributed to the Multiemployer Plans by one employer may be used to provide benefits to employees of other participating employers; |
| b) | If a participating employer stops contributing to the Multiemployer Plans, the unfunded obligations of the Multiemployer Plans may be borne by the remaining participating employers; and |
| c) | If Cemex chooses to stop participating in the Multiemployer Plans, the Company may be required to pay the Multiemployer Plans an amount based on the underfunded status of the Multiemployer Plans, referred to as a withdrawal liability. |
20) |
INCOME TAXES |
20.1) |
INCOME TAXES FOR THE PERIOD |
2023 |
2022 |
2021 |
||||||||||||||
Current income tax expense |
$ | |
|
|||||||||||||
Deferred income tax expense (benefit) |
( |
) | ||||||||||||||
| $ | ||||||||||||||||
20.2) |
DEFERRED INCOME TAXES |
2023 |
2022 |
|||||||||||
Deferred tax assets: |
||||||||||||
Tax loss carryforwards and other tax credits |
$ | |||||||||||
Accounts payable and accrued expenses |
||||||||||||
Intangible assets, net |
||||||||||||
Others |
||||||||||||
Total deferred tax assets, gross |
||||||||||||
Presentation of net position by same legal entity |
( |
) | ( |
) | ||||||||
| |
|
|||||||||||
Deferred tax liabilities: |
||||||||||||
Property, machinery and equipment and right-of-use |
( |
) | ( |
) | ||||||||
Investments and other assets |
( |
) | ( |
) | ||||||||
Total deferred tax liabilities, gross |
( |
) | ( |
) | ||||||||
Presentation of net position by same legal entity |
||||||||||||
Total deferred tax liabilities, net in the statement of financial position |
( |
) | ( |
) | ||||||||
Net deferred tax assets (liabilities) |
$ | ( |
) | |||||||||
Out of which: |
||||||||||||
Net deferred tax assets (liabilities) in Mexican entities |
$ | ( |
) | |||||||||
Net deferred tax assets (liabilities) in foreign entities |
( |
) | ||||||||||
Net deferred tax assets (liabilities) |
$ | ( |
) | |||||||||
2023 |
2022 |
|||||||||||||||||||||||||||
Assets |
Liabilities |
Net |
Assets |
Liabilities |
Net |
|||||||||||||||||||||||
Mexican entities |
$ | |
( |
|
$ | |
( |
( |
||||||||||||||||||||
| Foreign entities | |
( |
( |
|
( |
|
||||||||||||||||||||||
| $ | |
( |
( |
$ | |
( |
|
|||||||||||||||||||||
2023 |
2022 |
2021 |
||||||||||||
Deferred income tax expense (benefit) in the statement of income |
$ | |
|
( |
||||||||||
Deferred income tax (benefit) expense in stockholders’ equity |
( |
) | ( |
|||||||||||
Reclassifications 1 |
||||||||||||||
Change in deferred income tax during the period |
$ | |||||||||||||
1 |
In 2022 and 2021, refers to the effects of the reclassification of balances to assets held for sale and related liabilities (note 4.2). |
2023 |
2022 |
2021 |
||||||||||||
Expense (benefit) related to foreign exchange fluctuations from intercompany balances (note 21.2) |
$ | |
( |
|||||||||||
Expense (benefit) associated to actuarial results (note 21.2) |
( |
|||||||||||||
Benefit related to derivative financial instruments (note 17.4) |
( |
( |
( |
|||||||||||
Expense (benefit) from foreign currency translation and other effects |
( |
|||||||||||||
| $ | ( |
|
( |
|||||||||||
Amount of carryforwards |
Amount of unrecognized carryforwards |
Amount of recognized carryforwards |
||||||||||||
2024 |
$ | |||||||||||||
2025 |
||||||||||||||
2026 |
||||||||||||||
2027 |
||||||||||||||
2028 and thereafter |
||||||||||||||
| $ | |
|
|
|||||||||||
20.3) |
RECONCILIATION OF EFFECTIVE INCOME TAX RATE |
2023 |
2022 |
2021 |
||||||||||||||
Earnings before income tax |
$ | |
|
|
||||||||||||
Income tax expense |
( |
) | ( |
) | ( |
|||||||||||
Effective consolidated income tax expense rate 1 |
|
% | % | |||||||||||||
1 |
The average effective tax rate equals the net amount of income tax benefit or expense divided by income or loss before income taxes, as these line items are reported in the statements of income. |
2023 |
2022 |
2021 |
||||||||||||||||||||||
% |
$ |
% |
$ |
% |
$ |
|||||||||||||||||||
Mexican statutory tax rate |
||||||||||||||||||||||||
Income tax penalties in Spain (note 20.4) |
||||||||||||||||||||||||
Difference between accounting and tax expenses, net 1 |
||||||||||||||||||||||||
Non-taxable sale of equity securities and fixed assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Difference between book and tax inflation |
||||||||||||||||||||||||
Differences in the income tax rates in the countries where Cemex operates 2 |
( |
) | ( |
) | ||||||||||||||||||||
Changes in deferred tax assets 3 |
( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
Changes in provisions for uncertain tax positions |
( |
) | ( |
) | ||||||||||||||||||||
Others |
||||||||||||||||||||||||
Effective consolidated income tax expense rate |
|
|
|
|
|
|
||||||||||||||||||
1 |
In 2022, it includes $ non-deductible (note 7). |
2 |
Refers mainly to the effects of the differences between the statutory income tax rate in Mexico of |
3 |
Refers to the effects in the effective income tax rate associated with changes during the period in the amount of deferred income tax assets related to Cemex’s tax loss carryforwards. |
2023 |
2022 |
|||||||||||||||||
Changes in the statement of financial position |
Amounts in reconciliation |
Changes in the statement of financial position |
Amounts in reconciliation |
|||||||||||||||
Tax loss carryforwards generated and not recognized during the year |
$ | – | – | |||||||||||||||
Derecognition related to tax loss carryforwards recognized in prior years |
( |
– | ( |
|||||||||||||||
Recognition related to unrecognized tax loss carryforwards |
|
( |
( |
|||||||||||||||
Foreign currency translation and other effects |
( |
( |
||||||||||||||||
Changes in deferred tax assets |
$ | ( |
( |
( |
( |
|||||||||||||
20.4) |
UNCERTAIN TAX POSITIONS AND SIGNIFICANT TAX PROCEEDINGS |
2023 |
2022 |
2021 |
||||||||||||
Balance of tax positions at beginning of the period |
$ | |||||||||||||
Additions for tax positions of prior periods |
||||||||||||||
Additions for tax positions of current period |
||||||||||||||
Reductions for tax positions related to prior periods and other items |
( |
) | ( |
) | ( |
|||||||||
Settlements and reclassifications |
( |
) | ( |
|||||||||||
Expiration of the statute of limitations |
( |
) | ( |
) | ( |
|||||||||
Foreign currency translation effects |
( |
|||||||||||||
Balance of tax positions at end of the period |
$ | |
|
|
||||||||||
| • | The tax authorities in Spain (“the Spanish Tax Authorities”) challenged part of the tax loss carryforwards reported by Cemex España, S.A. (“Cemex España”) covering the tax years from and including 2006 to 2009. During 2013, the Spanish Tax Authorities notified Cemex España of fines for an aggregate amount of $ |
| • | On March 26, 2021, the Spanish Tax Authorities notified Cemex España of an assessment for income taxes in an amount in Euros equivalent to $ Tribunal Econ ó mico Administrativo Central |
| • | In connection with the tax return for the year 2012, the Colombian Tax Authority (the “Colombian Tax Authority”) assessed an increase in the income tax payable by Cemex Colombia S.A. (“Cemex Colombia”) and imposed an inaccuracy penalty for amounts in Colombian Pesos equivalent to $ |
| • | In connection with the tax return for the year 2011, the Colombian Tax Authority notified Cemex Colombia of a proceeding in which it rejected certain deductions and determined an increase in the income tax payable and imposed a penalty for amounts in Colombian Pesos equivalent to $ |
21) |
STOCKHOLDERS’ EQUITY |
As of December 31, 2023 |
||||||||||||
Consolidated |
Parent Company |
|||||||||||
Common stock and additional paid-in capital 1 |
$ | |||||||||||
Other equity reserves 1, 2 |
( |
) | ||||||||||
Retained earnings 2 |
||||||||||||
Total controlling interest |
$ | |||||||||||
1 |
The difference relates to the method of accruing Dollars using the historical exchange rates to translate each common stock and additional paid-in capital transaction denominated in Pesos to Dollars. The cumulative effect of these changes in exchange rates is recognized against other equity reserves. |
2 |
The difference relates to the method of accruing Dollars using the exchange rates of each month during the period for statement of income purposes. The cumulative effect of these changes in exchange rates is recognized against other equity reserves. |
21.1) |
COMMON STOCK AND ADDITIONAL PAID-IN CAPITAL |
2023 |
2022 |
|||||||||||
Common stock |
$ | |||||||||||
Additional paid-in capital |
||||||||||||
| $ | ||||||||||||
2023 |
2022 |
|||||||||||||||
Shares 1 |
Series A 2 |
Series B 2 |
Series A 2 |
Series B 2 |
||||||||||||
Subscribed and paid shares |
||||||||||||||||
Unissued shares authorized for executives’ stock compensation programs |
||||||||||||||||
Repurchased shares 3 |
||||||||||||||||
1 |
As of December 31, 2023 and 2022, |
2 |
Series “A” or Mexican shares must represent at least |
3 |
Shares repurchased under the share repurchase program authorized by the Parent Company’s shareholders (note 21.2). |
21.2) |
OTHER EQUITY RESERVES AND SUBORDINATED NOTES |
2023 |
2022 |
|||||||||||
Other equity reserves |
$ | ( |
) | ( |
||||||||
Subordinated notes |
||||||||||||
| $ | ( |
) | ( |
|||||||||
2023 |
2022 |
|||||||||||
Cumulative translation effect, tax effects from deferred income taxes recognized directly in equity (note 20.2) and derivative financial instruments designated as cash flow hedges |
$ | ( |
) | ( |
||||||||
Cumulative actuarial losses |
( |
) | ( |
|||||||||
Cumulative coupon payments under perpetual debentures (note 21.4) |
( |
) | ( |
|||||||||
Cumulative coupon payments under subordinated notes |
( |
) | ( |
|||||||||
Cancellation of treasury shares by shareholders’ resolution (note 21.1) |
( |
|||||||||||
Other effects |
( |
) | ( |
|||||||||
| $ | ( |
) | ( |
|||||||||
2023 |
2022 |
2021 |
||||||||||||||
Foreign currency translation result 1 |
$ | ( |
) | ( |
||||||||||||
Foreign exchange fluctuations from debt 2 |
( |
) | ( |
) | ||||||||||||
Foreign exchange fluctuations from intercompany balances 3 |
( |
) | ( |
) | ( |
|||||||||||
| $ | ( |
) | ( |
|||||||||||||
1 |
These effects refer to the result from the translation of the financial statements of foreign subsidiaries and include the changes in the fair value of foreign exchange forward contracts designated as a hedge of a net investment (note 17.4). |
2 |
Generated by foreign exchange fluctuations over a notional amount of debt in Cemex, S.A.B. de C.V., associated with the acquisition of foreign subsidiaries and designated as a hedge of the net investment in foreign subsidiaries (note 28.3). |
3 |
Refers to foreign exchange fluctuations arising from balances with related parties in foreign currencies that are of a long-term investment nature considering that their liquidation is not anticipated in the foreseeable future and foreign exchange fluctuations over a notional amount of debt of a subsidiary of Cemex España identified and designated as a hedge of the net investment in foreign subsidiaries. |
| • | The Subordinated Notes do not meet the definition of financial liability under IAS 32 considering that they include no contractual obligation: (i) to deliver cash or another financial asset to another entity; or (ii) to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the issuer. This is because: |
| ◾ | The Noteholders have agreed to the deferral of interest and principal, given that, the Parent Company has the unilateral and unconditional right to perpetually defer the payment of principal and interest; |
| ◾ | The Parent Company controls at all times any payments to be made to the Noteholders, even in the event of bankruptcy under either the laws of Mexico ( Ley de Concursos Mercantiles |
| ◾ | The Subordinated Notes contractually evidence a residual interest in the assets of the Parent Company after deducting all of its liabilities. The only requirement to settle the Notes would be in liquidation, which is akin to an equity instrument under IAS 32. |
21.3) |
RETAINED EARNINGS |
21.4) |
NON-CONTROLLING INTEREST AND PERPETUAL DEBENTURES |
| • | In February 2017, Cemex acquired a controlling interest in TCL, whose shares trade in the Trinidad and Tobago Stock Exchange. As of December 31, 2023 and 2022, there is a non-controlling interest in TCL of |
| • | As of December 31, 2023 and 2022, there was a non-controlling interest in CHP of |
| • | Until June 2023, after the conclusion of a tender offer and delisting process, Cemex Latam Holdings, S.A. (“CLH”), traded its ordinary shares on the Colombian Stock Exchange. CLH is the indirect holding company of Cemex’s operations in Colombia, Panama, Guatemala and Nicaragua, and until August 31, 2022, of the operations in Costa Rica and El Salvador. As of December 31, 2023 and 2022, there was a non-controlling interest in CLH of |
22) |
EXECUTIVE SHARE-BASED COMPENSATION |
ADSs equivalents delivered (thousands) |
||||||||||||||||||||||||||||||||||||||
Plan |
Target number of ADSs (thousands) |
ADS price at award’s date 1 |
Fair value (%) |
Fair value (millions) |
2023 |
2022 |
2021 |
ADSs Forfeited (thousands) |
ADSs Outstanding (thousands) 2 |
|||||||||||||||||||||||||||||
Performance Plans |
||||||||||||||||||||||||||||||||||||||
2018 |
$ | |
||||||||||||||||||||||||||||||||||||
2019 |
$ | |||||||||||||||||||||||||||||||||||||
2020 |
$ | |||||||||||||||||||||||||||||||||||||
2021 |
$ | |||||||||||||||||||||||||||||||||||||
2022 |
$ | |||||||||||||||||||||||||||||||||||||
2023 |
$ | |||||||||||||||||||||||||||||||||||||
Ordinary Plans |
||||||||||||||||||||||||||||||||||||||
2017 |
$ | |||||||||||||||||||||||||||||||||||||
2018 |
$ | |||||||||||||||||||||||||||||||||||||
2019 |
$ | |||||||||||||||||||||||||||||||||||||
2020 |
$ | |||||||||||||||||||||||||||||||||||||
2021 |
$ | |||||||||||||||||||||||||||||||||||||
2022 |
$ | |||||||||||||||||||||||||||||||||||||
2023 |
$ | |||||||||||||||||||||||||||||||||||||
1 |
Average ADS price of the awards at the date of grant. |
2 |
Until the final payout of the Performance Plans is determined after the conclusion of the three-year period for award, the number of ADSs outstanding assumes a payout considering the same percentage determined by the option pricing model. |
23) |
EARNINGS (LOSS) PER SHARE |
2023 |
2022 |
2021 |
||||||||||||||
Denominator (thousands of shares) |
||||||||||||||||
Weighted-average number of shares outstanding – basic |
||||||||||||||||
Effect of dilutive instruments – share-based compensation (note 22) 1 |
||||||||||||||||
Weighted-average number of shares – diluted |
||||||||||||||||
Numerator |
||||||||||||||||
Net income from continuing operations |
$ | |||||||||||||||
Less: non-controlling interest net income |
||||||||||||||||
Controlling interest net income from continuing operations |
$ | |||||||||||||||
Net income (loss) from discontinued operations |
$ | ( |
) | |||||||||||||
Controlling interest basic earnings (loss) per share |
||||||||||||||||
Controlling interest basic earnings per share |
$ | |||||||||||||||
Controlling interest basic earnings per share from continuing operations |
||||||||||||||||
Controlling interest basic earnings (loss) per share from discontinued operations |
( |
) | ||||||||||||||
Controlling interest diluted earnings (loss) per share |
||||||||||||||||
Controlling interest diluted earnings per share |
$ | |||||||||||||||
Controlling interest diluted earnings per share from continuing operations |
||||||||||||||||
Controlling interest diluted earnings (loss) per share from discontinued operations |
( |
) | ||||||||||||||
1 |
Number of the Parent Company’s shares to be potentially issued under the Share- Based Compensation Programs to be delivered to the executives equivalent to |
24) |
COMMITMENTS |
24.1) |
CONTRACTUAL OBLIGATIONS |
2023 |
||||||||||||||||||||||||
Obligations |
Less than 1 year |
1-3 years |
3-5 years |
More than 5 years |
Total |
|||||||||||||||||||
Long-term debt |
$ | |||||||||||||||||||||||
Leases 1 |
||||||||||||||||||||||||
Total debt and other financial obligations 2 |
||||||||||||||||||||||||
Interest payments on debt 3 |
||||||||||||||||||||||||
Pension plans and other benefits 4 |
||||||||||||||||||||||||
Acquisition of property, plant and equipment 5 |
||||||||||||||||||||||||
Purchases of services, raw materials, fuel and energy 6 |
||||||||||||||||||||||||
Total contractual obligations |
$ | |||||||||||||||||||||||
1 |
Represent nominal cash flows. As of December 31, 2023, the NPV of future payments under the Company’s lease contracts was $ 3 years and $ |
2 |
The schedule of debt payments, which includes current maturities, does not consider the effect of any refinancing of debt that may occur during the following years. In the past, Cemex has replaced its long-term obligations for others of a similar nature. |
3 |
Estimated cash flows on floating rate denominated debt were determined using the floating interest rates in effect as of December 31, 2023. |
4 |
Represents estimated annual payments under these benefits for the |
5 |
Refers mainly to the expansion of a cement production line in the Philippines. |
6 |
Future payments for the purchase of raw materials are presented based on contractual nominal cash flows. Future nominal payments for energy were estimated for all contractual commitments based on an aggregate average expected consumption per year using the future prices of energy established in the contracts for each period. Future payments also include Cemex’s commitments for the purchase of fuel. In addition, includes a contractual commitment with Neoris over a 5-year contract from 2023 until 2027 for the acquisition by Cemex of digitalization services and solutions for an annual amount of $ |
24.2) |
OTHER COMMITMENTS |
| • | On February 8, 2022, Cemex renewed or entered into new agreements with six service providers in the fields of data processing services (back office) in finance, accounting and human resources; as well as Information Technology (“IT”) infrastructure services, support and maintenance of IT applications in the countries in which Cemex operates, for a tenure of five to seven years at an average annual cost of $ |
| • | Beginning in April 2016, in connection with the Ventika S.A.P.I. de C.V. and the Ventika II S.A.P.I. de C.V. wind farms (jointly “Ventikas”) located in the Mexican state of Nuevo Leon with a combined generation capacity of |
| • | Beginning in February 2010, for its overall electricity needs in Mexico, Cemex agreed with EURUS to purchase a portion of the electric energy generated for no less than |
| • | Cemex maintains a commitment initiated in April 2004 to purchase the energy generated by Termoeléctrica del Golfo (“TEG”) until 2027 for its overall electricity needs in Mexico. The estimated annual cost of this agreement is $ |
| • | In regards to the above, Cemex also committed to supply TEG and another third-party electrical energy generating plant adjacent to TEG with all fuel necessary for their operations until the year 2027, equivalent to |
| • | On October 24, 2018, Cemex, S.A.B. de C.V. entered into an energy financial hedge agreement in Mexico, commencing October 1, 2019 and for a period of |
24.3) |
COMMITMENTS FROM EMPLOYEE BENEFITS |
24.4) |
CLIMATE CHANGE AND COMMITMENTS FOR THE REDUCTION OF CARBON DIOXIDE (“CO 2 ”) EMISSIONS (unaudited) |
25) |
LEGAL PROCEEDINGS |
25.1) |
PROVISIONS RESULTING FROM LEGAL PROCEEDINGS |
| • | As of December 31, 2023, Cemex accrued environmental remediation liabilities through its subsidiaries in the United Kingdom pertaining to closed and current landfill sites for the confinement of waste, representing the NPV of such obligations for an amount in Pounds sterling equivalent to $ |
| • | As of December 31, 2023, Cemex accrued environmental remediation liabilities through its subsidiaries in the United States for $ |
| • | In 2012, in connection with a contract entered into in 1990 (the “Quarry Contract”) by Cemex Granulats Rhône Méditerranée (“Cemex GRM”), one of Cemex’s subsidiaries in France, with SCI La Quinoniere (“SCI”) pursuant to which Cemex GRM had drilling rights to extract reserves and do quarry remediation at a quarry in the Rhône region of France, SCI filed a claim against Cemex GRM for breach of the Quarry Contract, requesting the rescission of such contract and damages plus interest for a revised amount in Euros equivalent to $ |
| • | In 2020, Cemex had accrued a provision through its subsidiaries in France for $ |
25.2) |
CONTINGENCIES FROM LEGAL PROCEEDINGS |
| • | The European Commission has inspected Cemex’s offices in France and requested certain information relating to the business in France in the construction chemicals sector, which includes chemical admixtures and additives for use in concrete, cement and related construction products. Cemex is fully cooperating with the authorities conducting this investigation. The fact that this investigation is being conducted does not mean that the European Commission has concluded that Cemex has violated the law. As of December 31, 2023, due to the early stages of this investigation, Cemex is not able to assess the likely outcome of the investigation as it relates to us or whether it would have a material adverse impact on our results of operations, liquidity and financial condition. |
| • | Cemex’s operations in the United States received a grand jury subpoena issued by the Department of Justice (the “DOJ”) in connection with an investigation of possible antitrust law violations in the cement additives and concrete admixtures sector. Cemex is fully cooperating with the authorities conducting this investigation. The fact that this investigation is being conducted does not mean that the DOJ has concluded that Cemex has violated the law. As of December 31, 2023, due to the early stages of this investigation, we are not able to assess the likely outcome of the investigation as it relates to us or whether it would have a material adverse impact on our results of operations, liquidity and financial condition. |
| • | In August 2020, an individual filed a class action lawsuit ( Acción de Grupo |
| • | On October 1, 2019, SEMARNAT published the basis for a trial emissions trading program. The pilot phase of the trial program concluded on December 31, 2021, and was followed by a 12-month period ending on December 31, 2022 to transition to the operative stage. The Mexican Emissions Trading System (“Mexican ETS”) is expected to enter its Phase I starting January 1, 2024 and conclude on December 31, 2026, followed by its Phase II, is expected to last from January 1, 2027 to December 31, 2030. The operating rules for Phase I of the Mexican ETS are under review by the SEMARNAT and are expected to be issued in June 2024. For Phase I, the SEMARNAT will publish growth projections factors and corresponding free allocations of allowances for the cement, steel, energy, and chemical sectors which, as of December 31, 2023, are still being drafted. As of December 31, 2023, we are unable to determine if Phase I of the Mexican ETS will have a material adverse impact on our results of operations, liquidity and financial condition. |
| • | As of December 31, 2023, levies in effect in several Mexican states on the extraction of raw materials range from an amount to $ |
| • | On September 20, 2018, triggered by heavy rainfall, a landslide causing damages and fatalities (the “Landslide”) occurred in a site located within an area covered by mining rights of APO Land & Quarry Corporation (“ALQC”) in Naga City, Cebu, Philippines. ALQC is a principal raw material supplier of APO Cement Corporation (“APO”), a wholly owned subsidiary of CHP. Cemex indirectly owns a minority clean-up and rehabilitation. |
| • | In December 2016, the Parent Company received subpoenas from the SEC seeking information to determine whether there have been any violations of the U.S. Foreign Corrupt Practices Act stemming from the Maceo Project. These subpoenas do not mean that the SEC has concluded that the Parent Company or any of its affiliates violated the law. On March 12, 2018, the DOJ issued a grand jury subpoena to the Parent Company relating to its operations in Colombia and other jurisdictions. In 2020, the Company delivered all of the information and documentation that had been requested and has not received any more requests since then. The Parent Company intends to continue to cooperate fully with the SEC, the DOJ and any other investigate entity. As of December 31, 2023, the Parent Company is unable to predict the duration, scope, or outcome of either the SEC investigation or the DOJ investigation, or any other investigation that may arise, or, because of the current status of the SEC investigation and the preliminary nature of the DOJ investigation, the potential sanctions which could be borne by the Parent Company, or if such sanctions, if any, would have a material adverse impact on Cemex results of operations, liquidity or financial position. |
| • | In September 2012, in connection with a lawsuit submitted to a first instance court in Assiut, Egypt in 2011, the first instance court of Assiut issued a resolution to nullify the Share Purchase Agreement (the “SPA”) pursuant to which Cemex acquired in 1999 a controlling interest in Assiut Cement Company (“ACC”). In addition, during 2011 and 2012, lawsuits seeking, among other things, the annulment of the SPA were filed by different plaintiffs, including th Circuit State Council Administrative Judiciary Court. On January 14, 2023, the High Constitutional Court determined that the Law 32/2014, pursuant to which the validity of the SPA is recognized, and which protects Cemex’s investments in Egypt, is constitutional. Following this resolution, the 7th Circuit of Cairo’ State Council Administrative Judiciary Court dismissed the claims due to the lack of legal standing of the plaintiffs in the application of Law 32/2014 on February 25, 2023. As the plaintiffs failed to challenge this dismissal within the legally prescribed term of 60 days, the resolution is final and definitive, and these proceedings are considered closed. |
25.3) |
OTHER SIGNIFICANT PROCESSES |
| • | As of December 31, 2023, the land over which the Maceo Plant was constructed, the mining concession, the environmental license and the shares of Zona Franca Especial Cementera del Magdalena Medio S.A.S. (“Zomam”) (holder of the free trade zone concession), acquired in 2012 from CI Calizas y Minerales S.A. (“CI Calizas”), are held under a domain extinction proceeding that was linked to a former shareholder of CI Calizas by Colombia’s Attorney General (the “Attorney General”) in which, among other measures, suspended CI Calizas’ ability to transfer certain assets (land, mining concession, environmental license, shares of Zomam with the corresponding free trade zone benefits and other related assets required to build a cement plant) to Cemex Colombia that Cemex Colombia had acquired from CI Calizas in 2012 as mentioned above. |
| • | As of the financial statements date, although Cemex Colombia acted in good faith and free of guilt in the acquisition process in 2012, pursuant to the domain extinction proceeding initiated in December 2012, which has not finalized and which may still take several more years, Cemex Colombia does not have the legal representation of Zomam, is not the rightful owner of the land over which the Maceo Plant was constructed and is not the assigned beneficiary of the corresponding mining concession. |
| • | In December 2020, Cemex Colombia presented to the Business Superintendency of Colombia ( Superintendencia de Sociedades de Colombia in-kind carried out by Cemex Colombia to Zomam in December 2015 by means of which a portion of the Maceo Plant’s assets were contributed to this entity. On December 6, 2022, the Business Superintendency issued an adverse resolution to Cemex Colombia in relation to this recourse; and, as of December 31, 2023, this resolution is under review by the Colombian Supreme Court. |
| • | Considering the domain extinction proceeding mentioned above, in April 2019, Cemex Colombia, its direct holding company and another of its subsidiaries reached a conciliatory agreement with the Sociedad de Activos Especiales, S.A.S. (the “SAE”) and CI Calizas before the Attorney General’s Office and signed jointly with CI Calizas and Zomam, with the authorization of the SAE as delegate of these last two companies on behalf of the State, a contract of Mining Operation, Manufacturing and Delivery Services and Leasing of Properties for Cement Production (the “Operation Contract”), which allows Cemex Colombia to continue using the assets for an initial term of |
| ◾ | Once the Maceo Plant begins commercial operations, Cemex Colombia and/or a subsidiary will pay on a quarterly basis: a) |
| ◾ | The Operation Contract will continue in force regardless of the result in the domain extinction proceeding, except if the applicable criminal judge recognizes ownership rights of the assets under the domain extinction proceeding to Cemex Colombia and one of its affiliates, in which case the Operation Contract would no longer be needed and would be terminated, considering that Cemex Colombia and its affiliate would be the owners of the corresponding assets. |
| • | As of December 31, 2023, Cemex believes that it would be able to keep ownership of the Maceo Plant. Nevertheless, if the domain extinction proceeding over the assets is ordered in favor of the Colombian State, and if the assets were adjudicated to a third party in a public tender offer, by virtue of the Operation Contract, such third party would have to subrogate to such contract. As of December 31, 2023, Cemex is not able to estimate whether the domain extinction proceeding over the assets will be ordered in favor of the Colombian State, or, if applicable, if the assets would be adjudicated to a third party in a public tender offer. |
| • | To begin operations under the Operation Contract, the following mandatory conditions must be completed: (a) extend the environmental license to permit the extraction of the required minerals to produce at least |
| ◾ | In September 2019, Corantioquia’s Directive Council, the regional environmental authority (“Corantioquia”), approved the subtraction of a portion of the plant from the IMD. In addition, in February 2021, Corantioquia notified CI Calizas of the modification of the environmental license allowing the extraction of up to |
| ◾ | Regarding the permits to conclude the construction of several sections of the access road, in December 2020, Maceo’s municipality issued a decree establishing the public utility of the access road, required for both, to obtain the permits to acquire the required land and build the remainder of the road. In respect to the modification of the permitted land use where the project is located, Cemex Colombia received favorable criteria from Corantioquia regarding the change of land use because of the approval for the subtraction from the IMD, which was endorsed by the municipality of Maceo in August 2020, which allows for an industrial and mining use compatible with the project. |
| ◾ | In addition, in June 2022, the Ministry of Commerce, Industry and Tourism granted Zomam the extension of the free trade zone area, which now covers the full area of the Maceo Plant. |
| ◾ | In spite of the developments above, which represent significant progress for the commissioning of the Maceo Plant, the beginning of commercial operations remains subject mainly to the conclusion of the access road and the authorization required from the owners of land plots adjacent to the Maceo Plant, as well as the extension of the environmental extraction permit that would allow the production of up to |
26) |
RELATED PARTIES |
| • | Cemex has a Master Services Agreement pursuant to which Cemex receives information technology services and solutions globally from Neoris. For the year 2023, Cemex incurred in consulting services from Neoris for $ |
| • | For the year 2023, Cemex incurred services from CEB, a provider of ready-mix pumping services to Cemex’s customers in Mexico for $ |
27) |
PRINCIPAL SUBSIDIARIES |
% Interest |
||||||||||
Subsidiary |
Country |
2023 |
2022 |
|||||||
1 |
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| |
|
|||||||||
2 |
||||||||||
3 |
||||||||||
4 |
||||||||||
5 |
||||||||||
6 |
||||||||||
7 |
||||||||||
7 |
||||||||||
8 |
||||||||||
9 |
||||||||||
10 |
||||||||||
1 |
Cemex España is the direct or indirect holding company of most of Cemex’s international operations . |
2 |
Represents Cemex Colombia’s |
3 |
Represents CLH’s direct and indirect interest in ordinary and preferred shares, including own shares held in Cemex Colombia’s treasury. |
4 |
Represents CLH’s |
5 |
Represents the aggregate ownership interest of Cemex in this entity of |
6 |
Cemex’s operations in the Philippines are conducted through CHP, a subsidiary incorporated in the Philippines, which since July 2016 trades its ordinary shares on the Philippines Stock Exchange under the symbol CHP (note 21.4) |
7 |
Represents CHP’s direct and indirect interest. |
8 |
Cemex España indirectly owns a holds the remaining |
9 |
Cemex International Trading LLC is involved in the international trading of Cemex’s products and fuel commercialization. |
10 |
Sunbulk Shipping Limited is involved mainly in maritime and land transportation and/or shipping of goods worldwide and the handling, administration, and hiring of shipments and cargo at ports, terminals and other loading and unloading destinations worldwide, as well as the offering and contracting of services in relation thereto for Cemex’s trading entities and operations. |
28) |
MATERIAL ACCOUNTING POLICIES |
28.1) |
PRINCIPLES OF CONSOLIDATION |
28.2) |
USE OF ESTIMATES AND CRITICAL ASSUMPTIONS |
28.3) |
FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION OF FOREIGN CURRENCY FINANCIAL STATEMENTS |
2023 |
2022 |
2021 |
||||||||||||||||||||||
Currency |
Closing |
Average |
Closing |
Average |
Closing |
Average |
||||||||||||||||||
| Peso | |
|
|
|
|
|
||||||||||||||||||
| Euro | ||||||||||||||||||||||||
| British Pound Sterling | ||||||||||||||||||||||||
| Colombian Peso | ||||||||||||||||||||||||
28.4) |
FINANCIAL INSTRUMENTS |
| • | Cash and cash equivalents (note 9). |
| • | Trade accounts receivable, other current accounts receivable and other current assets (notes 10 and 11). Due to their short-term nature, Cemex initially recognizes these assets at the original invoiced or transaction amount less expected credit losses, as explained below. |
| • | Trade accounts receivable sold under securitization programs, in which certain residual interest in the trade accounts receivable sold in case of recovery failure and continued involvement in such assets is maintained, do not qualify for derecognition and are maintained in the statement of financial position (notes 10 and 17.2). |
| • | Investments and non-current accounts receivable (note 14.2). Subsequent changes in effects from amortized cost are recognized in the statement of income as part of “Financial income and other items, net.” |
28.5) |
PROPERTY, MACHINERY AND EQUIPMENT AND ASSETS FOR THE RIGHT-OF-USE |
28.6) |
BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (notes 4.1 and 16) |
28.7) |
IMPAIRMENT OF LONG-LIVED ASSETS (notes 15 and 16) |
28.8) |
PROVISIONS (notes 18, 24 and 25) |
28.9) |
PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS (note 19) |
28.10) |
INCOME TAXES (note 20) |
Country |
2023 |
2022 |
2021 | |||||||
Mexico |
||||||||||
United States |
||||||||||
United Kingdom |
||||||||||
France |
||||||||||
Germany |
||||||||||
Spain |
||||||||||
Philippines |
||||||||||
Israel |
||||||||||
Colombia |
||||||||||
Others |
|
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28.11) |
STOCKHOLDERS’ EQUITY |
| • | Currency translation effects from the translation of foreign subsidiaries, net of: a) exchange results from foreign currency debt directly related to the acquisition of foreign subsidiaries; and b) exchange results from foreign currency related parties’ balances that are of a non-current investment class (note 28.3); |
| • | The effective portion of the valuation and liquidation effects from derivative financial instruments under cash flow hedging relationships, which are recorded temporarily in stockholders’ equity (note 28.4); |
| • | Changes in fair value of other investments in strategic securities (note 28.4); and |
| • | Current and deferred income taxes during the period arising from items whose effects are directly recognized in stockholders’ equity. |
| • | Effects related to controlling stockholders’ equity for changes or transactions affecting non-controlling interest stockholders in Cemex’s consolidated subsidiaries; |
| • | Effects attributable to controlling stockholders’ equity for financial instruments issued by consolidated subsidiaries that qualify for accounting purposes as equity instruments, such as the interest expense paid on perpetual debentures; |
| • | The balance of Subordinated Notes with no fixed maturity and any interest accrued thereof; and |
| • | The cancellation of the Parent Company’s shares held by consolidated entities. |
28.12) |
EXECUTIVE SHARE-BASED COMPENSATION (note 22) |
28.13) |
ALLOWANCES RELATED TO EMISSIONS OF CO 2 |
| • | Certificates received through government grants for no consideration paid are recognized at zero cost in the statement of financial position. |
| • | Revenues received from the sale of excess Allowances are recognized in the statement of income in the period in which they occur. |
| • | Allowances that would be acquired to hedge exceeding CO 2 emissions would be recognized as intangible assets at cost and would be further amortized to the cost of sales during the compliance period. |
| • | Cemex would accrue a provision at market value against the cost of sales when current emissions of CO 2 would exceed the number of emission rights on hand and the required additional Allowances would not be yet acquired in the market. |
| • | In addition, in certain countries, the environmental authorities impose levies per ton of CO 2 or other greenhouse gases released. Such expenses are recognized as part of the cost of sales as incurred. |
28.14) |
CONCENTRATION OF CREDIT |
28.15) |
NEWLY ISSUED IFRS NOT YET ADOPTED |
Standard |
Main topic |
Effective date | ||
Amendments to IAS 7, Statement of Cash Flows Financial Instruments: Disclosures |
The amendment requires entities to provide additional disclosures about their supplier finance arrangements to provide users of financial statements with information about: a) how such arrangements affect an entity’s liabilities and cash flows; and b) to understand their effect on an entity’s exposure to liquidity risk and how the entity might be affected if the arrangements were no longer available. |
January 1, 2024 | ||
Amendments to IAS 1, Presentation of Financial Statements Non-current liabilities with covenants |
The amendments improve information an entity provides when its right to defer settlement of liabilities for at least twelve months is subject to compliance with covenants. |
January 1, 2024 | ||
Amendments to IFRS 16, Leases |
The amendments mentioned that on initial recognition, the seller-lessee would include variable payments when it measures a lease liability arising from a sale-and-leaseback |
January 1, 2024 | ||
Amendments to IAS 1, Presentation of Financial Statements |
Clarifies the requirements to be applied in classifying liabilities as current and non-current. |
January 1, 2024 | ||
Amendments to IAS 21, The Effects of Changes in Foreign Exchange Rates |
The amendments require an entity to apply a consistent approach to assessing whether a currency is exchangeable into another currency and when it is not, to determine the exchange rate to use and the disclosures to provide. |
January 1, 2025 | ||
Table of Contents
Table of Contents
| PART III | ||||
PART III
Item 17—FINANCIAL STATEMENTS
Not applicable.
Item 18—FINANCIAL STATEMENTS
See pages F-1 through F-66, incorporated herein by reference.
Item 19—EXHIBITS
CEMEX • 2023 20-F REPORT • II-1
Table of Contents
| PART III | ||||
CEMEX • 2023 20-F REPORT • II-2
Table of Contents
| PART III | ||||
| (a) | Incorporated by reference to the Registration Statement on Form F-4 of Cemex, S.A.B. de C.V. (Registration No. 333-10682), filed with the SEC on August 10, 1999. |
| (b) | Incorporated by reference to the 2009 annual report on Form 20-F of Cemex, S.A.B. de C.V. filed with the SEC on June 30, 2010. |
CEMEX • 2023 20-F REPORT • II-3
Table of Contents
| PART III | ||||
| (c) | Incorporated by reference to the Registration Statement on Form F-6 of Cemex, S.A.B. de C.V. (Registration No. 333-174743), filed with the SEC on June 6, 2011. |
| (d) | Incorporated by reference to the 2014 annual report on Form 20-F of Cemex, S.A.B. de C.V. filed with the SEC on April 27, 2015. |
| (e) | Incorporated by reference to the 2015 annual report on Form 20-F of Cemex, S.A.B. de C.V. filed with the SEC on April 22, 2016. |
| (f) | Incorporated by reference to the 2016 annual report on Form 20-F of Cemex, S.A.B. de C.V. filed with the SEC on April 28, 2017. |
| (g) | Incorporated by reference to the 2018 annual report on Form 20-F of Cemex, S.A.B. de C. V. filed with the SEC on April 25, 2019. |
| (h) | Incorporated by reference to the 2019 annual report on Form 20-F of Cemex, S.A.B. de C. V. filed with the SEC on April 29, 2020. |
| (i) | Incorporated by reference to the 2020 annual report on Form 20-F of Cemex, S.A.B. de C. V. filed with the SEC on April 23, 2021. |
| (j) | Incorporated by reference to the 2021 annual report on Form 20-F of Cemex, S.A.B. de C. V. filed with the SEC on April 29, 2022. |
| (k) | Incorporated by reference to the 2022 annual report on Form 20-F of Cemex, S.A.B. de C. V. filed with the SEC on May 1, 2023. |
| (l) | Incorporated by reference to the Registration Statement on S-8 of Cemex, S.A.B. de C.V. (Registration No. 333-275529), filed with the SEC on November 13, 2023. |
| (m) | Filed herewith. |
| (n) | This was a paper filing, and it is not available on the SEC website. |
In reviewing the agreements included as exhibits to this annual report, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about us or the other parties to the agreements.
The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
| • | should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
| • | have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
| • | may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
| • | were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.
CEMEX • 2023 20-F REPORT • II-4
Table of Contents
| PART III | ||||
SIGNATURES
Cemex, S.A.B. de C.V. hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| Cemex, S.A.B. de C.V. | ||||
| By: | /s/ Fernando Ángel González Olivieri | |||
| Name: | Fernando Ángel González Olivieri | |||
| Title: | Chief Executive Officer | |||
Date: April 26, 2024
CEMEX • 2023 20-F REPORT • II-5
Exhibit 1.2
CEMEX, S.A.B. de C.V.
On March 25, 2024, Cemex, S.A.B. de C.V. (“Cemex” or the “Company”) informed the Mexican Stock Exchange (Bolsa Mexicana de Valores) about the resolutions adopted at Cemex’s Ordinary General Shareholders’ Meeting that was held on March 22, 2024.
The following is an unofficial English translation of the information that was provided to the Mexican Stock Exchange. In the event of any discrepancy between the English translation and the Spanish version of the information provided to the Mexican Stock Exchange, the Spanish version shall prevail:
Summary of the resolutions adopted at the Ordinary General Shareholders’ Meeting held pursuant to article 181 of the Mexican General Corporations Law (Ley General de Sociedades Mercantiles), where 42,804’011,073 (forty-two billion, eight hundred four million, eleven thousand, seventy-three) shares, which are equal to approximately 98.34% (ninety-eight point thirty-four percent) of the 43,524’984,744 (forty-three billion, five hundred twenty-four million, nine hundred eighty-four thousand, seven hundred forty-four) shares with voting rights that constitute the capital stock of the Company, were represented.
In relation to the First Item on the Agenda, by majority vote in favor and with the opposing vote of 129’265,944 (one hundred twenty-nine million, two hundred sixty-five thousand, nine hundred forty-four) shares which represent approximately 0.30% (zero point thirty percent) of the votes present, the following Resolution was adopted:
FIRST: The following is approved:
a) The Chief Executive Officer’s Report regarding the Company’s performance during fiscal year 2023; the Company’s consolidated and separate Financial Statements of Financial Position, Income Statement, Cash Flow Statement, and Statement of Changes in Equity, for fiscal year 2023, together with their complementary notes; the Board of Directors’ Report on the transactions and activities in which it intervened during fiscal year 2023; the Annual Report on the activities of the Audit, Corporate Practices and Finance, and Sustainability, Climate Action, Social Impact and Diversity Committees of the Board of Directors; the Report containing the main accounting policies and guidelines followed in the preparation of financial information, as well as the Report on the Company’s Tax Situation; and
b) The ratification of all acts and actions carried out by the Chief Executive Officer, the Board of Directors, and the Audit, Corporate Practices and Finance, and Sustainability, Climate Action, Social Impact and Diversity Committees of the Board of Directors.
In relation to the Second Item on the Agenda, by majority vote in favor and with the opposing vote of 560,540 (five hundred sixty thousand, five hundred forty) shares which represent approximately 0.00% (zero point zero percent) of the votes present, the following Resolution was adopted:
SECOND: The following is approved:
a) The allocation of profits for the year ended December 31, 2023, including the declaration of a cash dividend, in the following terms:
(amounts in constant millions of Mexican pesos as of December 31, 2023)
| Initial Retained Earnings: |
$ | 66,307 | ||
| Fiscal Year 2023 Earnings: |
$ | 3,320 | ||
|
|
|
| ||
| Earnings Subject to Distribution: |
$ | 69,627 | ||
| Dividend: |
$ | (2,027 | )* | |
|
|
|
| ||
| Remaining Retained Earnings: |
$ | 67,600 | ||
|
|
|
|
* Considering USD $120 million at an exchange rate of MXN $16.8935 per USD $ 1.00 as of December 29, 2023. This amount will be adjusted to the exchange rate available two business days prior to the payment dates.
The allocation of profits includes the declaration of a cash dividend of USD $120,000,000.00 (one hundred and twenty million U.S. dollars 00/100) payable in Mexican pesos at the exchange rate determined by Banco de México (Mexico’s central bank) two business days prior to each payment date, for all of the released shares that make up the capital stock on each payment date. The dividend will be paid in four equal installments in USD. The first installment will be paid starting on June 18, 2024 for coupon 151; the second installment will be paid starting on September 17, 2024 for coupon 152; the third installment will be paid starting on December 11, 2024 for coupon 153; and the fourth and last installment will be paid starting on March 11, 2025 for coupon 154.
b) Mr. Rogelio Zambrano Lozano, Mr. Fernando Ángel González Olivieri, Mr. José Antonio González Flores, Mr. Roger Saldaña Madero, and Mr. René Delgadillo Galván are authorized for any of them to present the notices and make the publications required for the declaration and payment of the approved dividend, as well as to determine and update the exchange rate that is applicable for each dividend installment
In relation to the Third Item on the Agenda, by majority vote in favor and with the opposing vote of 14’835,246 (fourteen million, eight hundred thirty-five thousand, two hundred forty-six) shares which represent approximately 0.34% (zero point thirty-four percent) of the votes present, the following Resolution was adopted:
THIRD: The following is approved:
a) To set the amount of USD $500,000,000.00 (five hundred million U.S. dollars 00/100) or its equivalent in Mexican pesos, as the maximum amount of resources that during fiscal year 2024, and until the next ordinary general shareholder’s meeting is held, Cemex, S.A.B. de C.V. may use for the acquisition of its own shares or securities that represent such shares; and
b) Authorize the Company’s Board of Directors to i) determine the bases on which the acquisition and placement, as may be the case, of said shares shall be instructed; ii) designate the persons that shall make the decisions to acquire or place any such shares or securities; and iii) appoint those responsible for carrying out the transactions and giving the corresponding notices to the authorities. The Board of Directors and/or attorneys-in-fact or delegates appointed at the time, or the persons responsible for such transactions, shall determine in each case, whether the purchase shall be carried out with a charge to stockholders’ equity as long as the shares belong to the Company, or charged to the capital stock, in case it is resolved to convert them into unsubscribed shares to be kept in treasury.
In relation to the Fourth Item on the Agenda, by majority vote in favor and with the opposing vote of 3,503’193,153 (three billion, five hundred three million, one hundred ninety-three thousand, one hundred fifty-three) shares which represent approximately 8.18% (eight point eighteen percent) of the votes present, the following Resolution was adopted:
FOURTH: The following is approved:
a) The extension until December 31, 2028 of the restricted stock incentive plan (“RSIP”) for eligible employees, officers and management of Cemex, S.A.B. de C.V. and its subsidiaries, so that the rights derived from it can be granted or assigned within this new period; and
b) Authorize the Board of Directors to determine the terms and conditions which have not been decided by the Shareholders Meeting, as well as the terms and conditions which are to be fulfilled in order to have a right to acquire the shares and the persons who will participate in the RSIP, which may delegate those operational and formal modifications to the CEO; and
c) The 1,322’164,245 (one billion, three hundred twenty-two million, one hundred sixty-four thousand, two hundred forty-five) shares that are currently in treasury to be subscribed and paid pursuant to the terms and conditions of the RSIP, will continue to be destined to guarantee compliance with the purposes of the RSIP.
In relation to the Fifth Item on the Agenda, by majority vote in favor and with the opposing vote stated in each case and the percentage each represents of the votes present, the following Resolutions were adopted:
FIFTH: The following are designated on an individual basis as members of Cemex, S.A.B. de C.V.’s Board of Directors:
| Board Member |
Type of Board Member |
Votes Against | ||
| ROGELIO ZAMBRANO LOZANO | Non-Independent Director (Criteria: Relevant Executive of the Company) | 458,777,345 (four hundred fifty-eight million, seven hundred seventy-seven thousand, three hundred forty-five) which represent approximately 1.07% (one point zero seven per cent) of the votes present. | ||
| FERNANDO ÁNGEL GONZÁLEZ OLIVIERI | Non-Independent Director (Criteria: Relevant Executive of the Company) | 446,655,108 (four hundred forty-six million, six hundred fifty-five thousand, one hundred eight) which represent approximately 1.04% (one point zero four per cent) of the votes present. | ||
| MARCELO ZAMBRANO LOZANO | Non-Independent Director (Criteria: First degree blood relative of the Chairman of the Board of Directors) | 212,424,927 (two hundred twelve million, four hundred twenty-four thousand, nine hundred twenty-seven) which represent approximately 0.49% | ||
| (zero point forty-nine per cent) of the votes present. | ||||
| ARMANDO J. GARCÍA SEGOVIA | Independent Director | 471,523,233 (four hundred seventy-one million, five hundred twenty-three thousand, two hundred thirty-three) which represent approximately 1.10% (one point ten per cent) of the votes present. | ||
| RODOLFO GARCÍA MURIEL | Independent Director | 1,076,864,665 (one billion, seventy-six million, eight hundred sixty-four thousand, six hundred sixty-five) which represent approximately 2.51% (two point fifty-one per cent) of the votes present. | ||
| FRANCISCO JAVIER FERNÁNDEZ CARBAJAL | Independent Director | 897,452,621 (eight hundred ninety-seven million, four hundred fifty-two thousand, six hundred twenty-one) which represent approximately 2.09% (two point zero nine per cent) of the votes present. | ||
| ARMANDO GARZA SADA | Independent Director | 4,382,127,385 (four billion, three hundred eighty-two million, one hundred twenty-seven thousand, three hundred eighty-five) which represent approximately 10.23% (ten point twenty-three per cent) of the votes present. | ||
| DAVID MARTÍNEZ GUZMÁN | Independent Director | 265,981,165 (two hundred sixty-five million, nine hundred eighty-one thousand, one hundred sixty-five) which represent approximately 0.62% (zero point sixty-two per cent) of the votes present. | ||
| EVERARDO ELIZONDO ALMAGUER | Independent Director | 431,981,833 (four hundred thirty-one million, nine hundred eighty-one thousand, eight hundred thirty-three) which represent approximately 1.00% (one point zero per cent) of the votes present. | ||
| RAMIRO GERARDO VILLARREAL MORALES | Independent Director | 425,163,663 (four hundred twenty-five million, one hundred sixty-three thousand, six hundred sixty-three) which represent approximately 0.99% (zero point ninety-nine per cent) of the votes present. | ||
| GABRIEL JARAMILLO SANINT | Independent Director | 279,847,501 (two hundred seventy-nine million, eight hundred forty-seven thousand, five hundred one) which represent approximately 0.65% (zero point sixty-five per cent) of the votes present. | ||
| ISABEL MARÍA AGUILERA NAVARRO c | Independent Director | 454,240,793 (four hundred fifty-four million, two hundred forty thousand, seven hundred ninety-three) which represent approximately 1.06% (one point zero six per cent) of the votes present. | ||
| MARÍA DE LOURDES MELGAR PALACIOS c | Independent Director | 169,524,879 (one hundred sixty-nine million, five hundred twenty-four thousand, eight hundred seventy-nine) which represent approximately 0.39% (zero point thirty-nine per cent) of the votes present. |
Based on the aforementioned criteria and the information provided by each such person, it was determined that no director designated as independent meets any of the conditions set forth in article 26 of the Mexican Securities Market Law (Ley del Mercado de Valores).
It was approved that the Directors are exempt from granting surety.
SIXTH: The appointment on an individual basis of each of the following persons, as Chairman, Secretary and Alternate Secretary of Cemex, S.A.B. de C.V.’s Board of Directors is approved, respectively, the latter two without being Directors:
|
|
Position |
Votes Against | ||
| ROGELIO ZAMBRANO LOZANO | Chairman | 458,777,345 (four hundred fifty-eight million, seven hundred seventy-seven thousand, three hundred forty-five) which represent approximately 1.07% (one point zero seven per cent) of the votes present. | ||
| ROGER SALDAÑA MADERO | Secretary | 8,393,370 (eight million, three hundred ninety-three thousand, three hundred seventy) which represent approximately 0.01% (zero point zero one per cent) of the votes present. | ||
| RENÉ DELGADILLO GALVÁN | Alternate Secretary | 3,046,720 (three million, forty-six thousand, seven hundred twenty) which represent approximately 0.00% (zero point zero per cent) of the votes present. | ||
In relation to the Sixth Item on the Agenda, by majority vote in favor and with the opposing vote stated in each case and the percentage each represents of the votes present, the following Resolutions were adopted:
SEVENTH: The appointment on an individual basis of each of the following persons as members of the Audit Committee of Cemex’s Board of Directors is approved:
| Board Member |
Votes Against | |||
| EVERARDO ELIZONDO ALMAGUER | 486,260,834 (four hundred eighty-six million, two hundred sixty thousand, eight hundred thirty-four) which represent approximately 1.13% (one point thirteen per cent) of the votes present. | |||
| FRANCISCO JAVIER FERNÁNDEZ CARBAJAL | 961,111,932 (nine hundred sixty-one million, one hundred eleven thousand, nine hundred thirty-two) which represent approximately 2.24% (two point twenty-four per cent) of the votes present. | |||
| GABRIEL JARAMILLO SANINT | 352,305,071 (three hundred fifty-two million, three hundred five thousand, seventy-one) which represent approximately 0.83% (zero point eighty-three per cent) of the votes present. | |||
EIGHT: The appointment on an individual basis of each of the following persons as President, Secretary and Alternate Secretary of the Audit Committee of Cemex’s Board of Directors is approved, respectively, the latter two without being members of such Committee:
|
|
Position |
Votes Against | ||
| EVERARDO ELIZONDO ALMAGUER | President | 486,260,834 (four hundred eighty-six million, two hundred sixty thousand, eight hundred thirty-four) which represent approximately 1.13% (one point thirteen per cent) of the votes present. | ||
| ROGER SALDAÑA MADERO | Secretary | 253,731,037 (two hundred fifty-three million, seven hundred thirty-one thousand, thirty-seven) which represent approximately 0.59% (zero point fifty-nine per cent) of the votes present. | ||
| RENÉ DELGADILLO GALVÁN | Alternate Secretary | 253,731,037 (two hundred fifty-three million, seven hundred thirty-one thousand, thirty-seven) which represent approximately 0.59% (zero point fifty-nine per cent) of the votes present. | ||
In relation to the Seventh Item on the Agenda, by majority vote in favor and with the opposing vote stated in each case and the percentage each represents of the votes present, the following Resolutions were adopted:
NINTH: The appointment on an individual basis of each of the following persons as members of the Corporate Practices and Finance Committee of Cemex’s Board of Directors is approved:
| Board Member |
Votes Against | |||
| FRANCISCO JAVIER FERNÁNDEZ CARBAJAL |
469,125,754 (four hundred sixty-nine million, one hundred twenty-five thousand, seven hundred fifty-four) which represent approximately 1.11% (one point eleven per cent) of the votes present. | |||
| RODOLFO GARCÍA MURIEL | 415,486,336 (four hundred fifteen million, four hundred eighty-six thousand, three hundred thirty-six) which represent approximately 0.97% (zero point ninety-seven per cent) of the votes present. | |||
| RAMIRO GERARDO VILLARREAL MORALES | 309,886,115 (three hundred nine million, eight hundred eighty-six thousand, one hundred fifteen) which represent approximately 0.72% (zero point seventy-two per cent) of the votes present. | |||
TENTH: The appointment on an individual basis of each of the following persons as President, Secretary and Alternate Secretary of the Corporate Practices and Finance Committee of Cemex’s Board of Directors is approved, respectively, the latter two without being members of such Committee:
|
|
Position |
Votes Against | ||
| FRANCISCO JAVIER FERNÁNDEZ CARBAJAL | President | 469,125,754 (four hundred sixty-nine million, one hundred twenty-five thousand, seven hundred fifty-four) which represent approximately 1.11% (one point eleven per cent) of the votes present. |
| ROGER SALDAÑA MADERO | Secretary | 253,249,770 (two hundred fifty-three million, two hundred forty-nine thousand, seven hundred seventy) which represent approximately 0.59% (zero point fifty-nine per cent) of the votes present. | ||
| RENÉ DELGADILLO GALVÁN | Alternate Secretary | 253,249,770 (two hundred fifty-three million, two hundred forty-nine thousand, seven hundred seventy) which represent approximately 0.59% (zero point fifty-nine per cent) of the votes present. | ||
In relation to the Eighth Item on the Agenda, by majority vote in favor and with the opposing vote stated in each case and the percentage each represents of the votes present, the following Resolutions were adopted:
ELEVENTH: The appointment on an individual basis of each of the following persons as members of the Sustainability, Climate Action, Social Impact and Diversity Committee of Cemex’s Board of Directors is approved:
| Board Member |
Votes Against | |||
| ARMANDO J. GARCÍA SEGOVIA | 376,988,293 (three hundred seventy-six million, nine hundred eighty-eight thousand, two hundred ninety-three) which represent approximately 0.88% (zero point eighty-eight per cent) of the votes present. | |||
| MARCELO ZAMBRANO LOZANO | 302,358,952 (three hundred two million, three hundred fifty-eight thousand, nine hundred fifty-two) which represent approximately 0.70% (zero point seventy per cent) of the votes present. | |||
| ISABEL MARÍA AGUILERA NAVARRO | 350,356,578 (three hundred fifty million, three hundred fifty-six thousand, five hundred seventy-eight) which represent approximately 0.81% (zero point eighty-one per cent) of the votes present. | |||
| MARÍA DE LOURDES MELGAR PALACIOS | 319,417,004 (three hundred nineteen million, four hundred seventeen thousand, four) which represent approximately 0.74% (zero point seventy-four per cent) of the votes present. | |||
TWELFTH: The appointment on an individual basis of each of the following persons as President, Secretary and Alternate Secretary of the Sustainability, Climate Action, Social Impact and Diversity Committee of Cemex’s Board of Directors is approved, respectively, the latter two without being members of such Committee:
|
|
Position |
Votes Against | ||
| ARMANDO J. GARCÍA SEGOVIA | President | 376’988,293 (three hundred seventy-six million, nine hundred eighty-eight thousand, two hundred ninety-three) which represent approximately 0.88% (zero point eighty-eight per cent) of the votes present. | ||
| ROGER SALDAÑA MADERO | Secretary | 253,249,770 (two hundred fifty-three million, two hundred forty-nine thousand, seven hundred seventy) which represent approximately 0.59% | ||
| (zero point fifty-nine per cent) of the votes present. | ||||
| RENÉ DELGADILLO GALVÁN | Alternate Secretary | 253,249,770 (two hundred fifty-three million, two hundred forty-nine thousand, seven hundred seventy) which represent approximately 0.59% (zero point fifty-nine per cent) of the votes present. | ||
In relation to the Ninth Item on the Agenda, by majority vote in favor and with the opposing vote of 280’685,804 (two hundred eighty million, six hundred eighty-five thousand, eight hundred four) shares which represent approximately 0.65% (zero point sixty-five percent) of the votes present, the following Resolution was adopted:
THIRTEENTH: Considering that the accumulated inflation in Mexico was 4.66% (four point sixty-six percent), it is approved that the compensation to be paid for attending the meetings of the Board of Directors and the Committees of the Board of Directors of Cemex for the period 2024-2025 shall be increased by a similar percentage, to be, in a gross amount and before taxes, equal to MXN $543,500.00 (five hundred forty-three thousand Mexican pesos 00/100) for each of the Directors per Board meeting attended, and equal to MXN $131,000.00 (one hundred thirty-one thousand Mexican pesos 00/100) for each of the members of the Audit, Corporate Practices and Finance, and Sustainability, Climate Action, Social Impact, and Diversity Committees of the Board of Directors per Committee meeting attended. The members of the committees created by the Board of Directors will receive at most the same compensation as the members of the Audit, Corporate Practices and Finance and Sustainability, Corporate Practices and Finance, and Sustainability, Climate Action, Social Impact, and Diversity Committees of the Board of Directors.
In relation to the Tenth Item on the Agenda, by majority vote in favor and with the opposing vote of 253’249,770 (two hundred fifty-three million, two hundred forty-nine thousand, seven hundred seventy) shares which represent approximately 0.59% (zero point fifty-nine percent) of the votes present, the following Resolution was adopted:
FOURTEENTH: MR. ROGELIO ZAMBRANO LOZANO, MR. FERNANDO ÁNGEL GONZÁLEZ OLIVIERI, MR. ROGER SALDAÑA MADERO, and MR. RENÉ DELGADILLO GALVÁN are appointed to appear, jointly or separately, before a Notary Public of their choice to record the minutes of this Shareholder’s Meeting, to formalize and execute the Resolutions adopted, and to process their registration in the corresponding Public Registry of Commerce, if necessary.
Exhibit 2.6
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
As of the date of our annual report on Form 20-F of which this exhibit is a part, we have the following classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (1) the Series A common stock, with no par value (the “Series A shares”), (2) the Series B common stock, with no par value (the “Series B shares”), (3) Ordinary Participation Certificates (Certificados de Participación Ordinarios), (the “CPOs”), and (4) American Depositary Shares (the “ADSs”). Our CPOs are listed on the Mexican Stock Exchange (Bolsa Mexicana de Valores; the “MSE”) under the symbol “CEMEXCPO.” Our ADSs are listed on the New York Stock Exchange under the symbol “CX.”
As of December 31, 2023, Cemex, S.A.B. de C.V. had outstanding 14,490,870,243 CPOs, 29,016,656,496 Series A shares (including Series A shares underlying CPOs) and 14,508,328,248 Series B shares (including Series B shares underlying CPOs), in each case including shares held by our subsidiaries.
Except as otherwise indicated or the context otherwise requires, the terms “Cemex,” “we,” “us” or “our” refer to Cemex, S.A.B. de C.V. and its consolidated entities.
Description of Common Stock
The following description of our common stock is a summary of the material terms of Cemex, S.A.B. de C.V.’s articles of association and by-laws (estatutos sociales) (the “By-Laws”) and applicable Mexican law in effect as of the date of our annual report on Form 20-F of which this exhibit is a part. Because it is a summary, it does not describe every aspect of our common stock, the By-Laws or Mexican law and may not contain all of the information that is important to you. References to provisions of the By-Laws are qualified in their entirety by reference to the full By-Laws, an English translation of which has been filed as an exhibit to our annual report on Form 20-F of which this exhibit is a part.
General
Pursuant to the requirements of Mexican corporations law, the By-Laws have been registered with the Mercantile Section of the Public Registry of Property and Commerce in Monterrey, Nuevo León, Mexico, under entry number 21, since June 11, 1920.
Cemex, S.A.B. de C.V. is an operating and a holding company engaged directly or indirectly, through its operating subsidiaries, primarily in the production, distribution, marketing and sale of cement, ready-mix concrete, aggregates, clinker and other construction materials, and Urbanization Solutions throughout the world. Cemex, S.A.B. de C.V.’s full corporate purpose can be found in article 2 of the By-Laws.
Cemex, S.A.B. de C.V. has two series of common stock, the Series A shares, which can only be owned by Mexican nationals, and the Series B shares, which can be owned by both Mexican and non-Mexican nationals. The By-Laws state that the Series A shares may not be held by non-Mexican individuals, corporations, groups, units, trusts, associations or governments that are foreign or have participation by foreign governments or their agencies. The By-Laws also state that the Series A shares shall at all times account for a minimum of 64% of Cemex, S.A.B. de C.V.’s total outstanding voting stock and that the Series B shares shall at all times account for a minimum of 36% of Cemex, S.A.B. de C.V.’s total outstanding voting stock. Other than as described herein, holders of the Series A shares and the Series B shares have the same rights and obligations.
In 1994, Cemex, S.A.B. de C.V. changed from a fixed capital corporation to a variable capital corporation in accordance with Mexican corporation law. As a result, Cemex, S.A.B. de C.V. established a fixed capital account and a variable capital account and issued one share of variable capital stock of the same series for each eight shares of fixed capital stock held by any shareholder. Each of our fixed and variable capital accounts is comprised of Series A shares and Series B shares. Under the Mexican Securities Market Law and the By-Laws, holders of shares representing variable capital are not entitled to withdraw those shares.
Shareholder authorization is required to increase or decrease either the fixed capital account or the variable capital account. Shareholder authorization to increase or decrease the fixed capital account must be obtained at an extraordinary meeting of shareholders. Shareholder authorization to increase or decrease the variable capital account must be obtained at an ordinary general meeting of shareholders.
On April 29, 1999, Cemex, S.A.B. de C.V.’s shareholders approved a stock split, and for every one of Cemex, S.A.B. de C.V.’s shares of any series Cemex, S.A.B. de C.V. issued two Series A shares and one Series B share. Concurrently with this stock split, Cemex, S.A.B. de C.V. also consummated an exchange offer to exchange new CPOs and new ADSs representing the new CPOs for Cemex, S.A.B. de C.V.’s then-existing Series A shares, Series B shares and ADSs, and converted Cemex, S.A.B. de C.V.’s then existing CPOs into the new CPOs. On June 1, 2001, the then- effective Mexican Securities Market Law was amended, among other things, to increase the protection granted to minority shareholders of Mexican listed companies and to commence bringing corporate governance procedures of Mexican listed companies in line with international standards.
On February 6, 2002, the Mexican securities authority (Comisión Nacional Bancaria y de Valores) issued an official communication authorizing the amendment of the By-Laws to incorporate additional provisions to comply with the then new provisions of the then-effective Mexican Securities Market Law. Following approval from Cemex, S.A.B. de C.V.’s shareholders at the 2002 annual shareholders’ meeting, Cemex, S.A.B. de C.V. amended and restated the By-Laws to incorporate these additional provisions, which consisted of, among other things, protective measures to prevent share acquisitions, hostile takeovers, and direct or indirect changes of control.
On March 19, 2003, the Mexican securities authority issued new regulations designed to (i) further implement minority rights granted to shareholders by the then-effective Mexican Securities Market Law and (ii) simplify and consolidate in a single document provisions relating to securities offerings and periodic reports by Mexican-listed companies.
On April 24, 2003, Cemex, S.A.B. de C.V.’s shareholders approved changes to the By-Laws, incorporating additional provisions and removing some restrictions. The changes that are still in force are as follows:
| • | The limitation on Cemex, S.A.B. de C.V.’s variable capital was removed. Formerly, Cemex, S.A.B. de C.V.’s variable capital was limited to ten times Cemex, S.A.B. de C.V.’s minimum fixed capital. |
| • | Increases and decreases in Cemex, S.A.B. de C.V.’s variable capital now require the notarization of the minutes of the ordinary general shareholders’ meeting that authorize such increase or decrease, as well as the filing of these minutes with the Mexican National Securities Registry (Registro Nacional de Valores), except when such increase or decrease results from stock repurchases. |
| • | The cancelation of registration of our shares in the Securities Section of the Mexican National Securities Registry now involves an amended procedure, which is described below under “—Repurchase Obligation.” In addition, any amendments to the article containing these provisions no longer require the consent of the Mexican securities authority and 95% approval by shareholders entitled to vote. |
On December 30, 2005, the Mexican Securities Market Law was published to continue bringing corporate governance requirements of Mexican listed companies in line with international standards. This new law included provisions increasing disclosure information requirements, improving minority shareholder rights and strengthening corporate governance standards, including the introduction of new requirements and fiduciary duties (duties of care and loyalty) applicable to each director, officer, external auditor and major shareholder of publicly traded companies. The law also provided that each member of the audit committee must be an independent director and required the creation of corporate governance committees integrated by independent directors as well. In addition, the law clarified directors’ duties, specified safe harbors for directors’ actions, clarified what is deemed as a conflict of interest and clarified what are the confidentiality obligations for directors.
Under the then new Mexican Securities Market Law, Cemex, S.A.B. de C.V. was required to adopt specific amendments to the By-Laws within 180 days of the effective date of the new law. Following approval from Cemex, S.A.B. de C.V.’s shareholders at its extraordinary shareholders’ meeting held on April 27, 2006, Cemex, S.A.B. de C.V. amended and restated the By-Laws to incorporate these amendments. The amendments to the By-Laws became effective on July 3, 2006. The most significant of these amendments were as follows:
| • | The change of its corporate name from Cemex, S.A. de C.V. to Cemex, S.A.B. de C.V., which means that it is now called a publicly traded company (sociedad anónima bursátil or S.A.B.). |
| • | The creation of a Corporate Practices Committee, which was a new committee of Cemex, S.A.B. de C.V.’s Board of Directors and which is comprised exclusively of independent directors. |
| • | The elimination of the position of statutory examiner (comisario) and the assumption of its responsibilities by the Board of Directors through the Audit Committee and the then new Corporate Practices Committee, as well as through the external auditor who audits Cemex, S.A.B. de C.V.’s financial statements, each within its professional role. |
| • | The express attribution of certain duties (such as the duty of loyalty and the duty of care) and liabilities on members of the Board of Directors as well as on certain senior executive officers. |
| • | The implementation of a mechanism for claims of a breach of a director’s or officer’s duties, to be brought by us or by holders of 5% or more of Cemex, S.A.B. de C.V.’s shares. |
| • | The Chief Executive Officer is now the person in charge of managing the company. Previously, this was the duty of the Board of Directors. The Board of Directors now supervises the Chief Executive Officer. |
| • | Shareholders are given the right to enter into certain agreements with other shareholders. |
On March 20, 2014, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved, among other items, the Board of Directors’ proposal to expand the corporate purpose of Cemex, S.A.B. de C.V. so that, aside from being a holding company, Cemex, S.A.B. de C.V. can undertake operating activities related to the production and commercialization of cement, ready-mix concrete and aggregates.
On March 26, 2015, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved, among other items, changes to the By-Laws, incorporating additional provisions and removing some restrictions. The changes, among other items, are the following: extend Cemex, S.A.B. de C.V.’s corporate existence for an indefinite period of time; adopt the electronic system established by the Ministry of Economy (Secretaría de Economía) for the publication of notices and other legal matters; remove a redundancy in minority rights; adopt additional considerations that Cemex, S.A.B. de C.V.’s Board of Directors shall consider in order to authorize purchases of 2% or more of shares; adopt provisions to improve corporate governance with respect to the presidency at shareholders’ meetings and corporate bodies; separation of roles of chairman of the board and Chief Executive Officer; include the possibility of electing an alternate secretary of the Board of Directors; authorization to formalize Cemex, S.A.B. de C.V.’s restated By-Laws; and authorization to exchange the share certificates that represent Cemex, S.A.B. de C.V.’s then outstanding capital stock.
On March 28, 2019, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved, among other items, changes to articles 2 and 28 of the By-Laws, incorporating additional provisions and removing some restrictions. The changes, among other items, are the following: broadening Cemex, S.A.B. de C.V.’s corporate purpose, which would permit Cemex to transport goods; amending the provision regarding seaport related services for its marine terminals; the manufacture and commercialization of cement bags, etc.; and clarifying that Cemex, S.A.B. de C.V.’s Relevant Executives (as defined under the laws of Mexico) are entitled to indemnification and liability protection only for liability arising from the lack of diligence when acting in good faith and pursuant to our best interests.
On March 25, 2021, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved changes to Article 2 of Cemex, S.A.B. de C.V.’s by-laws to further broaden Cemex, S.A.B. de C.V.’s corporate purpose. The changes, among other things, adjust our written corporate purpose in order to allow us to conduct certain activities, directly or indirectly through third parties, in line with our current needs and corporate vision.
On March 24, 2022, Cemex, S.A.B. de C.V. held an extraordinary shareholders’ meeting, at which its shareholders approved changes to Article 2 of Cemex, S.A.B. de C.V.’s by-laws to detail Cemex, S.A.B. de C.V.’s corporate purpose so that it will list only those activities it currently carries out; and cease contemplating those activities it does not perform or that are already included in another part of the by-laws.
Changes in Capital Stock and Preemptive Rights
Subject to certain exceptions discussed below, the By-Laws allow for a decrease or increase in its capital stock if it is approved by its shareholders at a shareholders’ meeting. Additional shares of Cemex, S.A.B. de C.V.’s capital stock, having no voting rights or limited voting rights, are authorized by the By-Laws and may be issued upon the approval of its shareholders at a shareholders’ meeting, with the prior approval of the Mexican securities authority. The By-Laws provide that, subject to certain exceptions, shareholders have preemptive rights with respect to the class and in proportion to the number of shares of our capital stock they hold, in connection with any capital increase in the number of outstanding Series A shares, Series B shares or any other existing series of shares, as the case may be. Subject to certain requirements: (i) under article 53 of the Mexican Securities Market Law, this preemptive right to subscribe is not applicable to increases of Cemex, S.A.B. de C.V.’s capital through public offers and (ii) under article 210-bis of the General Law of Negotiable Instruments and Credit Operations (Ley General de Títulos y Operaciones de Crédito), this preemptive right to subscribe is not applicable when issuing shares under convertible notes. Preemptive rights give shareholders the right, upon any issuance of shares by us, to purchase a sufficient number of shares to maintain their existing ownership percentages. Preemptive rights must be exercised within the period and under the conditions established for that purpose by the shareholders, and the By-Laws and applicable law provide that this period must be 15 days following the publication of the notice of the capital increase through the electronic system established by the Ministry of Economy (Secretaría de Economía) or, in its absence, in the Official Gazette of the State of Nuevo León (Periódico Oficial del Estado de Nuevo León) or in any major newspaper published and distributed in the city of Monterrey, Nuevo León, México.
Holders of ADSs that are U.S. persons or are located in the U.S. may be restricted in their ability to participate in the exercise of such preemptive rights.
Pursuant to the By-Laws, significant acquisitions of shares of Cemex, S.A.B. de C.V.’s capital stock and changes of control of Cemex, S.A.B. de C.V. require prior approval from Cemex, S.A.B. de C.V.’s Board of Directors. Cemex, S.A.B. de C.V.’s Board of Directors must authorize in advance any transfer of, or creation of any encumbrance or lien on, voting shares of Cemex, S.A.B. de C.V.’s capital stock that would result in any person or group becoming a holder of 2% or more of Cemex, S.A.B. de C.V.’s shares. Cemex, S.A.B. de C.V.’s Board of Directors shall consider the following when determining whether to authorize such transfer of voting shares: a) the type of investors involved; b) if stock prices may be affected or if the number of Cemex, S.A.B. de C.V.’s shares outstanding would be reduced in such way that marketability may be affected; c) whether the acquisition would result in the potential acquirer exercising a significant influence or being able to obtain control; d) whether all applicable rules and the By-Laws have been observed by the potential acquirer; e) whether the potential acquirers are our competitors or are persons or legal entities participating in companies, entities or persons that are or competitors and whether there is a risk of affecting market competition, or the potential acquirers could have access to confidential and privileged information; f) the morality and economic solvency of the potential acquirers; g) the protection of minority rights and the rights of our employees; and h) whether an adequate base of investors would be maintained. If Cemex, S.A.B. de C.V.’s Board of Directors denies the authorization, or the transfer had been authorized on the basis of false or incorrect information or information had been withheld or the requirements established in the By-Laws are not complied with, the persons involved in the transfer shall not be entitled to exercise the voting rights corresponding to the transferred shares, such shares shall not be taken into account for the determination of the quorums of attendance and voting at shareholders’ meetings and the transfers shall not be recorded or have any effect in our share registry and the registry undertaken by S.D. Indeval, Institución para el Depósito de Valores, S.A. de C.V. (“Indeval”), the Mexican securities depositary.
Any acquisition of shares of Cemex, S.A.B. de C.V.’s capital stock representing 30% or more of its capital stock by a person or group of persons requires prior approval from Cemex, S.A.B. de C.V.’s Board of Directors and, in the event approval is granted, the acquirer has an obligation to make a public offer to purchase all of the outstanding shares of Cemex, S.A.B. de C.V.’s capital stock.
In the event the requirements for significant acquisitions of shares of Cemex, S.A.B. de C.V.’s capital stock are not met, the persons acquiring such shares will not be entitled to any corporate rights with respect to such shares, such shares will not be taken into account for purposes of determining a quorum for shareholders’ meetings, Cemex, S.A.B. de C.V. will not record such persons as holders of such shares in its share registry and the registry undertaken by Indeval shall not have any effect. The By-Laws require the stock certificates representing shares of its capital
stock to make reference to the provisions in the By-Laws relating to the prior approval of the Cemex, S.A.B. de C.V. Board of Directors for significant share transfers and the requirements for recording share transfers in its share registry. In addition, shareholders are responsible for informing Cemex, S.A.B. de C.V. within five business days whenever their shareholdings exceed 5%, 10%, 15%, 20%, 25% and 30% of Cemex, S.A.B. de C.V.’s capital stock. If a person acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission (the “SEC”) under the Exchange Act) of 20% or more in voting power of the outstanding voting stock of Cemex, S.A.B. de C.V., a change of control will be deemed to have occurred under the Credit Agreements and other debt agreements of Cemex.
Cemex, S.A.B. de C.V. is required to maintain a share registry to record the names, nationalities and domiciles of all significant shareholders, and any shareholder that meets or exceeds these thresholds must be recorded in this registry if such shareholder is to be recognized or represented at any shareholders’ meeting. If a shareholder fails to inform Cemex, S.A.B. de C.V. of its shareholdings reaching a threshold as described above, we will not record the transactions that cause such threshold to be met or exceeded in Cemex, S.A.B. de C.V.’s share registry, and such transaction will have no legal effect and will not be binding on us.
The By-Laws also require that its shareholders comply with legal provisions regarding acquisitions of securities and certain shareholders’ agreements that require disclosure to the public.
Repurchase Obligation
In accordance with Mexican securities regulations, Cemex, S.A.B. de C.V. is obligated to make a public offer for the purchase of stock to its shareholders if Cemex, S.A.B. de C.V.’s registration with the Mexican securities registry is canceled, either by resolution of its shareholders or by an order of the Mexican securities authority. The minimum price at which we must purchase the stock is the higher of:
| • | the weighted average price per share based on the weighted average trading price of Cemex, S.A.B. de C.V.’s CPOs on the MSE during the latest period of 30 trading days preceding the date of the offer, for a period not to exceed six months; or |
| • | the book value per share, as reflected in the last quarterly report filed with the Mexican securities authority and the MSE before the date of the offer. |
Cemex, S.A.B. de C.V.’s Board of Directors shall prepare and disclose to the public through the MSE, within ten business days after the day the public offer begins, and after consulting the Corporate Practices and Finance Committee, its opinion regarding the price of the offer and any conflicts of interests that each of its members may have regarding such offer. This opinion may be accompanied by an additional opinion issued by an independent expert that we may hire.
Following the cancelation of Cemex, S.A.B. de C.V.’s registration with the Mexican securities registry, it must place in a trust set up for that purpose for a six-month period an amount equal to that required to purchase the remaining shares held by investors who did not participate in the offer.
Shareholders’ Meetings and Voting Rights
Shareholders’ meetings may be called by:
| • | Cemex, S.A.B. de C.V.’s Board of Directors or the Corporate Practices and Finance Committee and Audit Committee; |
| • | shareholders representing at least 10% of outstanding and fully paid shares, by making a request to the chairman of Cemex, S.A.B. de C.V.’s Board of Directors or Cemex, S.A.B. de C.V.’s Corporate Practices and Finance Committee and Audit Committee; |
| • | any shareholder (i) if no meeting has been held for two consecutive years or when the matters referred to in Article 181 of the Mexican corporations law have not been dealt with or (ii) when, for any reason, the required quorum for valid sessions of the Corporate Practices and Finance Committee and Audit Committee was not reached and the Board of Directors failed to make the appropriate provisional appointments; or |
| • | a Mexican court of competent jurisdiction, in the event Cemex, S.A.B. de C.V.’s Board of Directors or the Corporate Practices and Finance Committee and Audit Committee do not comply with the valid shareholders’ request described above. |
Notice of shareholders’ meetings must be published through the electronic system established by the Ministry of Economy (Secretaría de Economía) or, in its absence, in the Official Gazette of the State of Nuevo León (Periódico Oficial del Estado de Nuevo León), Mexico or in any major newspaper published and distributed in the city of Monterrey, Nuevo León, Mexico. The notice must be published at least 15 days prior to the date of any shareholders’ meeting. Consistent with Mexican law, the By-Laws further require that all information and documents relating to the shareholders’ meeting be available to shareholders from the date the notice of the meeting is published.
General shareholders’ meetings can be ordinary or extraordinary. At every general shareholders’ meeting, each qualified holder of Series A shares and Series B shares is entitled to one vote per share. Shareholders may vote by proxy duly appointed in writing. Under the CPO trust agreement, holders of CPOs who are not Mexican nationals cannot exercise voting rights corresponding to the Series A shares represented by their CPOs, in which case the CPO trustee (as defined below) will vote the underlying Series A shares in the same manner as the holders of the majority of the voting shares.
An annual general ordinary shareholders’ meeting must be held during the first four months after the end of each of Cemex, S.A.B. de C.V.’s fiscal year to consider the approval of a report of its Board of Directors regarding Cemex, S.A.B. de C.V.’s performance and its financial statements for the preceding fiscal year and to determine the allocation of profits from the preceding year. In addition, Cemex, S.A.B. de C.V.’s annual general ordinary shareholders’ meeting must:
| • | review the annual reports of Cemex, S.A.B. de C.V.’ Corporate Practices and Finance Committee and Audit Committee, its Chief Executive Officer and its Board of Directors; |
| • | elect, remove, or substitute the members of Cemex, S.A.B. de C.V.’s Board of Directors, which are voted on an individual basis; |
| • | determine the level of independence of the members of Cemex, S.A.B. de C.V.’s Board of Directors; |
| • | elect or remove the chairman of Cemex, S.A.B. de C.V.’s Corporate Practices and Finance and the Audit Committees; |
| • | approve any transaction that represents 20% or more of Cemex, S.A.B. de C.V. consolidated assets; and |
| • | resolve any issues not reserved for extraordinary shareholders’ meetings. |
A general extraordinary shareholders’ meeting may be called at any time to deal with any of the matters specified by Article 182 of the Mexican corporations law, which include, among other things:
| • | extending Cemex, S.A.B. de C.V.’s corporate existence; |
| • | Cemex, S.A.B. de C.V.’s voluntary dissolution; |
| • | increasing or reducing Cemex, S.A.B. de C.V.’s fixed capital stock; |
| • | changing Cemex, S.A.B. de C.V.’s corporate purpose; |
| • | changing Cemex, S.A.B. de C.V.’s country of incorporation; |
| • | changing Cemex, S.A.B. de C.V.’s form of organization; |
| • | a proposed merger; |
| • | issuing preferred shares; |
| • | redeeming Cemex, S.A.B. de C.V.’s own shares; |
| • | any amendment to the By-Laws; and |
| • | issuing bonds to be registered in the Mexican National Securities Registry |
| • | any other matter for which a special quorum is required by law or by the By-Laws. |
In order to vote at a meeting of shareholders, shareholders must (i) appear on the list that Indeval and Indeval participants holding shares on behalf of the shareholders prepare prior to the meeting, or (ii) prior to the meeting, deposit the certificates representing their shares at Cemex, S.A.B. de C.V.’s offices or in a Mexican credit institution or brokerage house that operates in accordance with applicable laws in Mexico. The certificate of deposit with respect to the share certificates must be presented to Cemex, S.A.B. de C.V.’s company secretary at least 48 hours before a meeting of shareholders. Cemex, S.A.B. de C.V.’s company secretary verifies that the person in whose favor any certificate of deposit was issued is named in Cemex, S.A.B. de C.V.’s share registry and issues an admission pass authorizing that person’s attendance at the meeting of shareholders.
The By-Laws provide that a shareholder may only be represented by proxy in a shareholders’ meeting with a duly completed form provided by Cemex, S.A.B. de C.V. authorizing the proxy’s presence. In addition, the By-Laws require that the secretary acting at the shareholders’ meeting publicly affirm the compliance by all proxies with this requirement. A shareholders’ resolution is required to take action on any matter presented at a shareholders’ meeting.
At an ordinary shareholders’ meeting, the affirmative vote of the holders of a majority of the shares present at the meeting is required to adopt a shareholders’ resolution. At an extraordinary meeting of shareholders, the affirmative vote of at least 50% of the capital stock is required to adopt a shareholders’ resolution, except that when amending Article 7 (with respect to measures limiting shareholding ownership), Article 10 (relating to the register of shares and significant participations) or Article 22 (specifying the impediments to being appointed a member of Cemex, S.A.B. de C.V.’s Board of Directors) of the By-Laws, the affirmative vote of at least 75% of the voting stock is required.
The attendance quorum for a general ordinary shareholders’ meeting upon the first call is 50% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares and, for the second call, is any number of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares. If the quorum is not met upon the first call, a subsequent meeting may be called and the quorum for the second ordinary shareholders’ meeting is any number of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares represented at the meeting. The attendance quorum for the extraordinary shareholders’ meeting upon the first call is 75% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares and, upon the second and subsequent calls, is 50% of Cemex, S.A.B. de C.V.’s outstanding and fully paid shares.
Rights of Minority Shareholders
At Cemex, S.A.B. de C.V.’s annual general ordinary shareholders’ meeting, any shareholder or group of shareholders representing 10% or more of its voting stock has the right to appoint or remove one member of Cemex, S.A.B. de C.V.’s Board of Directors, in addition to the directors appointed by the majority. Such appointment may only be revoked by other shareholders when the appointment of all other directors is also revoked. The By-Laws provide that holders of at least 10% of its outstanding capital stock are entitled to demand the postponement of the voting on any resolution of which they deem they have not been sufficiently informed.
Under Mexican law, holders of at least 20% of Cemex, S.A.B. de C.V.’s outstanding capital stock are entitled to vote on a particular matter they oppose on any resolution at a shareholders’ meeting by filing a petition with a court of law for a court order to suspend the resolution temporarily within 15 days after the adjournment of the meeting at which that action was taken and showing that the challenged action violates Mexican law or the By-Laws, provided the opposing shareholders deliver a bond to the court to secure payment of any damages that we suffer as a result of suspending the resolution in the event that the court ultimately rules against the opposing shareholders. Relief under these provisions is only available to holders who were entitled to vote on, or whose rights as shareholders were adversely affected by, the challenged shareholder action and whose shares were not represented when the action was taken or, if represented, voted against it.
Under Mexican law, an action for civil liabilities against directors may be initiated by a shareholders’ resolution for violation of their duty of loyalty to shareholders. In the event shareholders decide to bring an action of this type, the persons against whom that action is brought will immediately cease to be directors. Additionally, shareholders representing not less than 33% of the outstanding shares may directly exercise that action against the directors; provided that:
| • | those shareholders shall not have voted against exercising such action at the relevant shareholders’ meeting; and |
| • | the claim covers all of the damage alleged to have been caused to us and not merely the damage suffered by the plaintiffs. |
Under the By-Laws, shareholders representing 5% or more of its outstanding capital stock may initiate actions exclusively on behalf of Cemex, S.A.B. de C.V. against members of its Board of Directors, its Corporate Practices and Finance Committee and Audit Committee, its Chief Executive Officer, or any relevant executives, for breach of their duty of care or duty of loyalty to shareholders or for committing illicit acts or activities. The only requirement is that the claim covers all of the damage alleged to have been caused to us or any entities on which we have a significant influence and not merely the damage suffered by the plaintiffs. Actions initiated on these grounds have a five-year statute of limitations from the day of the act or action that caused the damage.
Any recovery of damages with respect to these actions will be for Cemex, S.A.B. de C.V.’s benefit and not that of the shareholders bringing the action.
Registration and Transfer
Cemex, S.A.B. de C.V.’s common stock is evidenced by share certificates in registered form with registered dividend coupons attached. Shareholders who have not deposited their shares into the CPO trust may hold their shares in the form of physical certificates or through institutions that have accounts with Indeval. Accounts may be maintained at Indeval by brokers, banks and other entities approved by the Mexican securities authority. Cemex, S.A.B. de C.V. maintains a stock registry, and, in accordance with Mexican Law, only those holders listed in Cemex, S.A.B. de C.V.’s stock registry and those holding certificates issued by Indeval and by Indeval participants indicating ownership are recognized as Cemex, S.A.B. de C.V. shareholders.
Pursuant to Mexican law, any transfer of shares must be registered in Cemex, S.A.B. de C.V.’s stock registry, if effected physically, or through book entries that may be tracked back from Cemex, S.A.B. de C.V.’s stock registry to the records of Indeval.
Redemption
Cemex, S.A.B. de C.V.’s capital stock is subject to redemption upon approval of our shareholders at an extraordinary shareholders’ meeting.
Share Repurchases
If approved by Cemex, S.A.B. de C.V.’s shareholders at a general shareholders’ meeting, we may purchase Cemex, S.A.B. de C.V.’s outstanding shares. The economic and voting rights corresponding to repurchased shares cannot be exercised during the period the shares are owned by us and the shares will be deemed outstanding for purposes of calculating any quorum or vote at any shareholders’ meeting. We may also repurchase our equity securities on the MSE at the then prevailing market prices in accordance with Mexican securities law. If we intend to repurchase shares representing more than 1% of Cemex, S.A.B. de C.V.’s outstanding shares at a single trading session, we must inform the public of such intention at least ten minutes before submitting our bid. If we intend to repurchase shares representing 3% or more of Cemex, S.A.B. de C.V.’s outstanding shares during a period of 20 trading days, we are required to conduct a public tender offer for such shares. We must conduct share repurchases as per the framework authorized by Cemex, S.A.B. de C.V.’s Board of Directors and through the person or persons approved by Cemex, S.A.B. de C.V.’s Board of Directors, through a single broker dealer during the relevant trading session and without submitting bids during the first and the last 30 minutes of each trading session. We must inform the MSE of the results of any share repurchase no later than the business day following any such share repurchase.
Directors’ and Shareholders’ Conflict of Interest
Under Mexican law, any shareholder who has a conflict of interest with Cemex, S.A.B. de C.V. with respect to any transaction is obligated to disclose such conflict and is prohibited from voting on that transaction. A shareholder who violates this prohibition may be liable for damages if the relevant transaction would not have been approved without that shareholder’s vote.
Under Mexican law, any director who has a conflict of interest with Cemex, S.A.B. de C.V. in any transaction must disclose that fact to the other directors and is prohibited from participating and being present during the deliberations and voting on that transaction. A director who violates this prohibition will be liable for damages and lost profits. Additionally, Cemex, S.A.B. de C.V.’s directors may not represent shareholders in our shareholders’ meetings.
Withdrawal Rights
Whenever Cemex, S.A.B. de C.V.’s shareholders approve a change of corporate purpose, change of nationality or transformation from one form of corporate organization to another, Mexican law provides that any shareholder entitled to vote on that change who has voted against it may withdraw from Cemex, S.A.B. de C.V. and receive an amount equal to the book value (in accordance with the latest statement of financial position approved by the annual general ordinary shareholders’ meeting) attributable to such shareholder’s shares, provided that such shareholder exercises that right within 15 days following the meeting at which the change was approved.
Dividends
At each annual general ordinary shareholders’ meeting, Cemex, S.A.B. de C.V.’s Board of Directors submits, for approval by its shareholders, its financial statements together with a report on them prepared by its Board of Directors and the statutory auditors. Cemex, S.A.B. de C.V.’s shareholders, once they have approved the financial statements, determine the allocation of our net income, after provision for income taxes, legal reserve and statutory employee profit sharing payments, for the preceding year. All shares of Cemex, S.A.B. de C.V.’s capital stock outstanding at the time a dividend or other distribution is declared are entitled to share equally in that dividend or other distribution.
Liquidation Rights
In the event Cemex, S.A.B. de C.V. is liquidated, the surplus assets remaining after payment of all its creditors will be divided among Cemex, S.A.B. de C.V.’s shareholders in proportion to the respective shares held by them. The liquidator may, with the approval of Cemex, S.A.B. de C.V.’s shareholders, distribute the surplus assets in kind among Cemex, S.A.B. de C.V.’s shareholders, sell the surplus assets and divide the proceeds among Cemex, S.A.B. de C.V.’s shareholders or put the surplus assets to any other uses agreed to by a majority of Cemex, S.A.B. de C.V.’s shareholders voting at an extraordinary shareholders’ meeting.
Description of CPOs
The following description of our CPOs is a summary of the material terms of our CPOs. Because it is a summary, it does not describe every aspect of our CPOs and may not contain all of the information that is important to you. For more information, please see the Bylaws, an English translation of which has been filed as an exhibit to our annual report on Form 20-F of which this exhibit is a part. References to provisions of the By-Laws are qualified in their entirety by reference to the full By-Laws.
General
Our CPOs are issued under the terms of a CPO trust agreement. The CPOs and the CPO trust agreement are governed by Mexican law. The CPO trust agreement established a master trust that, among other things, enables non-Mexican investors to acquire CPOs representing financial interests in our common stock, of which the Series A shares may otherwise be acquired directly only by Mexican investors. CPOs, which are negotiable instruments under Mexican law, are issued by Banco Nacional de México, S.A., which is the trustee of the CPO trust (the “CPO trustee”) pursuant to the terms of the CPO trust agreement. As of December 31, 2023, a total of 29,016,656,496 Series A shares and 14,508,328,248 Series B shares outstanding were held by the CPO trust. Each CPO represents two Series A shares and one Series B share. A portion of the CPOs is represented by ADSs.
Transfer and Withdrawal of CPOs
Under the terms of the CPO trust agreement, the CPO trustee may accept Series A shares and Series B shares against the issuance and release of CPOs. Each CPO represents two Series A shares and one Series B share. All Series A shares and Series B shares underlying the CPOs are held in trust by the CPO trustee in accordance with the terms and conditions of the CPO trust agreement. Those shares are registered in the name of the CPO trustee. The CPO trust operates through Indeval, the central depository for participants trading on the Mexican Securities Exchange, which maintains ownership records of the CPOs in book-entry form.
The CPO trustee will deliver CPOs in respect of the shares as described above. All CPOs are evidenced by a single certificate, the global CPO. CPOs are issued to and deposited in accounts maintained by the purchasers at Indeval. Ownership of CPOs deposited with Indeval is shown on, and transfer of the ownership of CPOs is effected through, records maintained by Indeval and Indeval participants. Holders of CPOs are not entitled to receive physical certificates evidencing their CPOs but may request certificates issued by Indeval and the relevant Indeval participants indicating ownership of CPOs. Holders of CPOs, including Mexican nationals, are not entitled to withdraw the Series A shares or Series B shares that are held in the CPO trust.
Dividends, Other Distributions and Rights
Holders of CPOs are entitled to receive the economic benefits to which they would be entitled if they were the holders of the Series A shares and Series B shares underlying those CPOs at the time that we declare and pay dividends or make distributions to holders of Series A shares and Series B shares. The CPO trustee will distribute cash dividends and other cash distributions received by it in respect of the Series A shares and Series B shares held in the CPO trust to the holders of CPOs in proportion to their respective holdings, in each case in the same currency in which they were received. The CPO trustee will distribute those cash dividends and other cash distributions through Indeval as custodian of the CPOs. Dividends paid with respect to CPOs deposited with Indeval will be distributed to the holders on the business day following the date on which the funds are received by Indeval.
If we pay a dividend in shares of our stock, those shares will be distributed to the CPO trustee who will hold those shares in the CPO trust for the benefit of CPO holders entitled thereto, and the CPO trustee, if the shares so received constitute units identical to the unit of securities then represented by a CPO, will distribute to the holders of outstanding CPOs, in proportion to their holdings, additional CPOs representing economic interests in the total number of shares received by the CPO trustee as that dividend. If the shares of stock so received do not constitute units of securities identical to the unit of securities then represented by a CPO, the CPO trustee will cause the securities received to be delivered to the CPO holders entitled thereto and as permitted under applicable law.
If we offer the holders of Series A shares and Series B shares the right to subscribe for additional Series A shares or Series B shares, the CPO trustee, subject to applicable laws, will offer to each holder of CPOs the right to instruct the CPO trustee to subscribe for that holder’s proportionate share of those additional Series A shares or Series B shares, subject to that holder’s providing the CPO trustee with the funds necessary to subscribe for those additional shares. The CPO trustee will offer those rights to a CPO holder only if that offer is legal and valid under the provisions of the laws of the country of residence of that CPO holder. Neither we nor the CPO trustee is obligated to register those rights, the CPOs or the underlying shares under the Securities Act. If CPO trust holders are offered those rights and if CPO holders provide the CPO trustee with the necessary funds, the CPO trustee will subscribe for the corresponding number of shares, which will be held in the CPO trust for the benefit of the subscribing holders, and if the shares so received constitute units identical to the unit of securities then represented by a CPO it will deliver additional CPOs representing those underlying shares to the applicable CPO holders.
Changes Affecting Underlying Shares
If as a result of a redemption of our common stock any underlying shares held in the CPO trust are called for redemption, the CPO trustee will proceed in accordance with the resolutions adopted by shareholders at the meeting of shareholders that authorizes the redemption and repurchase of the corresponding CPOs. See “—Description of Common Stock—Redemption.”
Voting of Series A Shares
Mexican holders of CPOs shall be entitled to attend our shareholders’ meetings for purposes of representing and exercising the voting rights of the Series A shares underlying their CPOs.
Under the CPO trust agreement, holders of CPOs who are not Mexican nationals cannot exercise voting rights with respect to the Series A shares represented by their CPOs. At our shareholders’ meetings the Series A shares of non-Mexican holders held in the CPO trust will be voted by the CPO trustee in the same manner as the votes cast by the majority of Mexican holders of Series A shares and holders of Series B shares voting at the meeting. The nationality of a holder of CPOs is established by reference to the information contained in the CPO registry book of the CPO trust. A Mexican national constitutes either:
| • | an individual of Mexican nationality; or |
| • | a Mexican corporation whose articles of association exclude foreign investors from owning or controlling, either directly or indirectly, a majority of its capital stock. |
CPOs represented by ADSs will be deemed owned by non-Mexican nationals.
The CPO trustee shall attend our shareholders’ meetings to represent and vote the Series A shares underlying the CPOs held by Mexicans for which no instructions were received from the holders of those CPOs. The technical committee under the trust shall have the power to cooperate with the CPO trustee’s exercise of its corporate rights with respect to the Series A shares underlying the CPOs.
Voting of Series B Shares
All holders of CPOs shall be entitled to attend our shareholders’ meetings for purposes of representing and exercising the voting rights of the Series B shares underlying their CPOs. The CPO trustee shall attend our shareholders’ meetings to represent and vote the Series B shares underlying the CPOs for which no instructions were received from the holders of the CPOs. The technical committee under the trust shall have the power to cooperate with the CPO trustee’s exercise of its corporate rights with respect to the Series B shares underlying the CPOs.
Voting at CPO Holders’ Meetings
Whenever we call a meeting of holders of CPOs, Mexican and non-Mexican holders of CPOs, whether they hold their CPOs directly or in the form of ADSs, will have the right to give instructions to vote the CPOs at the meeting.
The following table sets forth the method of voting for each security contained in a CPO:
| Securities Contained in a CPO | Method for Voting | |
| Series A shares represented by CPOs held by non-Mexican nationals (all CPOs represented by ADSs are deemed held by non-Mexican persons). | CPO trustee will vote the Series A shares in accordance with the majority of all Series A shares held by Mexican nationals and Series B shares voted at the meeting. | |
| Series A shares represented by CPOs held by Mexican nationals: | ||
| • If the CPO holder timely instructs the trustee as to voting. |
||
| • If the CPO holder makes timely arrangements with the CPO trustee to attend the shareholders’ meeting in person. |
CPO holder may attend the shareholders’ meeting and vote the Series A shares in person. | |
| • If the CPO holder does not timely instruct the CPO trustee as to voting or does not make timely arrangements with the CPO trustee to attend the shareholders’ meeting in person. |
CPO trustee will vote the Series A shares in cooperation with the technical committee. | |
| Series B shares represented by CPOs, whether held by Mexican or non-Mexican persons: | ||
| • If the CPO holder timely instructs the CPO trustee as to voting.CPO trustee will vote the Series B shares in accordance with the CPO |
CPO trustee will vote the Series B shares in accordance with the CPO holder’s instructions. | |
| • If the CPO holder makes timely arrangements with the CPO trustee to attend the shareholders’ meeting in person. |
CPO holder may attend the shareholders’ meeting and vote the Series B shares in person. | |
| • If the CPO holder does not timely instruct the CPO trustee as to voting or does not make timely arrangements with the CPO trustee to attend the shareholders’ meeting in person. |
CPO trustee will vote the Series B shares in cooperation with the technical committee. | |
Administration of the CPO Trust
Under the terms of the CPO trust agreement, the CPO trust is managed by the CPO trustee under the direction of a technical committee, which must consist of at least three members. Substitute members may also be appointed, who may substitute for any of the members. Technical committee meetings may also be attended by the CPO trustee, by the CPO common representative and by our statutory auditors, who may participate in any debate but may not vote. Resolutions adopted by the technical committee are required to be approved by a majority of the members of the technical committee present at the respective meeting; provided, however, that at least the chairman and two other members of the technical committee must be present at a meeting in order validly to adopt resolutions. The technical committee has the authority to instruct the CPO trustee to increase the maximum number of additional CPOs which may be issued and delivered for the purposes contemplated under the CPO trust agreement.
Termination of the CPO Trust and Establishment of Successor Trust
The CPO trust term is 30 years from the date of execution, expiring on September 6, 2029. Upon termination, the trustee and the common representative of the CPO holders shall constitute a successor CPO trust with the same terms and conditions set forth in the CPO trust agreement, other than the provisions pertaining to the exchange of CPOs for successor trust CPOs. We refer to that successor CPO trust as the successor trust. Upon termination of the CPO trust, which we call the “conversion date,” investors holding CPOs, subject to the provisions of the By-Laws, will receive in exchange for their CPOs, the successor trust CPOs issued by the successor trustee. Each successor trust CPO will represent the economic interests in two Series A shares and one Series B share.
The CPO trust cannot be terminated if any dividends or other distributions previously received by the CPO trustee remain unpaid to any CPO holder.
Upon termination of the CPO trust, any transfer of Series A shares or Series B shares which would result in any person or group of persons acting in concert becoming a holder of 2% or more of our voting shares will be subject, as provided in the By-Laws, to prior approval of Cemex, S.A.B. de C.V.’s Board of Directors. See “—Description of Common Stock—Changes in Capital Stock and Preemptive Rights.”
We will be obligated to pay any cost or expense incurred in connection with the transfer of the shares from the CPO trust to the successor trust and the exchange of CPOs for successor trust CPOs.
Charges of the CPO Trustee and Indeval
Under the CPO trust agreement, we will be obligated to pay the fees of the CPO trustee for the administration of the CPO trust and the fees of Indeval as depository.
Description of ADSs
The following description of our ADSs is a summary of the material terms of our ADSs. Because it is a summary, it does not describe every aspect of our ADSs and may not contain all of the information that is important to you. For more information, please see the Bylaws and the ADS deposit agreement (as defined below), each of which has been filed as an exhibit to our annual report on Form 20-F of which this exhibit is a part. References to provisions of the By-Laws or the ADS deposit agreement are qualified in their entirety by reference to the full By-Laws or the ADS deposit agreement, as applicable.
General
Each ADS represents ten CPOs. Holders of ADSs will, on and after the conversion date, have the right to receive ten successor trust CPOs for every ADS held. The CPOs and successor trust CPOs eligible for deposit with the custodian are sometimes known as “eligible securities,” and the eligible securities once deposited with the custodian are sometimes known as “deposited securities” against which the ADS depositary issues the ADSs. Please note that an ADS also represents any other property received by the ADS depositary or the custodian on behalf of the owner of the ADS but not distributed to that owner because of legal or practical restrictions. The ADSs are issuable in registered form by the depositary pursuant to the ADS deposit agreement. As of December 31, 2023, we had 445 ADS holders of record, holding 554,643,879 ADRs (as defined below), representing 5,546,438,790 CPOs, or approximately 38.27% of Cemex, S.A.B. de C.V.’s outstanding capital stock as of such date.
The ADS deposit agreement, as amended (the “ADS deposit agreement”), and the related ADRs contain our rights and obligations as well as your rights and obligations and those of the depositary. The ADS deposit agreement is governed by New York law. Each of Cemex and the depositary has agreed that federal and state courts in the City of New York will have non-exclusive jurisdiction over any actions, proceedings or disputes that arise out of or in connection with the ADS deposit agreement and submits to that jurisdiction. However, our obligations to the holders of deposited securities will continue to be governed by the laws of Mexico, which may be very different from the laws in the United States.
We have appointed Citibank, N.A. as ADS depositary pursuant to the ADS deposit agreement. Citibank’s depositary offices are located at 390 Greenwich Street, 4th Floor, New York, New York 10013. The ADSs represent ownership interests in securities that are on deposit with the depositary. The depositary typically appoints a custodian to safekeep the securities on deposit. Citibank has appointed Banco Nacional de México, S.A., División Fiduciaria as custodian for the deposited securities represented by the ADSs. ADSs may be represented by certificates that are commonly known as American Depositary Receipts (the “ADRs”).
Registration and Transfer
If you become an owner of ADSs, you may hold your ADSs in the form of an ADR certificate registered in your name, through a brokerage or safekeeping account or through an account established by the ADS depositary in your name reflecting registration of uncertificated ADSs directly on the books of the ADS depositary (commonly referred to as the “direct registration system” or “DR System”). The direct registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the ADS depositary. Under the direct registration system, ownership of ADSs is evidenced by periodic statements issued by the ADS depositary to the holders of ADSs. The direct registration system includes automated transfers between the ADS depositary and The Depositary Trust Company, or DTC, the central book-entry clearing and settlement system for equity securities in the United States. If you decide to hold your ADSs through your brokerage or safekeeping account, you must rely on the procedures of your broker or custodian to assert your rights as an ADS owner. This summary description assumes you have opted to own the ADSs directly by means of an ADR registered in your name and, as such, we will refer to you as “holder.”
Dividends and distributions
If you become a holder of ADSs, you will usually have the right to receive the distributions we make on the securities deposited with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal restrictions. Holders will receive distributions they are entitled to receive under the terms of the ADS deposit agreement in proportion to the number of ADSs they hold as of a specified record date.
Distributions of cash
Whenever we make a cash distribution payment for the securities on deposit with the custodian and the ADS depositary receives confirmation of our deposit of the distribution, the ADS depositary will convert the cash distribution into Dollars and distribute the proceeds of the conversion to the holders, so long as the conversion is reasonable and the Dollars are transferable to the United States. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the ADS deposit agreement. The ADS depositary will distribute the proceeds of the sale of any property held by the custodian in respect of the securities on deposit in the same manner.
Distributions of eligible securities
Whenever we make a free distribution of eligible securities for the securities on deposit with the custodian, we will cause the eligible securities to be deposited with the custodian. When the ADS depositary receives confirmation of such deposit with the custodian, the ADS depositary will either distribute to holders new ADSs representing the eligible securities deposited or modify the ADS-to-deposited securities ratio, in which case each ADS you hold will represent rights and interests in the additional eligible securities so deposited. The ADS depositary will distribute only whole numbers of ADSs. The ADS depositary will sell any remaining fractional entitlements and distribute the proceeds of that sale as in the case of a cash distribution.
The distribution of the new ADSs or the modification of the ADS-to-deposited securities ratio upon distribution of eligible securities will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the ADS deposit agreement. In order to pay those taxes and governmental charges, the ADS depositary may sell all or a portion of the eligible securities so distributed.
The ADS depositary will not make a distribution of ADSs if the distribution would engender a breach of law. If the ADS depositary does not distribute ADSs as described above, it may sell the securities received and will distribute the proceeds of the sale as in the case of a cash distribution.
Distributions of rights
Whenever we intend to distribute rights to subscribe for additional eligible securities, we will give prior notice to the ADS depositary and will indicate whether we wish such rights to be made available to ADS holders. In such cases, we will assist the ADS depositary in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional ADSs to holders and, if so, provide the ADS depositary with the documentation required under the ADS deposit agreement.
If the above conditions are satisfied, the ADS depositary will establish procedures to distribute such rights and to enable holders to exercise those rights. Holders of ADSs will have to pay the subscription price and may have to pay fees, expenses, taxes and other governmental charges to subscribe for the ADSs when they exercise their rights. We cannot assure you that any holder of ADSs will be able to exercise rights on the same terms as holders of eligible securities or that any holder of ADSs will be able to exercise its rights at all. The ADS depositary has no obligation to provide you with the means to exercise rights to subscribe for new eligible securities rather than ADSs.
The ADS depositary will not distribute the rights to any holder of ADSs if:
| • | we do not timely request that the rights be distributed to such holders or if we ask that the rights not be distributed to such holders; |
| • | we fail to deliver the required documents to the ADS depositary; or |
| • | it is not reasonably practicable to distribute the rights to such holders. |
The ADS depositary will sell the rights that are not exercised or not distributed if such a sale is lawful and reasonably practicable. The proceeds of that sale will be distributed to holders as in the case of a distribution in cash. If the ADS depositary is unable to sell the rights, it will allow the rights to lapse.
Elective distributions
Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional eligible securities, we will give prior notice thereof to the ADS depositary and will indicate whether we wish the elective distribution to be made available to holders of ADSs. In that case, we will assist the ADS depositary in determining whether that distribution is lawful and reasonably practicable.
The ADS depositary will make the election available to holders of ADSs only if it is reasonably practicable and if we have provided all the documentation contemplated in the ADS deposit agreement. In that case, the ADS depositary will establish procedures to enable holders of ADSs to elect to receive either cash or additional ADSs, in each case as described in the ADS deposit agreement.
If the election is not made available to holders of ADSs, such holders will receive either cash or additional ADSs, depending on what a shareholder in Mexico would receive for failing to make an election, as more fully described in the ADS deposit agreement.
Redemption
Whenever we decide to redeem any of the securities on deposit with the custodian, we will notify the ADS depositary. If it is reasonably practicable and if we provide all of the documentation contemplated in the ADS deposit agreement, the ADS depositary will mail notice of the redemption to the holders.
The custodian will be instructed to surrender the deposited securities being redeemed against payment of the applicable redemption price. The ADS depositary will convert the redemption funds received into Dollars upon the terms of the ADS deposit agreement and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their ADSs to the ADS depositary. Holders of ADSs may have to pay fees, expenses, taxes and other governmental charges upon the redemption of their ADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the ADS depositary may determine.
Other distributions
Whenever we intend to distribute property other than cash, eligible securities or rights to purchase additional eligible securities, we will give prior notice thereof to the ADS depositary and will indicate whether we wish the distribution to be made to holders of ADSs. In that case, we will assist the ADS depositary in determining whether the distribution to holders is lawful and reasonably practicable.
If it is reasonably practicable to distribute the property to holders of ADSs and if we provide all the documentation required under the ADS depositary agreement, the ADS depositary shall distribute that property to the holders in a manner it deems practicable for accomplishing the distribution.
The distribution of the property will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the ADS deposit agreement. In order to pay those taxes and governmental charges, the ADS depositary may sell all or a portion of the property.
The ADS depositary will not distribute the property to holders of ADSs and will sell the property if:
| • | we do not request that the property be distributed to such holders or if we ask that the property not be distributed to such holders; |
| • | we do not deliver satisfactory documents to the ADS depositary; or |
| • | such distribution is not reasonably practicable. |
The proceeds of any sale of the property will be distributed to holders as in the case of a cash distribution. If the ADS depositary is unable to sell the property, the ADS depositary may dispose of the property in any way it deems reasonably practicable under the circumstances.
Preemptive Rights
ADS holders may be unable to exercise preemptive rights granted to our shareholders, in which case ADS holders could be substantially diluted following future equity or equity-linked offerings. Under Mexican law, whenever we issue new shares for payment in cash or in kind, we are generally required to grant preemptive rights to our shareholders, except if the shares are issued in respect of a public offering or if the relevant shares underlie convertible securities. However, ADS holders may not be able to exercise these preemptive rights to acquire new shares unless both the rights and the new shares are registered in the United States or an exemption from registration is available. We cannot assure you that we would file a registration statement in the United States at the time of any rights offering.
Changes Affecting Deposited Securities
The deposited securities held on deposit in respect of ADSs may change from time to time as a result, for example, of a change in nominal or par value, a split-up, cancellation, consolidation or re-classification of deposited securities or a recapitalization, reorganization, merger, consolidation or sale of our assets.
If any such change were to occur, ADSs will, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the deposited securities held on deposit. The ADS depositary may in such circumstances deliver additional ADSs to holders of ADSs or call for the exchange of ADSs for replacement ADSs. If the ADS depositary may not lawfully distribute such property to holders of ADSs, the ADS depositary shall use its best efforts to sell such property and distribute the net proceeds to such holders as in the case of a cash distribution.
Issuance of ADSs Upon Deposit of Eligible Securities
If permitted by applicable law, the ADS depositary will create ADSs if eligible securities are deposited with the custodian. The ADS depositary will deliver the ADSs representing the eligible securities deposited to the person indicated after payment of the applicable issuance fees and all charges and taxes payable for the transfer of the eligible securities to the custodian.
Please note that the issuance of ADSs in all cases, other than the distribution of the appreciation value, may be delayed until the ADS depositary or the custodian receives confirmation that all required approvals have been given and that the eligible securities have been duly transferred. The ADS depositary will only issue ADSs in whole numbers.
When a deposit of eligible securities is made, the depositor will be responsible for transferring good and valid title to the ADS depositary. In addition, the depositor will be deemed to represent and warrant that:
| • | the eligible securities are duly authorized, validly issued, fully paid, non-assessable and legally obtained; |
| • | all preemptive and similar rights, if any, with respect to the eligible securities have been validly waived or exercised; |
| • | the depositor is duly authorized to deposit the eligible securities; |
| • | the eligible securities presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted securities” (as defined in the ADS deposit agreement); and |
| • | the eligible securities presented for deposit have not been stripped of any rights or entitlements. |
If any of these representations or warranties are false in any way, we and the ADS depositary may, at the depositor’s cost and expense, take any and all actions necessary to correct the consequences thereof.
Withdrawal of Deposited Securities Upon Cancellation of ADSs
A holder of ADSs is entitled to present its ADSs to the ADS depositary for cancellation and to receive delivery of the deposited securities represented by its ADSs from the custodian. In order to withdraw the deposited securities represented by such ADSs, the holder withdrawing ADSs will be required to pay the fees of the ADS depositary for cancellation of its ADSs and the charges and taxes payable for the transfer of the deposited securities being withdrawn. The holder withdrawing ADSs assumes the risk of delivery of all funds and securities upon withdrawal. Once cancelled, ADSs shall not have any rights under the ADS deposit agreement.
The ADS depositary may ask for proof of identity and the genuineness of signatures before canceling ADSs. The withdrawal of the deposited securities represented by ADSs may be delayed until the ADS depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Under Mexican law, a holder of ADSs is not entitled to withdraw the shares underlying CPOs. When ADSs are surrendered prior to the conversion date, the holder will be entitled to receive CPOs; after the conversion date, the holder will be entitled to receive successor trust CPOs. The ADS depositary will only accept ADSs for cancellation that represent a whole number of deposited securities.
A holder will have the right to withdraw the deposited securities represented by its ADSs at any time except for:
| • | temporary delays that may arise because the transfer books for the shares, CPOs, successor trust CPOs or ADSs are closed, or the deposited securities are immobilized on account of a shareholders’ meeting or a payment of dividends; |
| • | obligations to pay fees, taxes and similar charges; and |
| • | restrictions imposed on account of laws or regulations applicable to ADSs or the withdrawal of the securities deposited. |
Please note that the ADS deposit agreement may not be modified to impair withdrawal rights in respect of deposited securities represented by ADSs except to comply with mandatory provisions of law.
Voting Rights
A holder of ADSs generally has the right to instruct the ADS depositary to exercise the voting rights for the deposited securities represented by its ADSs. However, the By-Laws prohibit non-Mexican nationals from directly holding or voting Series A shares. A holder of ADSs is deemed to be a non-Mexican national and accordingly, has no right to instruct the ADS depositary to cause the CPO trustee to vote the Series A shares held in the CPO trust or the successor trust. Under the terms of the ADS depositary agreement, holders of ADSs may have the right to instruct the depositary to cause the CPO trustee to exercise the voting rights attributable to the Series B Shares held in the CPO trust. The voting rights of holders of deposited securities are described in “Description of CPOs—Voting of Series A shares” and “Description of CPOs—Voting of Series B shares” above.
At our request, the ADS depositary will coordinate with us the mailing to holders of ADSs of any notice of shareholders’ meeting together with information explaining how to instruct the depositary to exercise the voting rights, if any, pertaining to the deposited securities represented by ADSs. We will use our best efforts to deliver the notice of shareholders’ meeting to the ADS depositary 20 days prior to the date of the meeting. The ADS depositary will coordinate with us the mailing of the notice to ADS holders to coincide as closely as is reasonably practicable with the publication of the notice of shareholders’ meeting in Mexico.
Prior to the conversion date, at any meeting of shareholders, ADS holders have the right to instruct the ADS depositary to exercise their voting rights only in respect of the Series B shares held in the CPO trust. The terms of the CPO trust require the CPO trustee to vote the Series A shares held in the CPO trust in the same manner as the votes cast by the holders of the majority of all Series A shares held by Mexican nationals and Series B shares voted at the meeting.
On and after the conversion date, at any meeting of shareholders, ADS holders have the right to instruct the ADS depositary to exercise their voting rights in respect of the Series B shares in the successor trust. The terms of the successor trust are expected to require the successor trustee to vote the Series A shares held in the successor trust in substantially the same manner as Series A shares are voted under the CPO trust.
Whenever we call a meeting of holders of CPOs or successor trust CPOs, holders of ADSs have the right, as holders of ADSs representing CPOs or successor trust CPOs, to instruct the ADS depositary to vote the CPOs or successor trust CPOs according to their instructions.
If the ADS depositary timely receives an ADS holder’s voting instructions, it will endeavor to vote the deposited securities represented by ADSs for which holders of ADSs are entitled to give voting instructions according to those voting instructions or to cause the custodian to transmit to the CPO trustee the voting instructions received, as applicable.
If the ADS depositary does not receive voting instructions from a holder of ADSs in a timely manner, such holder will nevertheless be treated as having instructed the ADS depositary to give a proxy to a person we designate to vote the Series B shares underlying the CPOs represented by the ADSs in his/her discretion. The ADS depositary will not deliver the discretionary proxy if:
| • | we do not provide the ADS depositary with the requisite materials pertaining to the meeting on a timely basis; |
| • | we request that the discretionary proxy not be given; |
| • | we do not deliver to the ADS depositary a satisfactory opinion of counsel providing legal comfort under Mexican laws on the subject of the discretionary proxy; or |
| • | we do not deliver a satisfactory representation and indemnity letter to the ADS depositary. |
Please note that the ability of the ADS depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure holders of ADSs that they will receive voting materials in sufficient time to enable them to return voting instructions to the ADS depositary in a timely manner.
The ADS depositary or the custodian for the CPOs on deposit may represent the CPOs at any meeting of holders of CPOs even if no voting instructions have been received. The CPO trustee may represent the Series A shares and the Series B shares represented by the CPOs at any meeting of holders of Series A shares or Series B shares even if no voting instructions have been received. By so attending, the ADS depositary, the custodian or the CPO trustee, as applicable, may contribute to the establishment of a quorum at a meeting of holders of CPOs, Series A shares or Series B shares, as appropriate.
Fees and Charges
An ADS holder is required to pay the following service fees to the ADS depositary:
| Service |
Fees | |
| Issuance of ADSs upon deposit of eligible securities | Up to 5¢ per ADS issued | |
| Surrender of ADSs for cancellation and withdrawal of deposited securities | Up to 5¢ per ADS surrendered | |
| Exercise of rights to purchase additional ADSs | Up to 5¢ per ADS issued | |
| Distribution of cash (i.e., upon sale of rights and other entitlements) | Up to 2¢ per ADS held | |
An ADS holder also is responsible to pay fees and expenses incurred by the ADS depositary and taxes and governmental charges including, but not limited to:
| • | transfer and registration fees charged by the registrar and transfer agent for eligible and deposited securities, such as upon deposit of eligible securities and withdrawal of deposited securities; |
| • | expenses incurred for converting foreign currency into Dollars; |
| • | expenses for cable, telex and fax transmissions and for delivery of securities; |
| • | expenses incurred in connection with compliance with exchange control regulations and other applicable regulatory requirements; |
| • | fees and expenses incurred in connection with the delivery of deposited securities; and |
| • | taxes and duties upon the transfer of securities, such as when eligible securities are deposited or withdrawn from deposit. |
We have agreed to pay some of the other charges and expenses of the ADS depositary. Note that the fees and charges that a holder of ADSs is required to pay may vary over time and may be changed by us and by the ADS depositary. ADS holders will receive notice of the changes. The fees described above may be amended from time to time.
Amendments and Termination
We may agree with the ADS depositary to modify or supplement the ADS deposit agreement at any time without the consent of ADS holders. We undertake to provide ADS holders with 30 days’ prior notice of any modifications or supplements that would materially prejudice the substantial rights of ADS holders under the ADS deposit agreement. We will not consider to be materially prejudicial to the substantial rights of ADS holders any modifications or supplements that are reasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each case without imposing or increasing the fees and charges ADS holders are required to pay. In addition, we may not be able to provide ADS holders with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law, whether or not those modifications or supplements could be considered to be materially prejudicial to the substantial rights of ADS holders.
ADS holders will be bound by the modifications to the ADS deposit agreement if they continue to hold ADSs after the modifications to the ADS deposit agreement become effective. The ADS deposit agreement cannot be amended to prevent ADS holders from withdrawing the deposited securities represented by ADSs, except to comply with mandatory provisions of applicable law.
We have the right to direct the ADS depositary to terminate the ADS deposit agreement. Similarly, the ADS depositary may in some circumstances on its own initiative terminate the ADS deposit agreement. In either case, the ADS depositary must give notice to the holders at least 30 days before termination.
Upon termination, the following will occur under the ADS deposit agreement:
| • | For a period of 3 months after termination, ADS holders will be able to request the cancellation of their ADSs and the withdrawal of the deposited securities represented by their ADSs and the delivery of all other property held by the ADS depositary in respect of their deposited securities on the same terms as prior to the termination. During this three-month period, the ADS depositary will continue to collect all distributions received on the deposited securities, such as dividends, but will not distribute any such property to ADS holders until they request the cancellation of their ADSs. |
| • | After the expiration of the three-month period, the ADS depositary may sell the deposited securities held on behalf of the remaining holders with the custodian. The ADS depositary will hold the proceeds from the sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, the ADS depositary will have no further obligations to holders other than to account for the funds then held for the holders of ADSs still outstanding. |
Books of ADS Depositary
The ADS depositary will maintain ADS holder records at its depositary office. Holders of ADSs may inspect those records at that office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the ADSs and the ADS deposit agreement.
The ADS depositary will maintain facilities in New York to record and to process the issuance, cancellation, combination, split-up and transfer of ADSs. These facilities may be closed from time to time, to the extent not prohibited by law.
Limitations On Obligations and Liabilities
The ADS deposit agreement limits our obligations and liability and the ADS depositary’s obligations and liability to holders of ADSs. Please note the following:
| • | We and the ADS depositary are only obligated to take the actions specifically stated in the ADS deposit agreement without gross negligence or bad faith. |
| • | The ADS depositary disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the ADS deposit agreement. |
| • | The ADS depositary disclaims any liability for any failure to determine the lawfulness or reasonable practicality of any action, for the content of any document forwarded to ADS holders on their behalf or for the accuracy of any translation of such document, for the investment risks associated with investing in deposited securities, for the validity or worth of the deposited securities, for any tax consequences that result from the ownership of ADSs, for allowing any rights to lapse under the terms of the ADS deposit agreement, for the timeliness of any of our notices or for our failure to give notice. |
| • | We and the ADS depositary will not be obligated to perform any act that is inconsistent with the terms of the ADS deposit agreement. |
| • | We and the ADS depositary disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation, any provision of our articles of association, any provision of any securities on deposit or by reason of any act of God or war or other circumstances beyond our control. |
| • | We and the ADS depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for in the ADS deposit agreement or in our articles of association or in any provisions of the securities on deposit. |
| • | We and the ADS depositary further disclaim any liability for any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting eligible securities for deposit, any holder of ADSs or authorized representative thereof, or any other person believed by us in good faith to be competent to give such advice or information. |
| • | We and the ADS depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit which is made available to holders of eligible securities but is not, under the terms of the ADS deposit agreement, made available to the holders of the ADSs. |
| • | We and the ADS depositary may rely without any liability upon any written notice, request or other document believed by the ADS depositary to be genuine and to have been signed or presented by the proper parties. |
| • | We and the ADS depositary disclaim any liability for any consequential or punitive damages. |
Pre-Release Transactions
The ADS depositary may, in some circumstances, issue ADSs before receiving a deposit of eligible securities or release deposited securities before receiving ADSs. These transactions are commonly referred to as “pre-release transactions.” The ADS deposit agreement limits the aggregate size of pre-release transactions and imposes a number of conditions on such transactions including the need to receive collateral, the type of collateral required, and the representations required from brokers. The ADS depositary may retain the compensation received from the pre-release transactions.
Taxes
Holders of ADSs will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by the ADSs. We, the ADS depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. Holders of ADSs will be liable for any deficiency if the sale proceeds do not cover the taxes that are due.
The ADS depositary may refuse to issue ADSs and to deliver, transfer, split and combine ADRs or to release securities on deposit until all applicable taxes and charges are paid by the holder. The ADS depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on behalf of ADS holders. However, ADS holders may be required to provide to the ADS depositary and to the custodian proof of taxpayer status and residence and any other information as the ADS depositary and the custodian may reasonably require to fulfill legal obligations. Holders of ADSs are required to indemnify us, the ADS depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for such holders.
Foreign Currency Conversion
Whenever the ADS depositary or the custodian receives foreign currency and the ADS depositary can reasonably convert all foreign currency received into Dollars, the ADS depositary will distribute the Dollars according to the terms of the ADS deposit agreement. ADS holders may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements.
If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the ADS depositary may take the following actions in its discretion:
| • | convert the foreign currency to the extent practicable and lawful and distribute the Dollars to the holders of ADSs for whom such conversion and distribution is lawful and practicable; |
| • | distribute the foreign currency to holders of ADSs for whom such distribution is lawful and practicable; or |
| • | hold the foreign currency, without liability for interest, for holders of ADSs. |
Exhibit 4.7
BEARER STOCK CERTIFICATES
CEMEX, S.A.B. DE C.V.
“CEMEX 23-2L”
$8,500,000,000.00 (eight billion five hundred million Pesos 00/100 National Currency)
By virtue of this security, Cemex, S.A.B. de C.V., (hereinafter, “Cemex” or the “Issuer” or the “Company”, interchangeably) undertakes to unconditionally pay in a single installment, in the place indicated below, the amount of $8,500,000,000.00 (eight billion five hundred million Pesos 00/100 National Currency), for the total issuance of 85,000,000 (eighty five million) long-term stock certificates (the “Stock Certificates”), plus the respective interest, specifically on September 26, 2030 or, if that day is a non-business day, on the immediately following Business Day (the “Maturity Date”).
This security covers 50,000,000 (fifty million) bearer long-term stock certificates, with a nominal value of $100.00 (one hundred Pesos 00/100 National Currency) each (the “Original Stock Certificates”), issued on October 5, 2023, and 35,000,000 (thirty-five million) bearer long-term stock certificates, with a nominal value of $100.00 (one hundred Pesos 00/100 National Currency) each (the “Additional Stock Certificates”), issued on February 20, 2024.
This stock certificate is issued for administrative deposit with S.D. Indeval Institution for the Depósito de Valores, S.A. de C.V. (“Indeval ”), justifying the holding of the Stock Certificates by said institution and the performance of all the activities that have been assigned to the institutions for the deposit of securities, and that in accordance with the applicable legislation they must be exercised by the institutions for the deposit of securities, with no further liability to Indeval than that established in the LMV (as such term is defined below).
Under the terms of Article 282 of the LMV, the Issuer determines that the Stock Certificate does not have coupons attached, the certificates issued by Indeval, take their place, for all legal purposes.
The Stock Certificates of this Issue correspond to the type referred to in section I of article 62 of the LMV.
This stock certificate is issued under the Program (as such term is defined below), which has been registered in the National Securities Registry under number 0021-4.15-2023-004, whose preliminary registration was authorized by the CNBV (as such term is defined below), by official letter number 153/5589/2023, dated October 2, 2023. The dissemination of the documentation corresponding to this Issuance has been authorized in terms of official letter number 153/5589/2023, dated October 2, 2023, issued by the CNBV. The Stock Certificates documented by this security have been registered in the National Securities Registry under number 0021-4.15-2023-004-02. The public offer of the Additional Stock Certificates was authorized by the CNBV through official letter number 153/3146/2024, dated February 15, 2024.
| I. | DEFINITIONS. |
The following terms shall have the meaning indicated for each of them in this stock certificate and are equally applicable in singular and plural:
“Total Consolidated Assets” means the total consolidated assets of the Issuer and its Subsidiaries that appear on its most recent consolidated balance sheet and are calculated in accordance with the IFRS.
“Operating Assets” means, on any determination date, any fixed and tangible assets owned by the Issuer or any of its Subsidiaries that constitute all or part of any plant producing cement or concrete, aggregate quarry, for milling, maritime terminal, or ground distribution center that is used in the ordinary course of business, including, without limitation, machinery and equipment, other than those assets that, individually or, in the case of a series of related operations, as a whole, are not of importance to the business or assets of the Issuer and its Subsidiaries considered jointly, in the understanding that no asset shall be considered an Operating Asset unless
its net book value exceeds 3% (three percent) of the Total Consolidated Assets.
“Scope 1” means CO2 Emissions related to cement and clinker production, excluding on-site energy production from alternative fossil fuel sources.
“Scope 2” means the CO2 Emissions of the electricity purchased for cement and clinker production.
“Guarantors” means, initially, Cemex Concretos, S.A. de C.V., CEMEX Corp., Cemex Operaciones México, S.A. de C.V., and Cemex Innovation Holding Ltd.; with the understanding that the Issuer shall have the right to release or replace any Guarantor, or include new guarantors, provided that after such release, addition or replacement takes effect, it fulfills the Minimum Endorsement, based on a certification from the secretary of the Issuer’s Board of Directors.
“Minimum Endorsement” means the Cemex Subsidiaries that are individually endorsers or guarantors (i) under the 2021 Credit Agreement, (ii) under the Debt incurred to refinance the 2021 Credit Agreement, or (iii) of 85% of the unpaid and outstanding debt of the Issuer and its Restricted Subsidiaries.
“Independent Bank” has the meaning attributed to it in the “Voluntary Early Redemption” section of this stock certificate.
“BMV” means the Bolsa Mexicana de Valores, S.A.B. de C.V.
“Cause of Early Maturity” has the meaning indicated in the “Cause of Early Maturity” section of this stock certificate.
“Cemex” or the “Issuer” or the “Company” means indistinctly Cemex, S.A.B. de C.V., a company whose corporate purpose is to participate in commercial and civil companies, civil associations and in all kinds of domestic and foreign companies, through the subscription and/or acquisition of their shares, equity interests, assets and rights and through any means dispose of and carry out all kinds of acts and commercial contracts with respect to such shares, equity interests, assets and rights, and for the fulfillment of its corporate purpose, the Company may directly or indirectly through third parties, enter into or perform all kinds of acts, transactions and contracts of a civil, commercial, specialized works or services or of any other nature, that are pertinent, accessory, necessary or convenient for the effective achievement of its corporate purpose through the activities indicated below: (i) the manufacture, sale and purchase, distribution, transportation, import, export, industrial and commercial exploitation and use in general of cement, as well as any kind of construction materials; (ii) the production, distribution, import, export, supply, maquila, transportation, hauling, pumping, consignment, sale and purchase, deposit, intermediation, commission, exploitation, marketing and general industrial and commercial use of cement, concrete, mortar, clay, limestone, gypsum, shard, sand, gravel, iron ore, raw materials used in cement making, as well as any kind of construction materials in general; (iii) the sale, distribution, transportation, import, export, exploitation, use and industrial and commercial utilization of aggregates, ready-mixed concrete, its additives and components and, in general, all types of pieces and prestressed concrete objects, pre-concretes, tubes and construction materials, concrete blocks and precast concrete elements; (iv) the establishment of concrete, cement and asphalt manufacturing plants, with the facilities for obtaining and crushing aggregates, dosing and mixing thereof and hauling, and consolidation of its products; (v) own Exploration and/or Exploitation Mining Concessions, for the purpose of exploring and/or exploiting minerals or substances subject to the Mining Law in force, in accordance with the provisions of Article 11 of said law; (vi) be the holder of Ordinary and/or Extraordinary General Permits for the purchase, storage and consumption or purchase and consumption of explosive materials, for the construction industry and for the mining industry, in order to exploit the stone and mineral materials, respectively, in accordance with the provisions Articles 37 and 42 of the Federal Law of Firearms and Explosives; (vii) the transportation of merchandise and products in modality of general cargo, waste and/or hazardous materials and bulky and/or heavy weight materials, exploitation and use of the General Means of Communication (Vías Generales de Comunicación) or their services and related under the concessions or permits granted by the Federal Executive as applicable; or, through the concessions or permits that the Company receives in contribution, transfer or in right of its Partners and authorized by the competent authorities; (viii) the exploitation of specialized services of general cargo, waste and/or hazardous materials and bulky and/or heavy objects related to the concessions
2
and permits granted by the authorities of the states of the country; (ix) the use of roads in general and their connection with other means of transport, through the Contracts that are entered into, in order to offer the user public an efficient and safe service; (x) the verification of official Mexican standards and serve as an approved and accredited inspection and verification unit to perform the procedures for evaluating the specifications and physical-mechanical and safety conditions for the operation of roads and bridges under the federal jurisdiction of motor transportation cargo, in compliance with Mexican official standards; (xi) the training and preparation of Drivers of the Federal Motor Carrier and Private Transport Service (Conductores del Servicio de Autotransporte Federal y Transporte Privado), (xii) the specialized workshop maintenance and repair service, as well as the sale of spare parts and technical equipment to third parties; (xiii) the manufacture, purchase, sale, import, export, maquila and marketing of bags, sacks and all types of containers of any material, as well as the raw materials necessary for this purpose; (xiv) the industrial and commercial use of wastewater through its treatment and reuse; (xv) the use, exploitation and utilization of public property, for the handling of fluids and the use of goods and the provision of port services that constitute the port operation under the terms of the Ports Law, classified as maneuvering services for the transfer of goods or merchandise, such as loading, unloading, stacking, storage, stowage and haulage within the port, by any of the modalities provided by such law, including, but not limited to, obtaining concessions, permits, authorizations and partial assignments of rights; (xvi) logistic services associated with the oil industry, as well as operation management of asphalt emulation plants; (xvii) the treatment and refining of Oil, the processing of Natural Gas and the export and import of Hydrocarbons and Petroleum, as well as the Transportation, Storage, Distribution, compression, liquefaction, decompression, regasification, commercialization and Public Expense of Hydrocarbons, Petroleum or Petrochemicals, including the construction, operation and exploitation of land areas, warehouses, ships, tanks, dry ports, marine terminals and facilities of any kind, for the management of petroleum and/or energy products, by any of the modalities provided by such law, including but not limited to, obtaining concessions, permits and/or authorizations, as appropriate, under the terms of Title Three of the Hydrocarbons Law; (xviii) the rendering of the Auxiliary Service for the Railway Freight Terminal, the Railway Auxiliary Service for transshipment and transfer of liquids, the Railway Auxiliary Service of railway equipment maintenance workshops and the provision of the transfer of liquids in any of its modalities; (xix) the establishment of navigation services, transport, passengers and cargo, between the ports of the country and abroad, if necessary, the acquisition of boats for the aforementioned purposes and the operation of docks, shipyards and any other necessary construction or work for the initiation and development of its services; (xx) the obtaining of concessions, permits, subsidies and legal franchises related to any of the activities of its corporate purpose and acquiring by any legal title, including by concession of public power, direct ownership over lands, waters or their accessions and exploiting them, whether for irrigation, to generate driving force or for industrial objects; (xxi) the manufacture, sale, distribution, lease, import, export, transportation, supply, assembly, transport, loading, consignment, sale, deposit, mediation, commission, exploitation, commercialization and industrial and commercial use in general of all types of products allowed by the laws and in general, all kinds of domestic or foreign goods or merchandise, either as raw material, semi-finished products and perform with them trade acts in any form on their own or by third parties; (xxii) the rendering of handling, storage and custody of foreign goods services, either owned by the Company or by third parties with whom the Company enters into an agreement; (xxiii) the private transportation of goods owned by the Company or related to their activities, as well as of persons related to the same purpose, without involving the provision of federal public transportation in any of its forms; (xxiv) the operation as a shipping company and performance of all activities related to its operation and carrying out all the formalities before the competent authorities to obtain the proper permits; (xxv) the acquisition, lease, charter and enter into any type of contract with foreign and Mexican vessels as well as registering and obtaining the Mexican flag for the vessels that may require it; (xxvi) to act as consignee agent for vessels and perform all activities related to the operation as such; (xxvii) the manufacture, sale, distribution, lease, import, export, exploitation and overall development of all types of industrial and commercial equipment, machinery, tools, spare parts and parts, motor carriers and any articles or commercial items; (xxviii) the exploitation of the various engineering branches in all its aspects either pure or applied, as well as projects and construction works; (xxix) the execution of contracts for construction, design, engineering, and supply of technical and professional services, the development of architectural projects, installation of technical and mechanical infrastructure, and any other applications necessary, convenient or conducive to the development and prosperity of the Company, including participating in competitions, public or private bids or offers either national or international; (xxx) to acquire, sell, manage, lease or receive in lease or sublease, give or receive on loan, exchange, encumber in any way, exploit, affect or be a trustee in trust and, in general, enter into any legal act that involves acquiring, transferring or guaranteeing the rights of ownership or possession of all real or
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personal types of property, as deemed necessary or convenient for the development and prosperity of the Company, or to directly or indirectly support the development of the Company; (xxxi) to decorate, manage and operate in any manner all kinds of buildings, factories, warehouses, houses and apartments on their own or through third parties; (xxxii) to provide and receive any type of technical, administrative, sales, advertising, monitoring, technical assistance, consultation and advice services on industrial, tax, accounting, commercial, financial, and any other type of matters; (xxxiii) to request, obtain, buy, lease, assign or otherwise acquire or dispose of trademarks, trade names, copyrights, patents, inventions and processes, know-how and, in general, intellectual and industrial property rights, as well as licenses over them; (xxxiv) to enter into or agree on agency operations, mediation, technical assistance, professional services, consulting, distribution, supply, leasing and factoring, brokerage and generally all kinds of contracts or agreements involving services to or for third parties, as a result of the obligations or duties incurred by virtue of entering into the contracts in this section; (xxxv) to give or take money on loan, secured or unsecured, including the issuance of debt securities in public or private sale that represent loans with the investing public; (xxxvi) to issue, draw, sign, accept, endorse, guarantee and enter into any type of commercial or legal transaction, regarding negotiable instruments, with national or foreign credit institutions, as well as agents and securities intermediaries, in investment companies and auxiliary credit organizations and in any organization, corporation or association, any and all types of transactions necessary or convenient for the fulfillment of its corporate purpose, including entering into repurchases, loans, trusts, mandates, agencies or any contract or agreement either for the purpose of investing its resources, to obtain financing, or where appropriate, to affect, transmit or to pledge the negotiable instruments referred to in this section; (xxxvii) to grant guarantees, bonds and, in general, guarantee, including with pledges and mortgages, obligations incurred on behalf of third parties, with or without consideration; and (xxxviii) to render the Comprehensive Logistics and Supply Chain Service.
“Sole Circular” means the provisions of a general nature applicable to securities issuers and other securities market participants, issued by the Secretariat of Finance and Public Credit, through the CNBV, published in the Official Gazette of the Federation on March 19, 2003, as they have been and are amended.
“Stock Certificates” has the meaning attributed to it in the first paragraph of this security.
“Additional Stock Certificates” has the meaning attributed to it in the second paragraph of this title.
“Original Stock Certificates” has the meaning attributed to it in the second paragraph of this title.
“CNBV” means the National Banking and Securities Commission.
“2023 Credit Agreement” means the credit agreement, dated October 29, 2021, entered into by and between the Issuer, as a borrower, Citibank, N.A. as an administrative agent, ING Capital LLC as a sustainability structuring agent, BofA Securities Inc., BNP Paribas, Citigroup Global Markets Inc. and JPMorgan Chase Bank, N.A. as placement agents and joint lead coordinators, and the other creditors that are part of it, amended on October 30, 2023, and as amended and/or restated from time to time.
“Banorte Credit Agreement” means the credit agreement, dated December 20, 2021, entered into by and between the Issuer, as the borrower, and Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte, as the lender, amended on December 6, 2023, and as amended and/or restated from time to time.
“Independent Bank Quotation” has the meaning attributed to it in the “Voluntary Early Redemption” section of this stock certificate.
“Debt” has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this certificate.
“Business Day” means any day, other than Saturday or Sunday, or legal holiday, on which full-service banking institutions must keep their offices open to the public, according to the calendar published periodically by the CNBV.
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“Dollar” or “USD” means dollars, legal tender in the United States of America.
“Issue” means the issuance of the Stock Certificates covered by this stock certificate, to which the ticker CEMEX 23-2L was assigned.
“Issue of the Comparable M Bonus” has the meaning attributed to it in the “Voluntary Early Redemption” section of this stock certificate.
“CO2 Emissions” means the absolute emissions of carbon dioxide of the Issuer and its Subsidiaries during any period, measured in kgCO2/t.
“Euro” or “€” means Euros, legal tender for European Union member states that have adopted a single legal tender in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union.
“Rate Adjustment Date ” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Annual Gross Interest Rate Determination Date” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Date of Issue” means the date of issue of the Stock Certificates, as applicable.
“Date of Issue of Additional Stock Certificates” means February 20, 2024
“Date of Issue of Original Stock Certificates” means October 5, 2023.
“Notification Date” means the date the Issuer delivers the Notice of Compliance to the Common Representative.
“Interest Payment Date” has the meaning attributed to such term in the “Interest Payment Frequency” section of this stock certificate.
“Maturity Date” means September 26, 2030.
“Guarantee”has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this title.
“Encumbrance” or “Encumbrances” means, with respect to any asset, any mortgage, pledge, usufruct, deposit, charge, preference or any other security of any kind or nature, including any conditional purchase and sale or with reservation of ownership.
“Permitted Encumbrances” has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this title.
“Indeval” means the S.D. Indeval Institution for Depósito de Valores, S.A. de C.V.
“kgCO2/t” means kilograms of CO2 per tons of Cementing Product.
“LGTOC” means the General Law of Credit Securities and Operations.
“LMV” means the Securities Market Act.
“Financing Framework” means the Sustainability Linked Financing Framework adopted by the Issuer in August 2023 and available at the following website: https://www.cemex.com/inversionistas/informacion-sobre-deuda/finanzas-sostenibles.
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“Mexico” means the United Mexican States.
“Total Authorized Amount of the Program” means up to $20,000,000,000.00 (twenty billion Pesos 00/100 National Currency) or its equivalent in UDIs (unidad de inversión investment units).
“IFRS” means (i), with respect to the Issuer, the “International Financial Reporting Standards” issued by the International Accounting Standards Board, and (ii) with respect to the Guarantors, the generally accepted accounting principles applicable in the corresponding jurisdiction, in both cases, as in effect on the Date of Issue; on the understanding that the Issuer may choose, irrevocably, that in both cases such accounting principles will begin to be applied as they are in force at any time after the Date of Issue (and no longer as they were in force on the Date of Issue). The Issuer shall notify such choice to the Common Representative and the election shall take effect from such notice.
“Notes” has the meaning attributed to it in the “Destination of Funds” section of this title.
“Notice of Compliance” means the notice that the Issuer will give to the Common Representative signed by a legal representative or proxy confirming that the Issuer met the Sustainability Performance Target; on the understanding that the Notice of Compliance shall include an independent and external verification from the External Verifier, in accordance with its usual procedures, regarding the Issuer’s progress in reducing its Scope 1 and Scope 2 CO2 Emissions. For purposes of clarity, any verification issued by an External Verifier having a scope of verification equal to or greater than the content in the integrated annual report of the Issuer for the year 2022 will be considered as an independent and external verification issued by an External Verifier according to its regular procedures.
“Sustainability Performance Target” means the Issuer’s performance target and key performance indicator of reducing its Scope 1 and Scope 2 CO2 Emissions to 513 kgCO2/t for the year ending on December 31, 2027.
“Interest Period” has the meaning attributed to such term in the “Interest Payment Frequency” section of this stock certificate.
“Pesos” means the legal currency in Mexico.
“Early Redemption Price” has the meaning attributed to such term in the “Voluntary Early Redemption” section of this stock certificate.
“Cementing Product” means all volumes of clinker produced by the Issuer (excluding clinker purchased from third parties) for the manufacture of cement or the direct sale of clinker, plus gypsum, limestone, cement kiln dust (CKD) and all mineral components for cement blending, plus the blend, plus all cement substitutes produced.
“Program” means the long-term revolving securities certificate program, for an amount of up to $20,000,000,000.00 (twenty billion Pesos 00/100 National Currency) or its equivalent in UDIs, authorized by means of official letter number 153/5589/2023, dated October 2, 2023.. During the term of the Program, such issuances of stock certificates may be made as determined by the Issuer, provided that it does not exceed the Total Authorized Amount of the Program.
“Common Representative” means CIBanco, S.A., Institución de Banca Múltiple, whose institution serves as common representative of the Holders.
“SEDI” means the electronic information sending and dissemination system maintained by the BMV called “EMISNET”.
“STIV-2” means Securities Information Transfer System 2.
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“Subsidiary” means any company or entity of any nature in respect of which the Issuer, directly or indirectly, (i) owns 50% (fifty percent) or more of its capital or of the securities representative of its capital or voting rights; or (ii) controls the administration by any means or cause.
“Restricted Subsidiaries” means any Subsidiary of the Issuer that owns Operating Assets.
“Annual Gross Interest Rate” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Adjusted Annual Gross Interest Rate” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“M-Rate Bonus” has the meaning attributed to it in the “Voluntary Early Redemption” section of this stock certificate.
“Holders” means the legitimate holders of the outstanding Stock Certificates.
“UDIs” means the Investment Units whose value in Pesos is published by the Banco de México in the Official Gazette of the Federation.
“Nominal Value” means $100.00 (one hundred Pesos 00/100 National Currency) for each Stock Certificate.
“Adjusted Nominal Value” means, in the event that the Issuer carries out a partial early redemption of the Stock Certificates, the result of the redemption amount, divided by the number of Stock Certificates in circulation.
“External Verifier” means any independent provider of sustainability certification services designated by the Issuer for the purposes of verifying the Issuer’s progress in reducing its Scope 1 and Scope 2 CO2 Emissions.
| II. | SOME FEATURES OF THE STOCK CERTIFICATES. |
| Issue Number under the Program: | First Reopening of the Second Issuance. | |
| Total Amount of Issuance of Stock Certificates: | $8,500,000,000.00 (eight billion five hundred million Pesos 00/100 National Currency). | |
| Total Amount of Issuance of Original Stock Certificates: | $5,000,000,000.00 (five billion Pesos 00/100 National Currency). | |
| Total Amount of Issuance of Additional Stock Certificates: | $3,500,000,000.00 (three billion five hundred million Pesos 00/100 National Currency). | |
| Validity Period of the Original Stock Certificates: | 2,548 (two thousand five hundred forty-eight) days, counted from their Date of Issue, equivalent to approximately 7 (seven) years. | |
| Validity Period of the Additional Stock Certificates: | 2,410 (two thousand four hundred ten) days, counted from the Date of Issue, equivalent to approximately 6.6 (six point six) years. | |
| Date of Issue of Original Stock Certificates: | October 5, 2023. | |
| Date of Issue of Additional Stock Certificates | February 20, 2024. | |
| Date of Maturity: | September 26, 2030. | |
| III. | INTEREST RATE AND INTEREST CALCULATION METHOD. |
As of their Date of Issue, as appropriate, and provided they are not fully redeemed, the Stock Certificates shall accrue a gross annual interest on their Nominal Value or, if applicable, Adjusted Nominal Value, at an annual
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gross interest rate of 11.48% (eleven point forty-eight percent) the (“Annual Gross Interest Rate”), which will remain fixed during the term of the Issue, unless the Adjusted Annual Gross Interest Rate applies as from the Rate Adjustment Date.
The Annual Gross Interest Rate took as a reference the interpolated M Bond 29-31 rate plus 1.42% (one point forty-two percent) on the closing date of the book of the Original Stock Certificates.
The Annual Gross Interest Rate will increase by 0.25% (zero point twenty-five) percentage points as from the interest period commencing and including September 28, 2028 (the “Rate Adjustment Date”) to be set at 11.73% (eleven point seventy-three percent) (the “Adjusted Annual Gross Interest Rate”), unless the Issuer has delivered a Notice of Compliance to the Common Representative signed by a legal representative or proxy at least 7 (seven) Business Days prior to the Rate Adjustment Date (the date on which the Issuer delivers the Notice of Compliance, the “Notification Date”) and indicating the interest rate applicable under the Stock Certificates as of the Rate Adjustment Date. If (i) the Issuer does not deliver the Notice of Compliance to the Common Representative with the aforementioned advance notice; (ii) on the Notification Date, the Issuer has notified the Common Representative that the Sustainability Performance Target was not met; or (iii) on the Notification Date, the External Verifier has not verified, in accordance with its normal procedures, the progress of the Issuer in the reduction of its Scope 1 and Scope 2 CO2 Emissions, the interest rate applicable to Stock Certificates from the Rate Adjustment Date through the Maturity Date will be the Adjusted Annual Gross Interest Rate. For purposes of clarity, any verification issued by an External Verifier having a scope of verification equal to or greater than the content in the integrated annual report of the Issuer for the year 2022 will be considered as an independent and external verification issued by an External Verifier according to its regular procedures.
Ordinary interest accrued by the Stock Certificates will be calculated from their Date of Issue, as applicable, and the calculations to determine the amount of interest payable must include the calendar days actually elapsed until the corresponding Interest Payment Date. Calculations will be made by rounding to the hundredths.
The ordinary interest that said Stock Certificates accrue shall be settled in the manner indicated in the “Interest Payment Frequency” section of this stock certificate.
To determine the amount of ordinary interest payable on each Interest Payment Date, the Common Representative will use the following formula:
Where:
I = Interest to pay on the respective Interest Payment Date.
TI = Annual Gross Interest Rate or Adjusted Annual Gross Interest Rate (expressed as a percentage).
PL = Number of calendar days actually elapsed from the last Interest Payment Date and until the following respective Interest Payment Date.
VN = Nominal Value or Adjusted Nominal Value, as applicable, of the total outstanding Stock Certificates.
The Common Representative shall inform the CNBV, the BMV and Indeval, in writing or by the means determined by them, at least 2 (two) Business Days prior to the relevant Interest Payment Date, the amount of interest payable, and the Adjusted Nominal Value per Stock Certificate, if applicable, as well as the Annual Gross Interest Rate, as well as the applicable Adjusted Annual Gross Interest Rate, which shall remain fixed during the term of the Issuance.
In the event that at any time between the Interest Payment Dates the Adjusted Nominal Value of the Stock Certificates is modified due to one or more early redemptions of the Stock Certificates, the calculations made by the Common Representative in accordance with the provisions of this Stock Certificate must consider (i) the
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different Adjusted Nominal Values of the Stock Certificates that have taken place during said Interest Period, and (ii) the number of days applicable to each of said Adjusted Nominal Values of the Stock Certificates.
The Stock Certificates will no longer accrue interest as of the indicated payment date, provided that the Issuer has constituted the deposit of the redemption amount and, where appropriate, the corresponding interest, in the offices of Indeval no later than 11:00 a.m. on that day.
In the event that any interest payment is not paid in full, Indeval shall not be obliged to deliver the receipt corresponding to said payment, until it is fully paid; in any case, Indeval shall not be liable if it does not deliver the receipt corresponding to said payment, in the event that the payment is not fully paid.
This Stock Certificate will be deposited with Indeval. Under the terms of Article 282 of the LMV, the Issuer determines that the title does not have attached coupons, taking the place of these, for all legal purposes, the certificates issued by Indeval.
The Issuer is not obliged to pay additional amounts with respect to withholding taxes or any equivalent tax, applicable in relation to the payments it makes with respect to the Stock Certificates, with the understanding that Indeval will not intervene or be responsible for determining or calculating any payment derived from this stock certificate, or make any type of payment other than the payment of principal and ordinary interest derived from the Issue.
| IV. | INTEREST PAYMENT FREQUENCY. |
Ordinary interest accrued by the Stock Certificates shall be settled every 182 (one hundred eighty-two) days, in accordance with the schedule indicated in the security documenting this Issuance and reproduced below, during the term of the Issue, against the delivery of the proof that the Indeval has issued; on the understanding that the first interest period applicable to the Additional Stock Certificates will be 44 (forty-four) days.
The first interest payment will be made precisely on April 4, 2024.
| PERIOD | START DATE | INTEREST PAYMENT DATE | ||
| 1 | October 5, 2023 | April 4, 2024* | ||
| 2 | April 4, 2024 | October 3, 2024 | ||
| 3 | October 3, 2024 | April 3, 2025 | ||
| 4 | April 3, 2025 | October 2, 2025 | ||
| 5 | October 2, 2025 | April 2, 2026 | ||
| 6 | April 2, 2026 | October 1, 2026 | ||
| 7 | October 1, 2026 | April 1, 2027 | ||
| 8 | April 1, 2027 | September 30, 2027 | ||
| 9 | September 30, 2027 | March 30, 2028 | ||
| 10 | March 30, 2028 | September 28, 2028 | ||
| 11 | September 28, 2028 | March 29, 2029 | ||
| 12 | March 29, 2029 | September 27, 2029 | ||
| 13 | September 27, 2029 | March 28, 2030 | ||
| 14 | March 28, 2030 | September 26, 2030 |
*First Interest Payment Date of Original Stock Certificates and of Additional Stock Certificates
In the event that any interest payment date in terms of this stock certificate is a non-Business Day, payment will be made on the next Business Day, without the foregoing constituting a breach by the Issuer; the interest payment must be made based on the number of calendar days actually elapsed until the corresponding interest payment date (each, an “Interest Payment Date”) and, as a result, the next Interest Period will be decreased by the number of days the previous Interest Period has been increased.
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The first Interest Period shall commence on the corresponding Date of Issue and shall end on (but shall not include) the first Interest Payment Date; each subsequent Interest Period shall commence on each Interest Payment Date and shall end on (but shall not include) the next Interest Payment Date (each, an “Interest Period”).
Failure to pay interest in a timely manner may result in the early maturity of the entire Issue of the Stock Certificates in accordance with the provisions of the “Causes of Early Maturity” section of this stock certificate, and for this reason will be in default from that moment, making the payment obligations enforceable by the Issuer.
| V. | PRINCIPAL REDEMPTION. |
The principal of the Stock Certificates will be paid by a single payment at their Nominal Value or, if applicable, at their Adjusted Nominal Value, on the Maturity Date, upon delivery of the certificates issued by Indeval at the time by electronic transfer through Indeval. In the event that the Maturity Date is a non-Business Day, the redemption will be made on the immediately following Business Day, without the foregoing being considered a breach. The Common Representative must inform the CNBV through the STIV-2 (or the means it determines), the BMV through the SEDI (or the means it determines) and Indeval in writing (or through the means it determines), no later than the second Business Day prior to the Maturity Date, of the amount of the corresponding redemption in Pesos.
| VI. | VOLUNTARY EARLY REDEMPTION. |
The Issuer shall have the right to prepay the Stock Certificates fully or partially, on any date, prior to the Maturity Date, in accordance with the following:
(a) Redemption to “make-whole”. If the early redemption is made on or before June 12, 2030, it will be made at a price equal to the Early Redemption Price (as defined below), plus the ordinary interest accrued and unpaid on the principal of the Stock Certificates at the date of early redemption. The Early Redemption Price shall in no case be less than 100% (one hundred percent) of the outstanding principal amount of the Stock Certificates at the date of early redemption.
In the event that the Issuer exercises its right to redeem the Stock Certificates in advance before the aforementioned date, the Issuer shall pay the Holders an amount equal to the greater of (i) 100% (one hundred percent) of the outstanding principal amount of the Stock Certificates and (ii) the amount of the present value of each of the outstanding principal and interest payments under the Stock Certificates in accordance with the payment schedule that appears in the “Interest Payment Frequency” section of this security, (excluding accrued and unpaid interest on the principal of the Stock Certificates at the date of early redemption), calculated (x) if the early redemption date occurs before the Rate Adjustment Date, based on the Annual Gross Interest Rate up to the interest period beginning on the Rate Adjustment Date and based on the Adjusted Annual Gross Interest Rate as from the Interest Period commencing on the Rate Adjustment Date, unless the Issuer has met the Sustainability Performance Target prior to the early redemption date and the Issuer has delivered to the Common Representative a Notice of Compliance at least 15 (fifteen) calendar days prior to the early redemption date, in this case, it will be calculated based on the Annual Gross Interest Rate; or (y) if the early redemption date occurs after the Rate Adjustment Date, based on the Adjusted Annual Gross Interest Rate, unless the Issuer has met the Sustainability Performance Target prior to the Rate Adjustment Date and the Issuer has delivered the Notice of Compliance to the Common Representative on or before the Notification Date, as set forth in the “Interest Rate and Interest Method Calculation” section of this security, in which case, it will be calculated based on the Annual Gross Interest Rate, with the outstanding principal and interest payments discounted at the M Bond Rate, plus 25 basis points, (1) in the case of the principal, based on the number of days between the Maturity Date and the early redemption date (based on periods of 182 days and a year of 360 days), and (2) in the case of interest, based on the number of days between each Interest Payment Date after the date of early redemption, respectively (based on periods of 182 days and a year of 360 days) (such amount, the “Early Redemption Price”) plus accrued and unpaid interest on the principal of the Stock Certificates as of the date of early redemption.
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(b) Redemption to Nominal Value or Adjusted Nominal Value . If the early redemption is made as of June 13, 2030, it will be made at Nominal Value or Adjusted Nominal Value of the Stock Certificates, plus the ordinary interest accrued and not paid on the principal of the Stock Certificates at the date of early redemption.
(c) General Provisions Applicable to Early Redemption . In the event that the Issuer decides to redeem the Stock Certificates in advance in accordance with the foregoing, the Issuer, through the Common Representative, will notify the CNBV, the BMV, the Indeval of its decision to exercise said right in writing or by the means they determine, and the Holders, through the SEDI, at least 30 (thirty) calendar days in advance of the date on which it intends to redeem the Stock Certificates in advance.
The Common Representative shall calculate any payable amounts, informing the CNBV, BMV and Indeval, in writing or by the means determined by them, and the Holders through the SEDI, 5 (five) Business Days prior to the date of early redemption, together with the information used to calculate it.
On the date of early redemption, the Stock Certificates that are settled will no longer accrue interest, unless the Issuer does not deposit it with Indeval, no later than 11:00 a.m. (Mexico City time), the Early Redemption Price, plus the accrued and unpaid interest with respect to the Stock Certificates on the date of early redemption. The Early Redemption Price will be paid by electronic transfer through Indeval on the early redemption date.
In the event that the Issuer exercises its right to partially redeem the Stock Certificates, once the partial payment of the Stock Certificates has been made by the Issuer, the Common Representative shall pay pro rata between the Holders and calculate the Adjusted Nominal Value of the Stock Certificates, with the understanding that in the event of early partial redemptions, the Nominal Value of the Stock Certificates will be adjusted by subtracting the Nominal Value of the entirety of the Stock Certificates, the amount of the redemption, divided by the number of outstanding Stock Certificates.
For purposes of the foregoing,
“M Bond Rate” means, in relation to the date of early redemption, the annual rate equivalent to the semi-annual yield (considering periods of 182 days and a year of 360 days) at the interpolated maturity or maturity (based on the number of days) of the “Compare M Bond Issue”, assuming a price for the “Compare M Bond Issue” (expressed as a percentage of the principal) equal to the “Compare M Bond Price”.
“Comparable Bond Issue” means the issuance of Federal Government Development Bonds with Fixed Interest Rate selected by an “Independent Bank”, which have an actual or interpolated maturity comparable to the period between the date of early redemption and the Maturity Date of the Stock Certificates, which will be selected based on recognized financial practices for the valuation of new issuances of corporate debt.
“Independent Bank” means any Mexican Credit Institution that works with Federal Government Development Bonds with a Fixed Interest Rate in the Mexican primary market and that is selected by the Issuer.
“Price of the Comparable Bond” means, in relation to the date of early redemption, the “Independent Bank Quote”.
“Independent Bank Quote” means, in relation to the early redemption date, the average, as calculated by the Issuer, of the purchase and sale prices of the Comparable Bond Issue (expressed in each case as a percentage of its principal amount) quoted in writing by the Independent Bank before 2:30 p.m. Mexico City time, on the third business day prior to the early redemption date.
| VII. | DEFAULT INTEREST. |
In the event of default in the payment of principal of the Stock Certificates, in lieu of the Annual Gross Interest Rate or the Adjusted Annual Gross Interest Rate, as the case may be, default interest will accrue on the outstanding principal of the Stock Certificates at the Annual Gross Interest Rate or the Adjusted Annual Gross Interest Rate, as the case may be, applicable during each period in which the default occurs and continues plus
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2 (two) percentage points. Default interest will be payable on demand from the date on which the default occurs and until the principal amount has been fully paid, calculated on the basis of 360 days and for the days in default actually elapsed.
The amount owed for default interest must be paid at the domicile of the Issuer or the Common Representative, as the case may be, and in the same currency as the principal amount.
| VIII. | DEFAULT IN THE PAYMENT OF PRINCIPAL AND INTEREST. |
In the event that the Issuer does not make the timely payment of the principal and ordinary interest of the Stock Certificates on the corresponding payment date, the Common Representative, without prejudice to the rights that the Holders may individually exercise, will exercise the corresponding collection actions within 5 (five) Business Days following the date on which the payment should have been made, unless the general Meeting of Holders decides otherwise.
| IX. | PLACE AND FORM OF PAYMENT OF PRINCIPAL AND INTEREST. |
The principal and interest accrued by the Stock Certificates will be paid on the day of their maturity and on each payment date respectively, by electronic transfer of funds, through INDEVAL, whose offices are located at Avenida Paseo de la Reforma No. 255, 3er Piso, Col. Cuauhtémoc, 06500, Mexico City, or at any other address where the future Indeval is established, against the certificates or certifications issued for such purposes by said institution, or, where appropriate, at the offices of the Issuer located at Avenida Ricardo Margáin Zozaya #325, Colonia Valle Campestre, San Pedro Garza García, N.L., C.P. 66265. The amount owed for default interest must be paid at the offices of the Issuer or the Common Representative, as notified to the Holders.
| X. | INCREASE IN THE NUMBER OF STOCK CERTIFICATES. |
Subject to market conditions, the Issuer shall have the right to issue and publicly offer stock certificates additional to the stock certificates originally issued under the corresponding security. The additional stock certificates (i) shall be deemed to form part of the Issuance of the original stock certificates (for which reason, among other things, they will have the same ticker assigned by the BMV) and (ii) will have the same terms and conditions as the Original Stock Certificates (including, but not limited to, Maturity Date, Annual Gross Interest Rate and, if applicable, Adjusted Annual Gross Interest Rate, Nominal Value or Adjusted Nominal Value of each Stock Certificate, obligations to do and not to do and Causes of Early Maturity, if applicable). The additional stock certificates will accrue interest from the date of their Issuance at the rate applicable to the Original Stock Certificates.
By virtue of the acquisition of Original Stock Certificates, it will be understood that the Holders have consented to the Issuer issuing additional stock certificates, so the Issuance and public offer of the additional stock certificates will not require the authorization of the holders of the Original Stock Certificates. The Issuance of Additional Stock Certificates shall be subject to the following:
(a) The Issuer may issue and publicly offer additional stock certificates provided that (i) the ratings of the additional stock certificates are the same or higher than the ratings granted to the Original Stock Certificates and that the latter ratings do not decrease (either as a result of the increase in the number of outstanding Stock Certificates or for any other reason) and (ii) the Issuer is up to date in the fulfillment of its obligations (including the obligations to do and not do, if applicable), or there is or may be no Cause of Early Maturity (as a result of the issuance of additional stock certificates), in accordance with the Original Stock Certificates.
(b) The maximum amount of additional stock certificates that the Issuer may issue and publicly offer, in addition to the amount of the outstanding Issues (including the Issue of the Original Stock Certificates), may not exceed the Total Authorized Amount of the Program.
(c) On the date of issuance of the additional stock certificates, the Issuer shall redeem the stock certificate deposited in Indeval representing the original Stock Certificates, or, where appropriate, the Common
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Representative of the Holders of the Stock Certificates, by written notice given by the Issuer to Indeval 6 (six) Business Days in advance of the corresponding redemption, for a new stock certificate that covers the original Stock Certificates, plus the additional stock certificates, and deposit said certificate with Indeval. Said stock certificate shall only record the amendments that are necessary to reflect the Issuance of the additional stock certificates, that is, (i) the total amount of the Issue, (ii) the total number of Stock Certificates covered by the stock certificate (which shall be equal to the number of Original Stock Certificates, plus the number of additional stock certificates), (iii) the Date of Issue (which shall be the date of Issue of the additional stock certificates), and (iv) the term of the Issue, the term of which shall be equal to the term that exists between the date of Issue of the additional stock certificates and the Maturity Date of the Original Stock Certificates, by virtue of the Maturity Date of said stock certificate being the same Maturity Date as that of the Original Stock Certificates.
(d) The date of issue of the additional stock certificates may or may not coincide with the date on which any of the interest periods under this stock certificate that documents the Original Stock Certificates begin. The price of the additional stock certificates must reflect the interest accrued from the date on which the current Interest Period begins, on the understanding that the Original Stock Certificates continue to accrue interest in the Interest Period that is in force on the date of issuance of the additional stock certificates and the additional stock certificates will accrue interest from the date on which the Interest Period in force of the Original Stock Certificates begins.
(e) Neither the Issuance of the additional stock certificates nor the increase in the outstanding amount of the Original Stock Certificates derived therefrom shall constitute novation.
(f) The Issuer may make various additional stock certificate issues on any particular original Stock Certificate Issue.
(g) Additional stock certificates may be placed at a price other than their Nominal Value, depending on the market conditions.
| XI. | OBLIGATIONS TO GIVE, DO AND NOT DO OF THE ISSUER AND THE GUARANTORS. |
Unless the Holders of the majority of the Stock Certificates authorize otherwise in writing, from the date hereof and until the Stock Certificates are paid in full, the Issuer and the Guarantors (only with respect to section number (1), subsections (a) and (b) of section number (6) y section number (10)) undertake to comply with the following:
(1) Payments. Pay the principal and interest in accordance with the provisions of the “Interest Payment Frequency” and “Principal Redemption” sections of this stock certificate.
(2) Internal Financial Statements. Deliver to the Common Representative on a quarterly basis, no later than within 5 (five) Business Days after the dates indicated in Article 33 of the Sole Circular or any other provision applicable or that replaces it, a copy of the Issuer’s unaudited internal consolidated basic financial statements at the end of each of the first three quarters of each year, that for these purposes comprise the balance sheet, income statement and cash flow, which must be prepared in accordance with the IFRS and must be accompanied by a certification signed by the Director of the Comptroller’s Office or Treasurer of the Issuer, in which they declare that the financial statements to which said certification relates are the Issuer’s unaudited internal consolidated basic financial statements.
(3) Audited Financial Statements. Deliver to the Common Representative on an annual basis, no later than 5 (five) Business Days after the dates indicated in Article 33 of the Sole Circular or any other applicable provision or that replaces it, a complete copy of the Issuer’s annual consolidated financial statements, including the balance sheet, income statement and statement of change in financial position, prepared in accordance with the IFRS and audited by the Issuer’s external auditors.
(4) Other Reports.
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(a) Inform the Common Representative in writing, within 10 (ten) Business Days after the Issuer becomes aware of any event that constitutes a Cause of Early Maturity under this Stock Certificate.
(b) The Issuer delivers to the Common Representative the information and documentation necessary to verify compliance with the Issuer’s obligations in terms of section II of Article 68 of the Sole Circular, except for those obligations of an accounting, fiscal, labor, administrative and other nature of the Issuer, which are not directly related to the payment of the Stock Certificates, including a certificate within 10 (ten) Business Days following the date on which the Issuer’s financial statements for the first 3 (three) quarters and the annual audited financial statements are disclosed, respectively, signed by the Issuer, indicating compliance with the obligations contained in this section “Obligations To Give, To Do and Not To Do of the Issuer and the Guarantors” as of the date of said financial statements.
(5) Use of Resources derived from the Issue; Registration of Stock Certificates.
(a) Use the resources derived from the placement of the Stock Certificates for the purposes stipulated in this stock certificate.
(b) Maintain the registration of the Stock Certificates in the National Securities Registry of the CNBV and on the list of securities of the BMV.
(6) Legal Existence, Accounting and Prevailing Line of Business.
(a) Maintain its legal existence and that of the Guarantors and maintain itself and maintain them as a going concern, except as permitted in section 9 “Mergers, sales of assets” below.
(b) Maintain its accounting and that of the Guarantors in accordance with IFRSs.
(c) Maintain, through the usual development of business, its prevailing line of business and that of its consolidated subsidiaries considered as a whole.
(7) Priority of Payments. Do what is necessary so that its obligations under the Stock Certificates are direct and unsecured obligations of the Issuer and that they have the same priority of payment, in the case of commercial bankruptcy, as its other direct and unsecured obligations, except for the preferences established by operation of law.
(8) Limitations on Encumbrances. The Issuer shall not, and shall not cause or permit any of its Restricted Subsidiaries, directly or indirectly, to contract, grant, assume or permit the constitution of any Encumbrance on Operating Assets to secure the payment of Debt, except (i) in the case of Permitted Encumbrances or (ii) that simultaneously to the creation of any Encumbrance on Operating Assets to guarantee the payment of Debt, (a) if the Encumbrance is granted on Operating Assets of the Issuer or any Restricted Subsidiary other than Guarantor, only for as long as such Encumbrance remains, an Encumbrance is granted on the same Operating Asset that guarantees the obligations under the Stock Certificates, and (b) if the Encumbrance is granted on Operating Assets of a Restricted Subsidiary that is a Guarantor, only for as long as such Encumbrance remains, an Encumbrance is granted on the same Operating Asset that guarantees at least, in the same way and priority, its obligations under the Stock Certificates.
“Debt” means, with respect to any person, unduplicated, (i) any borrowed money obligations, (ii) any obligations represented by bonds, notes, obligations, promissory notes or other similar instruments, including perpetual notes or bonds, obligations or similar instruments, regardless of the maturity date, (iii) all obligations for financial leases or any other lease that is recognized as a financial liability under the IFRS; (iv) to the extent of reimbursement obligations with respect thereto, all obligations issued or assumed as a deferred purchase price of a property, all conditional sales obligations and all payment obligations under any ownership retention agreement (but excluding accounts payable and other accrued liabilities accounted for as current liabilities (in accordance with the IFRS) arising in the ordinary course of business), (v) reimbursement obligations with respect to letters of credit, or similar credit transactions, and (vi) all obligations under hedging contracts or other
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derivatives, on the understanding that “Debt” does not include obligations of the type described in subsections (i) to (vi) above due between the Issuer and its Subsidiaries or between the Subsidiaries of the Issuer.
“Guarantee” means any obligation, contingent or not (including an endorsement), of any person directly or indirectly securing another person’s Debt, contingently or otherwise, or which has been assumed for the purpose of otherwise securing the creditor of such Debt from payment thereof or to protect such creditor from any loss, in whole or in part, regarding it, on the understanding that “Guarantee” does not include endorsements as proxy or deposits in the ordinary course of business and does not apply to an intercompany Debt guarantee between the Issuer and its Subsidiaries or between the Subsidiaries of the Issuer.
“Permitted Encumbrances” means:
| (i) | Encumbrances arising from any tax or labor obligation or created by operation of law, provided that they have been challenged in good faith and with respect to which reserves or any other provision necessary under the IFRS have been created, if applicable; |
| (ii) | Encumbrances of lessors and carriers, warehousers, and mechanics incurred in the ordinary course of business for sums not yet due or whose payment is being challenged in good faith by appropriate procedures initiated in a timely manner and carried out with diligence and for which reserves or other appropriate provisions, if any, required by IFRS, and any other Encumbrance created by operation of law, have been constituted; |
| (iii) | Encumbrances incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security or (ii) other insurance maintained by the Issuer and its Subsidiaries; |
| (iv) | Encumbrances for judgments or court orders, unless the judgment it guarantees has not been, within 60 (sixty) days from the entry into force thereof, complied with, annulled or its execution suspended pending appeal, or has not been complied with or annulled within 60 (sixty) days from the expiration of said suspension; |
| (v) | Encumbrances on acquired Operating Assets (including, with respect to any acquisition of 51% (fifty-one percent) or more of the voting shares of a corporation, the shares or other interests in the share capital and/or assets of or in the acquired or acquiring company and/or any Subsidiary of the acquired or acquiring company), built, developed or improved by the Issuer or any of its Restricted Subsidiaries (independently or jointly with another person) after the Date of Issue of the Stock Certificates, or any assets reasonably considered to be incidental to the use or operation of the Operating Assets (including any real estate in which such Operating Assets are located), as long as, such Encumbrance is constituted or assumed (x) during the period in which such Operating Assets have been constructed, developed or improved, or (y) contemporaneously or within 360 (three hundred sixty) calendar days following the date of acquiring or completing their construction, development or improvement for the purpose of securing or obtaining payment of all or part of the purchase price or other consideration for such Operating Assets or other costs of such acquisition, construction, development or improvement (including incremental costs, interest during construction and financing and refinancing costs); |
| (vi) | Encumbrances on Operating Assets that exist before the Issuer or any of its Restricted Subsidiaries acquires them, provided that such Encumbrances have not been created exclusively as a result of such acquisition; |
| (vii) | Encumbrances on Operating Assets acquired from a person who merges with the Issuer or any of its Restricted Subsidiaries or any Encumbrance on Operating Assets of a person that exist before such person becomes a Restricted Subsidiary, in each case provided that such Encumbrances have not been created as a result of or before such acquisition; |
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| (viii) | Encumbrances that guarantee Debt or a Guarantee of the Issuer or any of the Subsidiaries, as well as those to guarantee the fulfillment of bids, commercial contracts, leases, bonds and other obligations of a similar nature, in each case, that are executed in the ordinary course of business; |
| (ix) | Encumbrances granted by the Issuer or any of its Restricted Subsidiaries to secure Debt; provided that the maximum amount of such Debt secured by such Encumbrance does not exceed US$500,000,000.00 (five hundred million 00/100 dollars) (or its equivalent in any other currency) at any time; |
| (x) | Encumbrances created prior to the Date of Issue of the Stock Certificates and any renewal, extension or increase thereof; |
| (xi) | Encumbrances on accounts receivable or on the share capital of any Subsidiary other than a Restricted Subsidiary, in both cases, solely with respect to an operation or series of transactions entered into by the Issuer or any Restricted Subsidiary to sell, transmit, assign or transfer in any way any accounts receivable in order to obtain financing for the operations of the Issuer or its Restricted Subsidiary; |
| (xii) | Encumbrances granted pursuant to or in connection with any compensation or netting agreement entered into in the ordinary course of business; |
| (xiii) | Encumbrances constituted with the prior consent of the Common Representative, in accordance with the instructions of at least 51% (fifty-one percent) of the Holders; |
| (xiv) | Encumbrances guaranteeing Debt or obligations under coverage contracts, as well as any guarantee under these and any reimbursement obligations with respect to letters of credit that have not been repaid within 30 days after their execution, provided that, the maximum amount of the Debt guaranteed by said Encumbrance does not exceed US$200,000,000.00 (two hundred million dollars 00/100) (or its equivalent in any other currency); and |
| (xv) | Encumbrances other than those mentioned above, which guarantee obligations of the Issuer or its Restricted Subsidiaries, which together guarantee obligations for an amount not greater than the highest of (i) 20% (twenty percent) of the Total Consolidated Assets, or (ii) USD 1,500,000,000.00 (one billion five hundred million dollars 00/100) (or its equivalent in any other currency). |
(9) Mergers, asset sales. Not to merge or transfer or dispose of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, unless the following conditions are met: (i) if the Issuer or any of the Guarantors is the merged company or the company that transmits or disposes of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, that the surviving or acquiring company assumes the obligations of the Issuer or the Guarantor, as appropriate, under the Stock Certificates, (ii) once the corresponding operation takes effect, a Cause of Early Maturity does not occur under the Stock Certificates, and (iii) if the Issuer or any of the Guarantors is the merged company or the one that transmits or disposes of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, the surviving or acquiring company delivers to the Common Representative a legal opinion that said merger or transfer complies with the provisions of subsection (i) above and a certificate signed by a responsible official indicating that said operation complies with the provisions of subsection (ii) above. For clarity, if the above conditions are met, the Issuer and the Guarantors may merge (as a merging company or merged company) or transfer or dispose of all or substantially all of the consolidated goods and assets of the Issuer and its Subsidiaries. The Issuer and the Guarantors shall not have to comply with such conditions if they enter into other types of transactions, including, without limitation, asset purchase or stock transactions or transactions for which the Issuer or the Guarantors sell or dispose of goods or assets that do not represent all or substantially all of the consolidated goods and assets of the Issuer and its Subsidiaries. The provisions of this section number (9) shall not apply when (a) the corresponding transfer or disposal of goods or assets is to the Issuer or between Guarantors, (b) the merger is between the Issuer and any Guarantor with the Issuer as a merger company or between Guarantors, or (c) the
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merger is between any Guarantor and a Restricted Subsidiary (as merger company) in which the Issuer, directly or indirectly, holds 99.5% (ninety-nine point five percent) or more of the shares or other stakes in the share capital.
(10) Tax Obligations. The Issuer and the Guarantors must comply with and be up to date in the payment of all taxes, contributions, government rights and charges that apply to them, determined, imposed or required, except for taxes, contributions, government rights and charges (regardless of the amount) whose constitutionality or determination is pending to be resolved for being the reason of a dispute with, or deferral requested before, the competent tax authority, provided that the Issuer or any of the Guarantors (a) has filed in good faith the means of defense established by applicable tax laws, (b) has established or maintains sufficient reserves, if required under applicable IFRS, in the event that the admissibility of the payment is declared by an enforceable judgment and (c) it has proceeded to guarantee the actual and potential tax liability in the terms required by the applicable tax provisions, given the case.
| XII. | CAUSES OF EARLY MATURITY. |
In the event that any of the following events occur (each one, a “Cause of Early Maturity”), the Stock Certificates may be considered to have matured in advance under the terms and conditions established below:
(1) Failure to Pay Interest on Time. If the Issuer fails to make the timely payment, when due, of any amount of interest under the Stock Certificate, and such payment is not made within 15 (fifteen) Business Days following the date on which it should have been made.
(2) Breach of Obligations under the Stock Certificate . If the Issuer or any Guarantor fails to comply with any of its obligations contained in the Stock Certificate other than the obligation to pay principal and interest under the Stock Certificates, on the understanding that the Issuer shall be deemed to be in default of such obligations if such default is not remedied within 90 (ninety) calendar days following the date on which the Issuer received written notification from the Common Representative specifying the default on the obligation in question.
(3) Default of Obligations that do not arise from the Stock Certificates. If the Issuer (i) fails to comply with the principal payment when due (whether on the scheduled due date or otherwise), with respect to any Debt of the Issuer for money borrowed, equal to or greater than USD 50,000,000.00 (fifty million Dollars 00/100) (or its equivalent in other currencies), or (ii) incurs in default or cause of early maturity (after its applicable grace period), and as a result of such breach or cause of early maturity such Debt is accelerated by whoever has the right to do so, through the corresponding statement, under any contract or instrument documenting or relating to Debt of the Issuer for money borrowed, equal to or greater than USD 50,000,000.00 (fifty million Dollars 00/100) (or its equivalent in other currencies).
(4) Insolvency. If the Issuer is declared in bankruptcy or insolvency by a competent judicial authority by means of a resolution that does not admit any appeal, or if the Issuer admits in writing its inability to pay debts in general when due.
(5) Validity of Stock Certificates. If the Issuer rejects, claims or challenges, through a procedure initiated in accordance with applicable law, the validity or enforceability of the Stock Certificates.
(6) Cancellation of the registration of Stock Certificates in the RNV. That the CNBV cancels the registration of the Stock Certificates in the RNV as a result of the Issuer’s failure to comply with the provisions established in the applicable regulation.
(7) Judgments. If the Issuer ceases to pay amounts pursuant to one or more final judicial judgments, not subject to appeal or remedy whatsoever, issued against it for a total amount of USD 100,000,000.00 (one hundred million Dollars 00/100) (or its equivalent in any other currency), and such judgments are not paid, guaranteed or suspended within 60 (sixty) calendar days following the date on which they must be paid.
If any of the events mentioned in the above paragraphs (4), (5) and (6) occur, the Stock Certificates will automatically mature, without the need for prior notice of default, presentation, payment requirement, protest
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or notification of any nature, whether legal or extralegal, and the unpaid principal amount of the Stock Certificates, the ordinary interest accrued and unpaid in respect thereof and all other amounts due thereunder will become immediately payable.
Should the event mentioned in paragraph (1) above occur (and the applicable grace period having elapsed), all amounts payable by the Issuer under the Stock Certificate may be declared mature in advance, provided that at least 1 (one) Holder provides written notice to the Common Representative indicating its intention to declare the Stock Certificates matured in advance, in which case the outstanding principal sum of the Stock Certificates, the ordinary interest accrued and unpaid with respect thereto and all other amounts due thereunder will become immediately payable. In the event that there is no request by any Holder whatsoever after 5 (five) Business Days after the date on which the Cause of Early Maturity mentioned in paragraph (1) above have elapsed, the Common Representative shall proceed to convene a Meeting of Holders in order to resolve it.
In the case that any of the events mentioned in paragraphs (2) (3) and (7) above occur (and the applicable grace periods have elapsed), all amounts payable by the Issuer pursuant to the Stock Certificates may be declared due in advance, provided that the meeting of Holders resolves to declare the Stock Certificates matured in advance and the Common Representative delivers a notice on the resolution of the meeting of Holders to the Issuer that declares the Stock Certificates matured in advance, in which case the Issuer shall become delinquent from the time it receives notice from the Common Representative, and the outstanding principal amount of the Stock Certificates, the accrued and unpaid interest thereon and all other amounts due thereunder, if any, shall become immediately enforceable. For the purpose of declaring the Stock Certificates mature in advance, the attendance and voting quorums at the meeting of Holders shall be those indicated in paragraphs (h) and (g) of section “Meeting of Holders” of this security.
The Common Representative shall inform the BMV (through the SEDI or the means it determines), the CNBV through the STIV 2, and the INDEVAL in writing (or through the means it determines) as soon as it is aware of and has verified any Cause of Early Maturity. Likewise, once the Stock Certificates are declared mature in advance, the Common Representative will inform the CNBV and the BMV, through the means determined thereby, including STIV 2 and SEDI (or any other means determined by the CNBV and the BMV, respectively). Likewise, the Common Representative must immediately inform Indeval in writing (or by the means it determines), that the Stock Certificates have been declared mature in advance, for which it will provide Indeval with the information requested for this purpose and that the Common Representative has at its disposal.
For clarity, failure to deliver the Notice of Compliance shall not constitute a Cause of Early Maturity.
| XIII. | DESTINATION OF FUNDS. |
| A. | Destination of Original Stock Certificate Funds |
The Issuer used the resources it obtained from the Issuance to fully or partially redeem the outstanding balance under any of the following contracts or obligations, at the Issuer’s option:
| (i) | The 2023 Credit Agreement, which consists of a simple USD 1 billion 5-year credit line, with a Secured Over Night Rate (“SOFR”) + 100 basis points and a committed revolving USD 2 billion 5-year credit line, with a SOFR + 100 basis points, maturing in November 2028; |
| (ii) | The Banorte Credit Agreement for up to USD 345 million, with a TIIE + 100 basis points, maturing on December 2028; |
| (iii) | The credit agreement for up to EUR 500 million, with an Euro Interbank Offered Rate (“EURIBOR”) + 140 basis points dated October 7, 2022, entered into between Cemex, S.A.B. de C.V. as borrower, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México as an administrative agent and sustainability structurer, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BNP Paribas, Citigroup Global Markets Inc. and Mizuho Bank Ltd., New York Branch, as placement agents and lead coordinators, and |
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| the other borrowers that are part of it, which was used to amortize debt instruments, maturing in October 2025; and/or |
| (iv) | The Notes. |
“Notes” means any of the following outstanding notes of the Issuer exempt from registration pursuant to Rule 144A and Regulation S under the United States Securities Act of 1933:
| i. | Senior notes with specific guarantee denominated in Euros at 3.125%, issued on March 19, 2019, for an outstanding amount of EUR 400 million, maturing in 2026; |
| ii. | Senior notes with specific guarantee denominated in Dollars at 5.450%, issued on November 19, 2019, for an outstanding amount of USD 753 million, maturing in 2029; |
| iii. | Senior notes with specific guarantee denominated in Dollars at 5.200%, issued on September 17, 2020, for an outstanding amount of USD 717 million, maturing in 2030; and |
| iv. | Senior notes with specific guarantee denominated in Dollars at 3.875%, issued on January 12, 2021, for an outstanding amount of USD 1.108 billion, maturing in 2031. |
| B. | Destination of Additional Stock Certificate Funds |
The Issuer will use the proceeds obtained from the Issue to repay all or part of the outstanding balance, at the Issuer’s election, under any of the Debt Instruments described in paragraph A above.
| XIV. | ADDRESS OF ISSUER. |
The Issuer’s registered office is Monterrey, Nuevo León. The Issuer’s mailing address for purposes of this stock certificate is Avenida Ricardo Margain Zozaya #325, Col. Valle Campestre, San Pedro Garza García, N.L., C.P. 66265.
| XV. | RIGHTS THAT STOCK CERTIFICATES CONFER ON HOLDERS. |
Each Stock Certificate shall represent for its holder the right to collect the principal and ordinary interest and, where appropriate, the default interest, as applicable, owed by the Issuer, under the terms described in this security and the Supplement, from the corresponding Date of Issue to the date of the full refund of its Nominal Value or Adjusted Nominal Value, as the case may be.
| XVI. | TRUSTEE. |
This security that covers the Stock Certificates will be deposited with Indeval in accordance with the provisions of Article 64 of the LMV.
| XVII. | WARRANTY. |
The Stock Certificates shall be unsecured and shall not have a specific guarantee, but they will at all times be endorsed by the Guarantors; on the understanding that at any time during the term of the Stock Certificates and without the consent of the Meeting of Holders or the Common Representative being required, the Issuer shall have the right to release any Guarantor from their obligations in such capacity under the Stock Certificates, as well as the right (but not the obligation) to replace any Guarantor or include new guarantors, provided that after such release, addition or replacement takes effect, the Minimum Endorsement is met, based on a certification from the secretary of the Issuer’s Board of Directors.
The Issuer (i) within 5 (five) Business Days following the date on which any of the changes described in the preceding paragraph occur, will publish a notice via the SEDI or any means that replaces it, describing the
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changes in Guarantors made in accordance with this Security, and (a) will submit the certification of the secretary of the Board of Directors of the Issuer referred to in the preceding paragraph, and (b) will obtain a legal opinion issued by an independent attorney (accrediting it with the letter referred to in Article 87 of the Provisions) that refers to the validity and enforceability of the Stock Certificates against persons who are constituted as Guarantors after such release, addition or replacement, as well as the powers of those who will subscribe the new security in their name and on their behalf (whose certification and legal opinion will be delivered to the CNBV (with a copy to the Common Representative) as part of the process of updating the registration of the Stock Certificates in the RNV), and (ii) once such notice is published, the redemption of the security shall be made by depositing the new security in Indeval as soon as possible and upon delivery of the Security then deposited, with the new security having to correctly reflect the Subsidiaries of the Issuer that will be Guarantors under the Stock Certificates from that moment on.
No change in the Guarantors shall constitute novation of the obligations contained in this stock certificate.
| XVIII. | TAX REGIME. |
The applicable withholding rate with respect to interest paid under the Stock Certificates is subject: (i) for individuals or legal entities residing in Mexico for tax purposes, to the provisions of Articles 54, 55, 135, and other applicable laws of the current Income Tax Law; and (ii) for individuals and legal entities resident abroad for tax purposes, to the provisions of Articles 153, 166, and other applicable laws of the current Income Tax Law, in the treaties to avoid double taxation that Mexico has in force, as applicable, and other applicable tax provisions, as amended at any time and provided that the requirements set forth by such provisions are met. Potential acquirers of the Stock Certificates should consult with their advisers about the tax consequences resulting from their investment in the Stock Certificates, including the application of specific rules regarding their particular situation. The current tax regime may be amended throughout the term of the Issue. The tax regime of the Issuance or investment in the Stock Certificates has not been validated or verified by the corresponding tax authorities. The Issuer assumes no obligation to report changes in applicable tax provisions throughout the term of the Issue, or to make gross or additional payments to cover any new taxes.
| XIX. | COMMON REPRESENTATIVE. |
The Holders of the Stock Certificates designate as common representative, under the terms of Articles 64 section XIII, 68 and 69 of the LMV, CIBanco, S.A., Institución de Banca Múltiple, who accepts the appointment and undertakes its faithful performance.
The Common Representative shall have the rights and obligations and carry out all acts necessary to safeguard the rights of the Holders, in accordance with (i) this stock certificate, (ii) Articles 68, 69 et al. applicable to the LMV relating to the common representation, and where applicable, (iii) the LGTOC, particularly with respect to the obligations and powers of the common representative, as well as its designation, revocation or waiver, and (iv) Articles 65, 68 et al. applicable to the Sole Circular.
The Common Representative shall have the obligation to ensure the interests of the Holders, for which it shall review, through the information provided to it for such purposes, the compliance by the Issuer and the Guarantors in due time and form , with their obligations related to the this Issuance and payment of the Stock Certificates contained in this stock certificate (except for the accounting, tax, labor and administrative obligations that are not directly related to payment of the Stock Certificates).
The Common Representative shall act in accordance with the instructions of the Meeting of Holders (for the purposes of clarity, the Common Representative does not represent the Holders individually, but jointly).
The Common Representative shall at all times have the right to request from the Issuer and, if applicable, from the Guarantors, the information and documentation that is necessary to verify compliance with the obligations established in this security, as well as conduct visits or reviews; the Issuer and the Guarantors, shall have the obligation to deliver such information and documentation and to have its external auditors, legal advisers or third parties provide the Common Representative with the information and documentation within the time frames reasonably requested by the Common Representative for the performance of its duties, in the
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understanding that the Common Representative may make such information known to the Holders. The Common Representative may at any time conduct visits or reviews of the Issuer once a year and whenever it deems it necessary, provided that it is (i) on business days and during business hours, (ii) does not interfere with the Issuer’s operations, and (iii) has given the Issuer 15 (fifteen) days’ advance written notice, except in the case of justified urgent cases in which case it will be required to give one-day advance written notice.
The Common Representative shall have the obligation to immediately request the Issuer to make known to the public, through a relevant event, any breach of the obligations established in this security, in the understanding that in the event that the Issuer fails to disclose the relevant event in question within 2 (two) Business Days following the notice from the Common Representative, the latter will have the obligation to publish such relevant event immediately.
In order to be able to comply with all of the above and that detailed below, the Common Representative may request to the general meeting of Holders, or have it contract, in case of breach, at the expense of the Issuer, any third-party specializing in the matter in question, that it considers necessary or appropriate to aid in compliance with its review obligations referred to in the preceding paragraphs or established in applicable legislation, subject to the responsibilities established by the meeting itself and, as a result, the Common Representative may rely, act and/or abstain from acting based on the determinations made by such specialists, as determined by the meeting of Holders. In the event that the Meeting of Holders does not approve such a contract, it may not be carried out. In the latter case, the Common Representative shall only be liable for the activities that are directly attributable to it under the terms of applicable legal provisions, in the understanding that if the meeting of Holders authorizes the contracting but does not provide sufficient resources to the Common Representative for such purposes, the provisions of Article 281 of the Commercial Code will be followed as well as the provisions of Article 2577 of the Civil Code for the Federal District and its correlatives in relation to its capacity as agent in terms of Article 217 of the LGTOC, in the understanding, also, that the Common Representative shall not be obliged to anticipate the amounts necessary for contracting third-party specialists and shall not be liable under any circumstance for the delay in their contracting and/or for lack of resources to carry out said contracting and/or because they are not provided to them by either the Issuer or, if it does not comply with that obligation, the Holders.
The Common Representative shall only act or cease to act based on information received, without being obligated to verify its authenticity, integrity or accuracy. The Common Representative shall not be liable in cases involving malpractice, negligence, bad faith or illegal action (including fraud) by the Issuer.
The Common Representative shall have the powers and obligations indicated by the LMV, the LGTOC and other applicable ones, as well as those attributed to it by way of example and not limitation in this stock certificate. For all matters not expressly provided for in this stock certificate or in the LGTOC, the Common Representative shall act in accordance with the instructions of the meeting of Holders.
The Common Representative shall have, among others, the following obligations and powers:
| (i) | Sign this representative stock certificate of the Stock Certificates; |
| (ii) | Power to monitor compliance with the use of the resources obtained from the Issuance and placement of the Stock Certificates in accordance with the provisions of this stock certificate; |
| (iii) | Convene and preside over the meetings of Holders when required by law, when deemed necessary or appropriate, or at the request of the Holders representing, individually or jointly, 10% (ten percent) or more of the circulating Stock Certificates or at the request of the Issuer; |
| (iv) | Sign, on behalf of the Holders and after approval of the Meeting of Holders, when applicable, the documents or agreements that must be signed or entered into with the Issuer. |
| (v) | Exercise the acts that are necessary for the purpose of safeguarding the rights of the Holders, including without limitation, the power to request the meeting to hire an auditor, when in its opinion it is necessary; |
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| (vi) | Calculate and publish the Annual Gross Interest Rate applicable to the Stock Certificates in each Interest Period, as well as the amount of interest payable on each of the Interest Payment Dates or, if applicable, of principal on the Maturity Date; |
| (vii) | Act before the Issuer or before any competent authority as intermediary with respect to the Holders of the Stock Certificates; |
| (viii) | Monitor compliance with the obligations of the Issuer under the terms of this stock certificate; |
| (ix) | Publish, through the means determined for this purpose, any information to the large investing public regarding the status of the Issuance, in the understanding that any information that is confidential must always be identified as such, since the Common Representative may disclose to the investing public any information that has been made known to it and that has not been identified as confidential; |
| (x) | Request from the parties all the necessary information in the exercise of their powers and for the fulfillment of their obligations; |
| (xi) | Inform the CNBV, the BMV and the Indeval, through the means they determine, as soon as they become aware of a Cause of Early Maturity and when the Stock Certificates are declared matured in advance. |
| (xii) | At the instructions of the general Meeting of Holders or, if so deemed appropriate, the Common Representative requests it from the Meeting of Holders, contract third parties for the fulfillment of their review and supervision obligations established in this stock certificate; and |
| (xiii) | In general, exercise all functions and powers, as well as comply with all the obligations under its responsibility in terms of this stock certificate, the LMV, the LGTOC, the Sole Circular, and healthy trading uses and practices. |
Any and all acts carried out by the Common Representative on behalf of the Holders, in terms of this stock certificate or applicable law, shall be mandatory and shall be deemed accepted by the Holders.
The Common Representative shall be responsible for the performance of its duties when requested by the Meeting of Holders or at the time of completing its assignment.
The Common Representative may be removed or replaced by agreement of the Meeting of Holders, with the understanding that such removal will only take effect from the date on which the substitute common representative has been appointed, accepted the position and has taken possession thereof. The appointment of a new common representative may only be from a brokerage or credit institution.
The Common Representative shall terminate its duties on the date that all amounts owed to the Holders pursuant to the Stock Certificates have been paid in full.
The Common Representative shall not at any time be obliged to pay any type of expense or amount whatsoever charged to its assets to carry out all the acts of authority and obligations that correspond to it by virtue of its assignment.
| XX. | MEETING OF HOLDERS. |
(a) Meetings of Holders shall represent all of them and shall be governed, at all times, by the provisions of this stock certificate, the LMV and by the LGTOC for unforeseen or inappropriate cases, its resolutions being valid with respect to all Holders, even with respect to those absent and dissenting. Accordingly, any act of the Issuer which, in terms of this stock certificate, is subject to the approval of the Holders shall be submitted to the relevant general Meeting of Holders.
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(b) The Meeting of Holders shall meet whenever convened by the Common Representative, when required by law, or at the request of the Holders representing, individually or jointly, at least 10% (ten percent) or more of the outstanding Stock Certificates or at the request of the Issuer specifying in their request the items to be discussed at the meeting. The Common Representative must issue the call for the meeting within 15 (fifteen) calendar days from the date on which it receives the request. If the Common Representative breaches this obligation, the judge of first instance of the domicile of the Issuer, at the request of the Issuer or the requesting Holders, must issue the call for the meeting.
(c) The call for meetings of Holders shall be published at least once in any newspaper with wide circulation at the national level, at least ten (10) calendar days prior to the date on which the meeting must be held. The call will indicate the items that must be addressed at the meeting, and may not deal with items that are not foreseen on the agenda, unless 100% (one hundred percent) of the outstanding Stock Certificates is represented, taking into account that each Holder will be entitled to one vote for each Stock Certificate it accredits.
(d) To attend the Meetings of Holders, the Holders must deliver to the Common Representative the deposit certificates issued for this purpose by Indeval, as well as the list of owners who, if applicable, issues the corresponding financial entity in which the number of Stock Certificates of which the Holder in question is the holder is indicated, at the place designated in the call to the Meeting of Holders, at least the Business Day prior to the date on which the Meeting of Holders is to be held. The Holders may be represented at the meeting by proxy (with sufficient powers or a signed power of attorney letter before two witnesses).
(e) The meetings of Holders shall be held at the address of the Common Representative and in the absence or impossibility of this, at the address indicated in the corresponding call to order of the registered office of the Issuer.
(f) For a Meeting of Holders to be considered legally installed by virtue of the first call to meet to discuss matters other than those indicated in subsection (g) below, at least, half plus one of the outstanding Stock Certificates should be represented, and their decisions shall be valid when approved by the Holders representing the majority of those present at the meeting, taking into account that each Holder shall be entitled to one vote for each outstanding Stock Certificate it accredits.
(g) If the Meeting of Holders meets by virtue of a second or subsequent call to discuss matters other than those indicated in subsection (h) below, there will be a quorum for its installation with any number of Stock Certificates represented therein and its decisions will be valid if they are made by the majority of the Holders present at the Meeting taking into account that each Holder will be entitled to one vote for each outstanding Stock Certificate it accredits.
(h) At least 75% (seventy-five percent) of the outstanding Stock Certificates must be represented at the meeting of Holders, by virtue of the first call, and the decisions must be approved by at least half plus one of the votes at said meeting, taking into account that each Holder will be entitled to one vote for each accredited outstanding Stock Certificate, in the following cases:
| (i) | when it comes to appointing or revoking the appointment of the Common Representative or appointing any other common representative to replace it; |
| (ii) | to exempt the Issuer or the Guarantors from compliance with any Obligation To Do and/or Not To Do in terms of this security; |
| (iii) | when it comes to granting extensions or delays to the Issuer with respect to the payments of principal and/or interest under this stock certificate; or |
| (iv) | when it comes to declaring the early maturity of the Stock Certificates in accordance with the provisions of the penultimate paragraph of the section “Causes of Early Maturity” contained above. |
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When it comes to making any amendment to the terms or conditions of the Stock Certificates, unless the amendment in question is to (i) correct any omission or defect in the wording of this security, (ii) correct or add to any provision of this security that is inconsistent with the remainder thereof, (iii) satisfy any requirements, condition or guidelines contained in an order, judgment or applicable statutory provision or (iv) where such amendment does not materially alter the terms of this security, nor causes harm to the rights of the Holders, in the judgment of the Common Representative; cases in which the consent of the Holders will not be required. In the event that such amendments impact the stock certificate, the Common Representative shall carry out the procedures and comply with the requirements necessary to redeem the stock certificate before the Indeval, informing Indeval in writing or by the means determined by Indeval, at least 6 (six) Business Days in advance of the date of the aforementioned redemption, and notice shall indicate (i) the date on which the relevant redemption will take place, and (ii) any and all amendments made to the stock certificate, with the clarification that they do not affect, modify or limit the rights of the Holders. The Holders, by merely acquiring one or more Stock Certificates, accept and authorize the Issuer and the Common Representative to carry out, without holding a meeting, the amendments referred to in this section.
(i) If the meeting of Holders meets by virtue of a second or subsequent call to deal with any of the matters indicated in subsections (h) (i), (ii) and (iii) above, half plus one of the outstanding Stock Certificates shall be required to be present or represented and their decisions shall be valid if made by the majority of the Holders present at the meeting, based on the Nominal Value of the Stock Certificates, except in the case of any of the matters referred to in subsection (h) (iv) above, in which case it will be required that at least 75% (seventy-five percent) of the outstanding Stock Certificates be represented in the meeting of Holders and the decisions be approved by at least the majority vote of the Holders present, based on the Nominal Value of the Stock Certificates.
(j) In no case may Holders be represented at the meeting who, individually or jointly, hold stock certificates that have not been put into circulation, or that the Issuer, or any person related to the Issuer, has acquired in the market. In such a case, such Stock Certificates shall not be considered for the quorum to convene and vote at the general meetings of Holders provided for in this corresponding stock certificate.
(k) The minutes signed by those who have served as president and secretary shall be drawn up at each meeting. The attendance list will be added to the minutes, signed by the attendees and by the returning officers. The minutes and other data and documents that refer to the action of the meetings of Holders or the Common Representative shall be kept by the latter and may, at all times, be consulted by the Holders, who shall have the right to have, at the expense of the applicant, the Common Representative issue certified copies of said documents to them.
(l) For the purposes of calculating the quorum of attendance at the Meetings of Holders, the number of outstanding Stock Certificates shall be taken as a basis.
(m) The meetings of Holders shall be chaired by the Common Representative and in the meetings, the Holders shall be entitled to as many votes as correspond to them by virtue of the Stock Certificates they hold, one vote for each outstanding Stock Certificate.
(n) The resolutions made outside of the meeting unanimously by the Holders representing all the Stock Certificates entitled to vote shall have, for all legal purposes, the same validity as if they had been adopted at the meeting, provided that they are confirmed in writing.
(o) Once the meeting is declared to be installed, the Holders may not prevent its holding by leaving. Holders who withdraw or who do not attend the resumption of a Meeting of Holders that has been adjourned in the terms indicated above shall be deemed have refrained from casting their vote on the matter(s) in question. The foregoing shall be without prejudice to the provisions of Articles 220, last paragraph and 223, section I, of the LGTOC.
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(p) Any and all acts carried out by the Common Representative in the name or on behalf of the Holders, under the terms of this stock certificate or applicable legislation, shall be binding and shall be considered accepted by the Holders, including those absent and dissenting.
None of the above provisions shall limit or affect the rights that, where appropriate, the holders have in accordance with Article 220, last paragraph and Article 223 of the LGTOC.
| XXI. | APPLICABLE LAW AND JURISDICTION. |
This stock certificate shall be governed by and construed in accordance with the laws of Mexico. The Issuer, the Guarantors, the Common Representative and, by virtue of the acquisition of Stock Certificates, the Holders, submit to the jurisdiction of the federal courts in Mexico City for any dispute related to the Stock Certificates and/or Holders’ assembly, waiving any other jurisdiction that may correspond to them by reason of domicile, present or future, or for any reason.
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This Security covers the entirety of the Stock Certificates and replaces the security originally issued and deposited with Indeval on October 5, 2023. This Security is issued and redeemed for the previously deposited security, on the occasion of the issuance of the Additional Stock Certificates corresponding to the First Reopening of the Second Issue.
This stock certificate consists of 28 (twenty-eight) pages and is signed by the Issuer, the Guarantors and, for the purposes of recording their acceptance of their assignment and their functions, the Common Representative, in San Pedro Garza García, Nuevo León, on February 20, 2024.
| The Issuer | ||
| Cemex, S.A.B. de C.V. | ||
| /s/ Fernando José Reiter Landa | ||
| By: Fernando José Reiter Landa | ||
| Position: Proxy | ||
| The Guarantors | ||
| Cemex Concretos, S.A. de C.V. | CEMEX Corp. | |
| /s/ Fernando José Reiter Landa | /s/ Fernando José Reiter Landa | |
| By: Fernando José Reiter Landa | By: Fernando José Reiter Landa | |
| Position: Proxy | Position: Proxy | |
| Cemex Operaciones México, S.A. de C.V. | Cemex Innovation Holding Ltd. | |
| /s/ Fernando José Reiter Landa | /s/ Fernando José Reiter Landa | |
| By: Fernando José Reiter Landa | By: Fernando José Reiter Landa | |
| Position: Proxy | Position: Proxy | |
| Common Representative of the Holders | ||
| CIBanco, S.A., Institución de Banca Múltiple | ||
| /s/ Patricia Flores Milchorena | /s/ Alfredo Basurto Dorantes | |
| By: Patricia Flores Milchorena | By: Alfredo Basurto Dorantes | |
| Position: Proxy | Position: Proxy | |
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Exhibit 4.8
BEARER STOCK CERTIFICATES
CEMEX, S.A.B. DE C.V.
“CEMEX 23L”
$3,000,000,000.00 (three billion Pesos 00/100 National Currency)
By virtue of this security, Cemex, S.A.B. de C.V., (hereinafter, “Cemex” or the “Issuer” or the “Company”, indistinctly) undertakes to pay unconditionally in a single payment, at the location indicated below, the amount of $3,000,000,000.00 (three billion Pesos 00/100 National Currency), for the total issuance of 30,000,000 (thirty million) long-term stock certificates (the “Stock Certificates”); plus the respective interest, precisely on October 1, 2026 or, if said day is a non-business day, the next Business Day (the “Expiration Date”).
This stock certificate covers 10,000,000 (ten million) bearer long-term stock certificates, with a nominal value of $100.00 (one hundred Pesos 00/100 National Currency) each (the “Original Stock Certificates”), issued on October 5, 2023, and 20,000,000 (twenty million) bearer long-term stock certificates, with a nominal value of $100.00 (one hundred Pesos 00/100 National Currency) each (the “Additional Stock Certificates”), issued on February 20, 2024.
This stock certificate is issued for administrative deposit with S.D. Indeval Institution for the Depósito de Valores, S.A. de C.V. (“Indeval ”), justifying the holding of the Stock Certificates by said institution and the performance of all the activities that have been assigned to the institutions for the deposit of securities, and that in accordance with the applicable legislation they must be exercised by the institutions for the deposit of securities, with no further liability to Indeval than that established in the LMV (as such term is defined below).
Under the terms of Article 282 of the LMV, the Issuer determines that the Stock Certificate does not have coupons attached, the certificates issued by Indeval, take their place, for all legal purposes.
The Stock Certificates of this Issue correspond to the type referred to in section I of article 62 of the LMV.
This stock certificate is issued under the Program (as such term is defined below), which has been registered in the National Securities Registry under number 0021-4.15-2023-004, whose preliminary registration was authorized by the CNBV (as such term is defined below), by official letter number 153/5589/2023, dated October 2, 2023. The dissemination of the documentation corresponding to this Issuance has been authorized in terms of official letter number 153/5589/2023, dated October 2, 2023, issued by the CNBV. The Stock Certificates documented by this stock certificate have been registered in the National Securities Registry under number 0021-4.15-2023-004-01. The public offer of the Additional Stock Certificates was authorized by the CNBV through official letter number 153/3146/2024, dated February 15, 2024.
I. DEFINITIONS.
The following terms shall have the meaning indicated for each of them in this stock certificate and are equally applicable in singular and plural:
“Total Consolidated Assets” means the total consolidated assets of the Issuer and its Subsidiaries that appear on its most recent consolidated balance sheet and are calculated in accordance with the IFRS.
“Operating Assets” means, on any determination date, any fixed and tangible assets owned by the Issuer or any of its Subsidiaries that constitute all or part of any plant producing cement or concrete, aggregate quarry, for milling, maritime terminal, or ground distribution center that is used in the ordinary course of business, including, without limitation, machinery and equipment, other than those assets that, individually or, in the case of a series of related operations, as a whole, are not of importance to the business or assets of the Issuer and its Subsidiaries considered jointly, in the understanding that no asset shall be considered an Operating Asset unless
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its net book value exceeds 3% (three percent) of the Total Consolidated Assets.
“Scope 1” means CO2 Emissions related to cement and clinker production, excluding on-site energy production from alternative fossil fuel sources.
“Scope 2” means the CO2 Emissions of the electricity purchased for cement and clinker production.
“Guarantors” means, initially, Cemex Concretos, S.A. de C.V., CEMEX Corp., Cemex Operaciones México, S.A. de C.V., and Cemex Innovation Holding Ltd.; with the understanding that the Issuer shall have the right to release or replace any Guarantor, or include new guarantors, provided that after such release, addition or replacement takes effect, it fulfills the Minimum Endorsement, based on a certification from the secretary of the Issuer’s Board of Directors.
“Minimum Endorsement” means the Cemex Subsidiaries that are individually endorsers or guarantors (i) under the 2021 Credit Agreement, (ii) under the Debt incurred to refinance the 2021 Credit Agreement, or (iii) of 85% of the unpaid and outstanding debt of the Issuer and its Restricted Subsidiaries.
“BMV” means the Bolsa Mexicana de Valores, S.A.B. de C.V.
“Cause of Early Maturity” has the meaning indicated in the “Cause of Early Maturity” section of this stock certificate.
“Cemex” or the “Issuer” or the “Company” means indistinctly Cemex, S.A.B. de C.V., a company whose corporate purpose is to participate in commercial and civil companies, civil associations and in all kinds of domestic and foreign companies, through the subscription and/or acquisition of their shares, equity interests, assets and rights and through any means dispose of and carry out all kinds of acts and commercial contracts with respect to such shares, equity interests, assets and rights, and for the fulfillment of its corporate purpose, the Company may directly or indirectly through third parties, enter into or perform all kinds of acts, transactions and contracts of a civil, commercial, specialized works or services or of any other nature, that are pertinent, accessory, necessary or convenient for the effective achievement of its corporate purpose through the activities indicated below: (i) the manufacture, sale and purchase, distribution, transportation, import, export, industrial and commercial exploitation and use in general of cement, as well as any kind of construction materials; (ii) the production, distribution, import, export, supply, maquila, transportation, hauling, pumping, consignment, sale and purchase, deposit, intermediation, commission, exploitation, marketing and general industrial and commercial use of cement, concrete, mortar, clay, limestone, gypsum, shard, sand, gravel, iron ore, raw materials used in cement making, as well as any kind of construction materials in general; (iii) the sale, distribution, transportation, import, export, exploitation, use and industrial and commercial utilization of aggregates, ready-mixed concrete, its additives and components and, in general, all types of pieces and prestressed concrete objects, pre-concretes, tubes and construction materials, concrete blocks and precast concrete elements; (iv) the establishment of concrete, cement and asphalt manufacturing plants, with the facilities for obtaining and crushing aggregates, dosing and mixing thereof and hauling, and consolidation of its products; (v) own Exploration and/or Exploitation Mining Concessions, for the purpose of exploring and/or exploiting minerals or substances subject to the Mining Law in force, in accordance with the provisions of Article 11 of said law; (vi) be the holder of Ordinary and/or Extraordinary General Permits for the purchase, storage and consumption or purchase and consumption of explosive materials, for the construction industry and for the mining industry, in order to exploit the stone and mineral materials, respectively, in accordance with the provisions Articles 37 and 42 of the Federal Law of Firearms and Explosives; (vii) the transportation of merchandise and products in modality of general cargo, waste and/or hazardous materials and bulky and/or heavy weight materials, exploitation and use of the General Means of Communication (Vías Generales de Comunicación) or their services and related under the concessions or permits granted by the Federal Executive as applicable; or, through the concessions or permits that the Company receives in contribution, transfer or in right of its Partners and authorized by the competent authorities; (viii) the exploitation of specialized services of general cargo, waste and/or hazardous materials and bulky and/or heavy objects related to the concessions and permits granted by the authorities of the states of the country; (ix) the use of roads in general and their connection with other means of transport, through the Contracts that are entered into, in order to offer the user public an efficient and safe service; (x) the verification of official Mexican standards and serve as an approved
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and accredited inspection and verification unit to perform the procedures for evaluating the specifications and physical-mechanical and safety conditions for the operation of roads and bridges under the federal jurisdiction of motor transportation cargo, in compliance with Mexican official standards; (xi) the training and preparation of Drivers of the Federal Motor Carrier and Private Transport Service (Conductores del Servicio de Autotransporte Federal y Transporte Privado), (xii) the specialized workshop maintenance and repair service, as well as the sale of spare parts and technical equipment to third parties; (xiii) the manufacture, purchase, sale, import, export, maquila and marketing of bags, sacks and all types of containers of any material, as well as the raw materials necessary for this purpose; (xiv) the industrial and commercial use of wastewater through its treatment and reuse; (xv) the use, exploitation and utilization of public property, for the handling of fluids and the use of goods and the provision of port services that constitute the port operation under the terms of the Ports Law, classified as maneuvering services for the transfer of goods or merchandise, such as loading, unloading, stacking, storage, stowage and haulage within the port, by any of the modalities provided by such law, including, but not limited to, obtaining concessions, permits, authorizations and partial assignments of rights; (xvi) logistic services associated with the oil industry, as well as operation management of asphalt emulation plants; (xvii) the treatment and refining of Oil, the processing of Natural Gas and the export and import of Hydrocarbons and Petroleum, as well as the Transportation, Storage, Distribution, compression, liquefaction, decompression, regasification, commercialization and Public Expense of Hydrocarbons, Petroleum or Petrochemicals, including the construction, operation and exploitation of land areas, warehouses, ships, tanks, dry ports, marine terminals and facilities of any kind, for the management of petroleum and/or energy products, by any of the modalities provided by such law, including but not limited to, obtaining concessions, permits and/or authorizations, as appropriate, under the terms of Title Three of the Hydrocarbons Law; (xviii) the rendering of the Auxiliary Service for the Railway Freight Terminal, the Railway Auxiliary Service for transshipment and transfer of liquids, the Railway Auxiliary Service of railway equipment maintenance workshops and the provision of the transfer of liquids in any of its modalities; (xix) the establishment of navigation services, transport, passengers and cargo, between the ports of the country and abroad, if necessary, the acquisition of boats for the aforementioned purposes and the operation of docks, shipyards and any other necessary construction or work for the initiation and development of its services; (xx) the obtaining of concessions, permits, subsidies and legal franchises related to any of the activities of its corporate purpose and acquiring by any legal title, including by concession of public power, direct ownership over lands, waters or their accessions and exploiting them, whether for irrigation, to generate driving force or for industrial objects; (xxi) the manufacture, sale, distribution, lease, import, export, transportation, supply, assembly, transport, loading, consignment, sale, deposit, mediation, commission, exploitation, commercialization and industrial and commercial use in general of all types of products allowed by the laws and in general, all kinds of domestic or foreign goods or merchandise, either as raw material, semi-finished products and perform with them trade acts in any form on their own or by third parties; (xxii) the rendering of handling, storage and custody of foreign goods services, either owned by the Company or by third parties with whom the Company enters into an agreement; (xxiii) the private transportation of goods owned by the Company or related to their activities, as well as of persons related to the same purpose, without involving the provision of federal public transportation in any of its forms; (xxiv) the operation as a shipping company and performance of all activities related to its operation and carrying out all the formalities before the competent authorities to obtain the proper permits; (xxv) the acquisition, lease, charter and enter into any type of contract with foreign and Mexican vessels as well as registering and obtaining the Mexican flag for the vessels that may require it; (xxvi) to act as consignee agent for vessels and perform all activities related to the operation as such; (xxvii) the manufacture, sale, distribution, lease, import, export, exploitation and overall development of all types of industrial and commercial equipment, machinery, tools, spare parts and parts, motor carriers and any articles or commercial items; (xxviii) the exploitation of the various engineering branches in all its aspects either pure or applied, as well as projects and construction works; (xxix) the execution of contracts for construction, design, engineering, and supply of technical and professional services, the development of architectural projects, installation of technical and mechanical infrastructure, and any other applications necessary, convenient or conducive to the development and prosperity of the Company, including participating in competitions, public or private bids or offers either national or international; (xxx) to acquire, sell, manage, lease or receive in lease or sublease, give or receive on loan, exchange, encumber in any way, exploit, affect or be a trustee in trust and, in general, enter into any legal act that involves acquiring, transferring or guaranteeing the rights of ownership or possession of all real or personal types of property, as deemed necessary or convenient for the development and prosperity of the Company, or to directly or indirectly support the development of the Company; (xxxi) to decorate, manage and operate in any manner all kinds of buildings, factories, warehouses, houses and apartments on their own or
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through third parties; (xxxii) to provide and receive any type of technical, administrative, sales, advertising, monitoring, technical assistance, consultation and advice services on industrial, tax, accounting, commercial, financial, and any other type of matters; (xxxiii) to request, obtain, buy, lease, assign or otherwise acquire or dispose of trademarks, trade names, copyrights, patents, inventions and processes, know-how and, in general, intellectual and industrial property rights, as well as licenses over them; (xxxiv) to enter into or agree on agency operations, mediation, technical assistance, professional services, consulting, distribution, supply, leasing and factoring, brokerage and generally all kinds of contracts or agreements involving services to or for third parties, as a result of the obligations or duties incurred by virtue of entering into the contracts in this section; (xxxv) to give or take money on loan, secured or unsecured, including the issuance of debt securities in public or private sale that represent loans with the investing public; (xxxvi) to issue, draw, sign, accept, endorse, guarantee and enter into any type of commercial or legal transaction, regarding negotiable instruments, with national or foreign credit institutions, as well as agents and securities intermediaries, in investment companies and auxiliary credit organizations and in any organization, corporation or association, any and all types of transactions necessary or convenient for the fulfillment of its corporate purpose, including entering into repurchases, loans, trusts, mandates, agencies or any contract or agreement either for the purpose of investing its resources, to obtain financing, or where appropriate, to affect, transmit or to pledge the negotiable instruments referred to in this section; (xxxvii) to grant guarantees, bonds and, in general, guarantee, including with pledges and mortgages, obligations incurred on behalf of third parties, with or without consideration; and (xxxviii) to render the Comprehensive Logistics and Supply Chain Service.
“Sole Circular” means the provisions of a general nature applicable to securities issuers and other securities market participants, issued by the Secretariat of Finance and Public Credit, through the CNBV, published in the Official Gazette of the Federation on March 19, 2003, as they have been and are amended.
“Stock Certificates” has the meaning attributed to it in the first paragraph of this security.
“Additional Stock Certificates” has the meaning attributed to it in the second paragraph of this title.
“Original Stock Certificates” has the meaning attributed to it in the second paragraph of this title.
“CNBV” means the National Banking and Securities Commission.
“2023 Credit Agreement” means the credit agreement, dated October 29, 2021, entered into by and between the Issuer, as a borrower, Citibank, N.A. as an administrative agent, ING Capital LLC as a sustainability structuring agent, BofA Securities Inc., BNP Paribas, Citigroup Global Markets Inc. and JPMorgan Chase Bank, N.A. as placement agents and joint lead coordinators, and the other creditors that are part of it, amened on October 30, 2023, and as amended and/or restated from time to time.
“Banorte Credit Agreement” means the credit agreement, dated December 20, 2021, entered into by and between the Issuer, as the borrower, and Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte, as the lender, amended on December 6, 2023, and as amended and/or restated from time to time.
“Debt” has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this certificate.
“Business Day” means any day, other than Saturday or Sunday, or legal holiday, on which full-service banking institutions must keep their offices open to the public, according to the calendar published periodically by the CNBV.
“Dollar” or “USD” means dollars, legal tender in the United States of America.
“Issue” means the issuance of the Stock Certificates covered by this stock certificate, to which the ticker CEMEX 23L was assigned.
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“CO2 Emissions” means the absolute emissions of carbon dioxide of the Issuer and its Subsidiaries during any period, measured in kgCO2/t.
“Euro” or “€” means Euros, legal tender for European Union member states that have adopted a single legal tender in accordance with the Treaty establishing the European Community, as amended by the Treaty on European Union.
“Annual Gross Interest Rate Determination Date” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Date of Issue” means the date of issue of the Stock Certificates, as applicable.
“Date of Issue of Additional Stock Certificates” means February 20, 2024.
“Date of Issue of Original Stock Certificates” means October 5, 2023.
“Notification Date” means the date the Issuer delivers the Notice of Compliance to the Common Representative.
“Interest Payment Date” has the meaning attributed to such term in the “Interest Payment Frequency” section of this stock certificate.
“Maturity Date” means October 1, 2026.
“Guarantee” has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this title.
“Encumbrance” or “Encumbrances” means, with respect to any asset, any mortgage, pledge, usufruct, deposit, charge, preference or any other security of any kind or nature, including any conditional purchase and sale or with reservation of ownership.
“Permitted Encumbrances” has the meaning attributed to it in the “Obligations To Give, To Do and Not To Do of the Issuer and Guarantors” section of this title.
“Indeval” means the S.D. Indeval Institution for Depósito de Valores, S.A. de C.V.
“kgCO2/t” means kilograms of CO2 per tons of Cementing Product.
“LGTOC” means the General Law of Credit Securities and Operations.
“LMV” means the Securities Market Act.
“Financing Framework” means the Sustainability Linked Financing Framework adopted by the Issuer in August 2023 and available at the following website: https://www.cemex.com/inversionistas/informacion-sobre-deuda/finanzas-sostenibles.
“Mexico” means the United Mexican States.
“Total Authorized Amount of the Program” means up to $20,000,000,000.00 (twenty billion Pesos 00/100 National Currency) or its equivalent in UDIs (unidad de inversión investment units).
“IFRS” means (i), with respect to the Issuer, the “International Financial Reporting Standards” issued by the International Accounting Standards Board, and (ii) with respect to the Guarantors, the generally accepted accounting principles applicable in the corresponding jurisdiction, in both cases, as in effect on the Date of Issue; on the understanding that the Issuer may choose, irrevocably, that in both cases such accounting principles will begin to be applied as they are in force at any time after the Date of Issue (and no longer as they
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were in force on the Date of Issue). The Issuer shall notify such choice to the Common Representative and the election shall take effect from such notice.
“Notes” has the meaning attributed to it in the “Destination of Funds” section of this title.
“Notice of Compliance” means the notice that the Issuer will give to the Common Representative signed by a legal representative or proxy confirming that the Issuer met the Sustainability Performance Target; on the understanding that the Notice of Compliance shall include an independent and external verification from the External Verifier, in accordance with its usual procedures, regarding the Issuer’s progress in reducing its Scope 1 and Scope 2 CO2 Emissions. For purposes of clarity, any verification issued by an External Verifier having a scope of verification equal to or greater than the content in the integrated annual report of the Issuer for the year 2022 will be considered as an independent and external verification issued by an External Verifier according to its regular procedures.
“Sustainability Performance Target” means the Issuer’s performance target and key performance indicator of reducing its Scope 1 and Scope 2 CO2 Emissions to 564 kgCO2/t for the year ending on December 31, 2025.
“Interest Period” has the meaning attributed to such term in the “Interest Payment Frequency” section of this stock certificate.
“Pesos” means the legal currency in Mexico.
“Cementing Product” means all volumes of clinker produced by the Issuer (excluding clinker purchased from third parties) for the manufacture of cement or the direct sale of clinker, plus gypsum, limestone, cement kiln dust (CKD) and all mineral components for cement blending, plus the blend, plus all cement substitutes produced.
“Program” means the long-term revolving securities certificate program, for an amount of up to $20,000,000,000.00 (twenty billion Pesos 00/100 National Currency) or its equivalent in UDIs, authorized by means of official letter number 153/5589/2023, dated October 2, 2023. During the term of the Program, such issuances of stock certificates may be made as determined by the Issuer, provided that it does not exceed the Total Authorized Amount of the Program.
“Common Representative” means CIBanco, S.A., Institución de Banca Múltiple, whose institution serves as common representative of the Holders.
“SEDI” means the electronic information sending and dissemination system maintained by the BMV called “EMISNET”.
“STIV-2” means Securities Information Transfer System 2.
“Subsidiary” means any company or entity of any nature in respect of which the Issuer, directly or indirectly, (i) owns 50% (fifty percent) or more of its capital or of the securities representative of its capital or voting rights; or (ii) controls the administration by any means or cause.
“Restricted Subsidiaries” means any Subsidiary of the Issuer that owns Operating Assets.
“Annual Gross Interest Rate” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Reference Interest Rate” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“Substitute Rate” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
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“Holders” means the legitimate holders of the outstanding Stock Certificates.
“TIIE ” has the meaning attributed to such term in the “Interest Rate and Interest Calculation Method” section of this stock certificate.
“UDIs” means the Investment Units whose value in Pesos is published by the Banco de México in the Official Gazette of the Federation.
“Nominal Value” means $100.00 (one hundred Pesos 00/100 National Currency) for each Stock Certificate.
“Adjusted Nominal Value” means, in the event that the Issuer carries out a partial early redemption of the Stock Certificates, the result of the redemption amount, divided by the number of Stock Certificates in circulation.
“Increased Nominal Value” means the Nominal Value plus 0.2% (zero point two percent), which will be applicable on the Maturity Date, unless the Issuer has delivered a Notice of Compliance to the Common Representative.
“External Verifier” means any independent provider of sustainability certification services designated by the Issuer for the purposes of verifying the Issuer’s progress in reducing its Scope 1 and Scope 2 CO2 Emissions.
II. SOME FEATURES OF THE STOCK CERTIFICATES.
| Issue Number under the Program: | First Reopening of the First Issue. | |
| Total Amount of Issuance of Stock Certificates: | $3,000,000,000.00 (three billion Pesos 00/100 National Currency). | |
| Total Amount of Issuance of Original Stock Certificates: | $1,000,000,000.00 (one billion Pesos 00/100 National Currency) | |
| Total Amount of Issuance of Additional Stock Certificates: | $2,000,000,000.00 (two billion Pesos 00/100 National Currency). | |
| Validity Period of the Original Stock Certificates: | 1,092 (one thousand ninety-two) days, counted from the Date of Issue, equivalent to approximately 3 (three) years. | |
| Validity Period of the Additional Stock Certificates: | 954 (nine hundred fifty-four) days, counted from the Date of Issue, equivalent to approximately 2.6 (two point six) years. | |
| Date of Issue of Original Stock Certificates: | October 5, 2023. | |
| Date of Issue of Additional Stock Certificates | February 20, 2024. | |
| Date of Maturity: | October 1, 2026. | |
III. INTEREST RATE AND INTEREST CALCULATION METHOD.
As of their Date of Issue, as applicable, and provided they are not fully redeemed, the Stock Certificates shall accrue a gross annual interest on their Nominal Value or, if applicable, Adjusted Nominal Value, but never on their Increased Nominal Value, at an annual rate equal to that referred to in the following paragraph, which the Common Representative will calculate 2 (two) Business Days prior to the start of each 28-day Interest Period, to be determined according to the payment schedule below (each of said previous Business Days, the “Annual Gross Interest Rate Determination Date”), and will govern during the applicable Interest Period, except for the Gross Annual Interest Rate applicable to the first Interest Period, which will be that described below.
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The Annual Gross Interest Rate (as defined below) will be calculated by adding 0.45 (zero point forty-five) percentage points to the Interbank Equilibrium Interest Rate at 28 days (“TIIE” or “Reference Interest Rate”), capitalized or, if applicable, equivalent to the number of days effectively elapsed in each corresponding Interest Period that is published by the Banco de México, by the mass communication media to be determined thereby, or through any other electronic, computer or telecommunication means, including the Internet, authorized for this purpose by said Banco de México, on the applicable Annual Gross Interest Rate Determination Date, or, failing that, within 30 (thirty) Business Days prior to it, in which case the rate reported on the Business Day closest to said Annual Gross Interest Rate Determination Date by Banco de México must be taken as a basis.
In the event that the TIIE ceases to exist or be published, the Common Representative will use as a substitute reference rate to determine the Annual Gross Interest Rate of the Stock Certificates the rate that the Banco de México determines as a substitute rate of the TIIE 28-day term (the “Substitute Rate”).
The Common Representative will use the following formula to determine the Reference Interest Rate or the capitalized Substitute Rate or, where appropriate, equivalent to the number of days actually elapsed during the corresponding Interest Period, as well as the amount of ordinary interest payable in each Interest Period:
Where:
TC = Capitalized Reference Interest Rate or Capitalized Substitute Rate or, if applicable, equivalent to the number of calendar days effectively elapsed until the corresponding Interest Payment Date.
TR = Reference Interest Rate or Substitute Rate, plus 0.45 (zero point forty-five) percentage points.
PL = Term of the relevant instrument in days.
NDE = Number of days effectively elapsed until the corresponding Interest Payment Date.
The rate resulting from the provisions of the preceding paragraphs will be referred to as the “Annual Gross Interest Rate”.
Ordinary interest accrued by the Stock Certificates will be calculated from their Date of Issue, as applicable, and the calculations to determine the rate and the amount of interest payable must include the calendar days effectively elapsed until the corresponding Interest Payment Date. Calculations will be made by rounding to the hundredths.
Ordinary interest accrued by the Stock Certificates will be settled in the manner indicated in the section “Interest Payment Frequency” of this title.
To determine the amount of ordinary interest payable on each Interest Payment Date, the Common Representative will use the following formula:
Where:
I = Gross interest for the period.
VN = Nominal Value or, if applicable, Adjusted Nominal Value of the outstanding Stock Certificates.
TB = Annual Gross Interest Rate.
NDE = Number of days effectively elapsed until the corresponding Interest Payment Date.
At the beginning of each period, the Annual Gross Interest Rate determined for that period will remain unchanged during that period.
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The Common Representative shall report to the CNBV, the BMV (Bolsa Mexicana de Valores Mexican Stock Market) and INDEVAL (Instituto para el Depósito de Valores Securities Deposit Institute), in writing or through the means determined thereby, at least 2 (two) Business Days prior to the corresponding Interest Payment Date, the amount of interest payable, and 1 (one) Business Day in advance, report to the CNBV and the BMV, through the SEDI (Sistema Electrónico de Difusión de Información Electronic Information Dissemination System) (or other means as determined by the BMV) the Annual Gross Interest Rate, as well as the Nominal Value or Adjusted Nominal Value for each Stock Certificate.
In the event that during any Interest Period, the Adjusted Nominal Value of the Stock Certificates is amended due to one or more early redemptions of the Stock Certificates, the calculations made by the Common Representative in accordance with the provisions of the Stock Certificate must consider (i) the different Adjusted Nominal Values of the Stock Certificates that have taken place during said Interest Period, and (ii) the number of days applicable to each of said Adjusted Nominal Values of the Stock Certificates.
The Stock Certificates will no longer accrue interest as of the indicated payment date, provided that the Issuer has constituted the deposit of the redemption amount and, where appropriate, the corresponding interest, in the offices of Indeval no later than 11:00 a.m. on that day.
In the event that any interest payment is not paid in full, Indeval shall not be obliged to deliver the receipt corresponding to said payment, until it is fully paid; in any case, Indeval shall not be liable if it does not deliver the receipt corresponding to said payment, in the event that the payment is not fully paid.
This Stock Certificate will be deposited with Indeval. Under the terms of Article 282 of the LMV, the Issuer determines that the title does not have attached coupons, taking the place of these, for all legal purposes, the certificates issued by Indeval.
The Issuer is not obliged to pay additional amounts with respect to withholding taxes or any equivalent tax, applicable in relation to the payments it makes with respect to the Stock Certificates, with the understanding that Indeval will not intervene or be responsible for determining or calculating any payment derived from this stock certificate, or make any type of payment other than the payment of principal and ordinary interest derived from the Issue.
IV. INTEREST PAYMENT FREQUENCY.
The ordinary interest that the Stock Certificates accrue shall be settled every 28 (twenty-eight) days, in accordance with the calendar indicated in this stock certificate documenting this Issuance and reproduced below, during the term of the Issuance, against the delivery of the proofs that the Indeval has issued; on the understanding that the first Interest Period applicable to the Additional Stock Certificates will be 2 (three) days.
| PERIOD | START DATE | INTEREST PAYMENT DATE | ||
| 1 | October 5, 2023 | November 2, 2023 | ||
| 2 | November 2, 2023 | November 30, 2023 | ||
| 3 | November 30, 2023 | December 28, 2023 | ||
| 4 | December 28, 2023 | January 25, 2024 | ||
| 5 | January 25, 2024 | February 22, 2024* | ||
| 6 | February 22, 2024 | March 21, 2024 | ||
| 7 | March 21, 2024 | April 18, 2024 | ||
| 8 | April 18, 2024 | May 16, 2024 | ||
| 9 | May 16, 2024 | June 13, 2024 | ||
| 10 | June 13, 2024 | July 11, 2024 | ||
| 11 | July 11, 2024 | August 8, 2024 | ||
| 12 | August 8, 2024 | September 5, 2024 | ||
| 13 | September 5, 2024 | October 3, 2024 | ||
| 14 | October 3, 2024 | October 31, 2024 | ||
| 15 | October 31, 2024 | November 28, 2024 |
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| 16 | November 28, 2024 | December 26, 2024 | ||
| 17 | December 26, 2024 | January 23, 2025 | ||
| 18 | January 23, 2025 | February 20, 2025 | ||
| 19 | February 20, 2025 | March 20, 2025 | ||
| 20 | March 20, 2025 | April 17, 2025 | ||
| 21 | April 17, 2025 | May 15, 2025 | ||
| 22 | May 15, 2025 | June 12, 2025 | ||
| 23 | June 12, 2025 | July 10, 2025 | ||
| 24 | July 10, 2025 | August 7, 2025 | ||
| 25 | August 7, 2025 | September 4, 2025 | ||
| 26 | September 4, 2025 | October 2, 2025 | ||
| 27 | October 2, 2025 | October 30, 2025 | ||
| 28 | October 30, 2025 | November 27, 2025 | ||
| 29 | November 27, 2025 | December 25, 2025 | ||
| 30 | December 25, 2025 | January 22, 2026 | ||
| 31 | January 22, 2026 | February 19, 2026 | ||
| 32 | February 19, 2026 | March 19, 2026 | ||
| 33 | March 19, 2026 | April 16, 2026 | ||
| 34 | April 16, 2026 | May 14, 2026 | ||
| 35 | May 14, 2026 | June 11, 2026 | ||
| 36 | June 11, 2026 | July 9, 2026 | ||
| 37 | July 9, 2026 | August 6, 2026 | ||
| 38 | August 6, 2026 | September 3, 2026 | ||
| 39 | September 3, 2026 | October 1, 2026 |
*First Interest Payment Date of the Original Stock Certificates.
**First Interest Payment Date of the Additional Stock Certificates.
In the event that any interest payment date in terms of this stock certificate is a non-Business Day, payment will be made on the next Business Day, without the foregoing constituting a breach by the Issuer; the interest payment must be made based on the number of calendar days actually elapsed until the corresponding interest payment date (each, an “Interest Payment Date”) and, as a result, the next Interest Period will be decreased by the number of days the previous Interest Period has been increased.
The first Interest Period shall commence on the corresponding Date of Issue and shall end on (but shall not include) the first Interest Payment Date; each subsequent Interest Period shall commence on each Interest Payment Date and shall end on (but shall not include) the next Interest Payment Date (each, an “Interest Period”).
Failure to pay interest in a timely manner may result in the early maturity of the entire Issue of the Stock Certificates in accordance with the provisions of the “Causes of Early Maturity” section of this stock certificate, and for this reason will be in default from that moment, making the payment obligations enforceable by the Issuer.
V. PRINCIPAL REDEMPTION.
The principal on the Stock Certificates will be paid by a single payment at their Nominal Value or, if applicable, at their Adjusted Nominal Value or Increased Nominal Value, as the case may be, on the Maturity Date, upon delivery of the certificates issued by INDEVAL at the time by electronic transfer through INDEVAL. In the event that the Maturity Date is a non-Business Day, the redemption will be made on the immediately following Business Day, without the foregoing being considered a breach. The Common Representative must inform the CNBV through the STIV-2 (or the means it determines), the BMV through the SEDI (or the means it determines) and Indeval in writing (or through the means it determines), no later than the second Business Day prior to the Maturity Date, of the amount of the corresponding redemption in Pesos.
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VI. VOLUNTARY EARLY REDEMPTION.
The Issuer shall have the right to redeem in advance, in whole or in part, the Stock Certificates, on any date prior to the Maturity Date, at a price equal to the Early Redemption Price (as defined below), plus accrued and unpaid interest on the principal of the Stock Certificates subject to full or partial redemption, as the case may be, on the date of early redemption.
In the event that the Issuer decides to redeem the Stock Certificates in advance in accordance with the foregoing, the Issuer shall notify the Common Representative in writing of its intention to make the voluntary early redemption of the Stock Certificates at least 7 (seven) Business Days in advance of the date on which said voluntary early redemption will be carried out. The Common Representative shall report the Issuer’s decision to exercise said right and the amount of the redemption to the CNBV through STIV-2, the BMV through SEDI, and Indeval (or by the means determined thereby) in writing at least 6 (six) Business Days in advance of the date on which it intends to redeem the Stock Certificates in advance.
In the event that the Issuer exercises its right to redeem the Stock Certificates in advance, the Issuer shall pay the Holders an amount equal to the amount resulting from the sum of:
(1) the greater of: (a) 100% (one hundred percent) of the Nominal Value or Adjusted Nominal Value or Increased Nominal Value, as the case may be, of the Stock Certificates to be redeemed in advance, and (b) the clean price of the Stock Certificates to be redeemed in advance, calculated using the arithmetic average of the last 30 (thirty) business days prior to the date of early redemption provided by the Proveedor Integral de Precios, S.A. de C.V. (PIP) and Valuación Operativa y Referencias de Mercado, S.A. de C.V. (VALMER) multiplied by the amount of principal to be redeemed divided by the unpaid balance of the Stock Certificates (such amount, the “Early Redemption Price”). In any case, in addition to the Early Redemption Price, the Issuer shall pay the Holders the interest accrued and unpaid on the principal of the Stock Certificates at the date of early redemption,
(2) plus 0.2% (zero point two percent) of the Nominal Value or Adjusted Nominal Value of the Stock Certificates to be redeemed, except in the event that the Issuer has complied with the Sustainability Performance Target prior to the Early Redemption Date and the Issuer has delivered to the Common Representative the Notice of Compliance at least 7 (seven) Business Days in advance of the Early Redemption Date; therefore, in that case, only the amount set forth in subsection (a) above would apply.
The Common Representative will calculate the Early Redemption Price based on the arithmetic average of the information provided by PIP and VALMER to the Issuer and by the latter to the Common Representative, making it known to the CNBV through the STIV-2, BMV through the SEDI and INDEVAL in writing or by the means determined by them, at least 1 Business Day before the Early Redemption Date.
In the event that the Issuer decides not to exercise its right with respect to early redemption, it must notify the Common Representative, the CNBV through STIV-2, the BMV through SEDI and the Indeval in writing (or through the means they determine) at least 2 (two) Business Days prior to the Early Redemption Date, without the foregoing being considered a default under the Stock Certificate. In the event that the Issuer does not notify the Common Representative in accordance with the foregoing, the expenses incurred by the Common Representative with respect to such change shall be borne by the Issuer.
In the event that the Issuer exercises its right to partially redeem the Stock Certificates, once the partial payment of the Stock Certificates has been made by the Issuer, Indeval shall pay pro rata between the Holders and the Common Representative shall calculate the adjusted nominal value of each outstanding Stock Certificate (the “Adjusted Nominal Value”), which will be the result obtained from dividing the result of subtracting (i) from the Nominal Value or Adjusted Nominal Value of the totality of the Stock Certificates calculated at the time prior to early redemption, (ii) the amount of partial redemption, between (iii) the number of outstanding Stock Certificates.
In any case, in addition to the Early Redemption Price, the Issuer shall pay the Holders the accrued and unpaid interest on the principal of the Stock Certificates on the date of early redemption. The Early Redemption Price shall in no event be less than 100% of the face value of the Stock Certificates as of the date of early redemption.
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The Common Representative shall inform the CNBV, BMV and INDEVAL, in writing or by the means determined by them, of the Early Redemption Price, together with the information used to calculate it, 2 (two) Business Days prior to the early redemption date.
In the event that the Issuer exercises its right to partially redeem the Stock Certificates, once the partial payment of the Stock Certificates by the Issuer has been made, the Common Representative must pay pro-rata between the Holders and calculate the new Nominal Value of the Stock Certificates.
VII. INCREASE IN PRINCIPAL OF STOCK CERTIFICATES.
In the event that the Issuer does not deliver a Notice of Compliance to the Common Representative signed by a legal representative or proxy indicating that it has met the Sustainability Performance Target at least 7 (seven) Business Days prior to the Maturity Date, the Stock Certificates shall be redeemed on the Maturity Date at their Nominal Value or Adjusted Nominal Value, as the case may be, plus 0.2% (zero point two percent) over said value (the “Increased Nominal Value”).
VIII. DEFAULT INTEREST.
In the event of default in the payment on the principal of the Stock Certificates, in lieu of the Annual Gross Interest Rate, default interest will accrue on the outstanding principal of the Stock Certificates at the Annual Gross Interest Rate applicable during each period in which the default occurs and continues, plus 2 (two) percentage points. Default interest will be payable on demand from the date on which the default occurs and until the principal amount has been fully paid, calculated on the basis of 360 days and for the days in default actually elapsed.
The amount owed for default interest must be paid at the domicile of the Issuer or the Common Representative, as the case may be, and in the same currency as the principal amount.
IX. DEFAULT IN THE PAYMENT OF PRINCIPAL AND INTEREST.
In the event that the Issuer does not make the timely payment of the principal and ordinary interest of the Stock Certificates on the corresponding payment date, the Common Representative, without prejudice to the rights that the Holders may individually exercise, will exercise the corresponding collection actions within 5 (five) Business Days following the date on which the payment should have been made, unless the general Meeting of Holders decides otherwise.
X. PLACE AND FORM OF PAYMENT OF PRINCIPAL AND INTEREST.
The principal and interest accrued by the Stock Certificates will be paid on the day of their maturity and on each payment date respectively, by electronic transfer of funds, through INDEVAL, whose offices are located at Avenida Paseo de la Reforma No. 255, 3er Piso, Col. Cuauhtémoc, 06500, Mexico City, or at any other address where the future INDEVAL is established, against the certificates or certifications issued for such purposes by said institution, or, where appropriate, at the offices of the Issuer located at Avenida Ricardo Margáin Zozaya No. 325, Colonia Valle Campestre, San Pedro Garza García, N.L., C.P. 66265. The amount owed for default interest must be paid at the offices of the Issuer or the Common Representative, as notified to the Holders.
XI. INCREASE IN THE NUMBER OF STOCK CERTIFICATES.
Subject to market conditions, the Issuer shall have the right to issue and publicly offer stock certificates additional to the stock certificates originally issued under the corresponding security. The additional stock certificates (i) shall be deemed to form part of the Issuance of the original stock certificates (for which reason, among other things, they will have the same ticker assigned by the BMV) and (ii) will have the same terms and conditions as the Original Stock Certificates (including, but not limited to, Maturity Date, Annual Gross Interest Rate and, if applicable, Adjusted Annual Gross Interest Rate, Nominal Value or Adjusted Nominal Value of
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each Stock Certificate, obligations to do and not to do and Causes of Early Maturity, if applicable). The additional stock certificates will accrue interest from the date of their Issuance at the rate applicable to the Original Stock Certificates.
By virtue of the acquisition of Original Stock Certificates, it will be understood that the Holders have consented to the Issuer issuing additional stock certificates, so the Issuance and public offer of the additional stock certificates will not require the authorization of the holders of the Original Stock Certificates. The Issuance of Additional Stock Certificates shall be subject to the following:
(a) The Issuer may issue and publicly offer additional stock certificates provided that (i) the ratings of the additional stock certificates are the same or higher than the ratings granted to the Original Stock Certificates and that the latter ratings do not decrease (either as a result of the increase in the number of outstanding Stock Certificates or for any other reason) and (ii) the Issuer is up to date in the fulfillment of its obligations (including the obligations to do and not do, if applicable), or there is or may be no Cause of Early Maturity (as a result of the issuance of additional stock certificates), in accordance with the Original Stock Certificates.
(b) The maximum amount of additional stock certificates that the Issuer may issue and publicly offer, in addition to the amount of the outstanding Issues (including the Issue of the Original Stock Certificates), may not exceed the Total Authorized Amount of the Program.
(c) On the date of issuance of the additional stock certificates, the Issuer shall redeem the stock certificate deposited in Indeval representing the original Stock Certificates, or, where appropriate, the Common Representative of the Holders of the Stock Certificates, by written notice given by the Issuer to Indeval 6 (six) Business Days in advance of the corresponding redemption, for a new stock certificate that covers the original Stock Certificates, plus the additional stock certificates, and deposit said certificate with Indeval. Said stock certificate shall only record the amendments that are necessary to reflect the Issuance of the additional stock certificates, that is, (i) the total amount of the Issue, (ii) the total number of Stock Certificates covered by the stock certificate (which shall be equal to the number of Original Stock Certificates, plus the number of additional stock certificates), (iii) the Date of Issue (which shall be the date of Issue of the additional stock certificates), and (iv) the term of the Issue, the term of which shall be equal to the term that exists between the date of Issue of the additional stock certificates and the Maturity Date of the Original Stock Certificates, by virtue of the Maturity Date of said stock certificate being the same Maturity Date as that of the Original Stock Certificates.
(d) The date of issue of the additional stock certificates may or may not coincide with the date on which any of the interest periods under this stock certificate that documents the Original Stock Certificates begin. The price of the additional stock certificates must reflect the interest accrued from the date on which the current Interest Period begins, on the understanding that the Original Stock Certificates continue to accrue interest in the Interest Period that is in force on the date of issuance of the additional stock certificates and the additional stock certificates will accrue interest from the date on which the Interest Period in force of the Original Stock Certificates begins.
(e) Neither the Issuance of the additional stock certificates nor the increase in the outstanding amount of the Original Stock Certificates derived therefrom shall constitute novation.
(f) The Issuer may make various additional stock certificate issues on any particular original Stock Certificate Issue.
(g) Additional stock certificates may be placed at a price other than their Nominal Value, depending on the market conditions.
XII. OBLIGATIONS TO GIVE, DO AND NOT DO OF THE ISSUER AND THE GUARANTORS.
Unless the Holders of the majority of the Stock Certificates authorize otherwise in writing, from the date hereof and until the Stock Certificates are paid in full, the Issuer and the Guarantors (only with respect to section
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number (1), subsections (a) and (b) of section number (6) y section number (10)) undertake to comply with the following:
(1) Payments. Pay the principal and interest in accordance with the provisions of the “Interest Payment Frequency” and “Principal Redemption” sections of this Stock Certificate.
(2) Internal Financial Statements. Deliver to the Common Representative on a quarterly basis, no later than within 5 (five) Business Days after the dates indicated in Article 33 of the Sole Circular or any other provision applicable or that replaces it, a copy of the Issuer’s unaudited internal consolidated basic financial statements at the end of each of the first three quarters of each year, that for these purposes comprise the balance sheet, income statement and cash flow, which must be prepared in accordance with the IFRS and must be accompanied by a certification signed by the Director of the Comptroller’s Office or Treasurer of the Issuer, in which they declare that the financial statements to which said certification relates are the Issuer’s unaudited internal consolidated basic financial statements.
(3) Audited Financial Statements. Deliver to the Common Representative on an annual basis, no later than 5 (five) Business Days after the dates indicated in Article 33 of the Sole Circular or any other applicable provision or that replaces it, a complete copy of the Issuer’s annual consolidated financial statements, including the balance sheet, income statement and statement of change in financial position, prepared in accordance with the IFRS and audited by the Issuer’s external auditors.
(4) Other Reports.
(a) Inform the Common Representative in writing, within 10 (ten) Business Days after the Issuer becomes aware of any event that constitutes a Cause of Early Maturity under this Stock Certificate.
(b) The Issuer delivers to the Common Representative the information and documentation necessary to verify compliance with the Issuer’s obligations in terms of section II of Article 68 of the Sole Circular, except for those obligations of an accounting, fiscal, labor, administrative and other nature of the Issuer, which are not directly related to the payment of the Stock Certificates, including a certificate within 10 (ten) Business Days following the date on which the Issuer’s financial statements for the first 3 (three) quarters and the annual audited financial statements are disclosed, respectively, signed by the Issuer, indicating compliance with the obligations contained in this section “Obligations To Give, To Do and Not To Do of the Issuer and the Guarantors” as of the date of said financial statements.
(5) Use of Resources derived from the Issue; Registration of Stock Certificates.
(a) Use the resources derived from the placement of the Stock Certificates for the purposes stipulated in this Stock Certificate.
(b) Maintain the registration of the Stock Certificates in the National Securities Registry of the CNBV and on the list of securities of the BMV.
(6) Legal Existence, Accounting and Prevailing Line of Business.
(a) Maintain its legal existence and that of the Guarantors and maintain itself and maintain them as a going concern, except as permitted in section 9 “Mergers, sales of assets” below.
(b) Maintain its accounting and that of the Guarantors in accordance with IFRSs.
(c) Maintain, through the usual development of business, its prevailing line of business and that of its consolidated subsidiaries considered as a whole.
(7) Priority of Payments. Do what is necessary so that its obligations under the Stock Certificates are direct and unsecured obligations of the Issuer and that they have the same priority of payment, in the case of commercial
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bankruptcy, as its other direct and unsecured obligations, except for the preferences established by operation of law.
(8) Limitations on Encumbrances. The Issuer shall not, and shall not cause or permit any of its Restricted Subsidiaries, directly or indirectly, to contract, grant, assume or permit the constitution of any Encumbrance on Operating Assets to secure the payment of Debt, except (i) in the case of Permitted Encumbrances or (ii) that simultaneously to the creation of any Encumbrance on Operating Assets to guarantee the payment of Debt, (a) if the Encumbrance is granted on Operating Assets of the Issuer or any Restricted Subsidiary other than Guarantor, only for as long as such Encumbrance remains, an Encumbrance is granted on the same Operating Asset that guarantees the obligations under the Stock Certificates, and (b) if the Encumbrance is granted on Operating Assets of a Restricted Subsidiary that is a Guarantor, only for as long as such Encumbrance remains, an Encumbrance is granted on the same Operating Asset that guarantees at least, in the same way and priority, its obligations under the Stock Certificates.
“Debt” means, with respect to any person, unduplicated, (i) any borrowed money obligations, (ii) any obligations represented by bonds, notes, obligations, promissory notes or other similar instruments, including perpetual notes or bonds, obligations or similar instruments, regardless of the maturity date, (iii) all obligations for financial leases or any other lease that is recognized as a financial liability under the IFRS; (iv) to the extent of reimbursement obligations with respect thereto, all obligations issued or assumed as a deferred purchase price of a property, all conditional sales obligations and all payment obligations under any ownership retention agreement (but excluding accounts payable and other accrued liabilities accounted for as current liabilities (in accordance with the IFRS) arising in the ordinary course of business), (v) reimbursement obligations with respect to letters of credit, or similar credit transactions, and (vi) all obligations under hedging contracts or other derivatives, on the understanding that “Debt” does not include obligations of the type described in subsections (i) to (vi) above due between the Issuer and its Subsidiaries or between the Subsidiaries of the Issuer.
“Guarantee” means any obligation, contingent or not (including an endorsement), of any person directly or indirectly securing another person’s Debt, contingently or otherwise, or which has been assumed for the purpose of otherwise securing the creditor of such Debt from payment thereof or to protect such creditor from any loss, in whole or in part, regarding it, on the understanding that “Guarantee” does not include endorsements as proxy or deposits in the ordinary course of business and does not apply to an intercompany Debt guarantee between the Issuer and its Subsidiaries or between the Subsidiaries of the Issuer.
“Permitted Encumbrances” means:
| (i) | Encumbrances arising from any tax or labor obligation or created by operation of law, provided that they have been challenged in good faith and with respect to which reserves or any other provision necessary under the IFRS have been created, if applicable; |
| (ii) | Encumbrances of lessors and carriers, warehousers, and mechanics incurred in the ordinary course of business for sums not yet due or whose payment is being challenged in good faith by appropriate procedures initiated in a timely manner and carried out with diligence and for which reserves or other appropriate provisions, if any, required by IFRS, and any other Encumbrance created by operation of law, have been constituted; |
| (iii) | Encumbrances incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security or (ii) other insurance maintained by the Issuer and its Subsidiaries; |
| (iv) | Encumbrances for judgments or court orders, unless the judgment it guarantees has not been, within 60 (sixty) days from the entry into force thereof, complied with, annulled or its execution suspended pending appeal, or has not been complied with or annulled within 60 (sixty) days from the expiration of said suspension; |
| (v) | Encumbrances on acquired Operating Assets (including, with respect to any acquisition of 51% (fifty-one percent) or more of the voting shares of a corporation, the shares or other |
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| interests in the share capital and/or assets of or in the acquired or acquiring company and/or any Subsidiary of the acquired or acquiring company), built, developed or improved by the Issuer or any of its Restricted Subsidiaries (independently or jointly with another person) after the Date of Issue of the Stock Certificates, or any assets reasonably considered to be incidental to the use or operation of the Operating Assets (including any real estate in which such Operating Assets are located), as long as, such Encumbrance is constituted or assumed (x) during the period in which such Operating Assets have been constructed, developed or improved, or (y) contemporaneously or within 360 (three hundred sixty) calendar days following the date of acquiring or completing their construction, development or improvement for the purpose of securing or obtaining payment of all or part of the purchase price or other consideration for such Operating Assets or other costs of such acquisition, construction, development or improvement (including incremental costs, interest during construction and financing and refinancing costs); |
| (vi) | Encumbrances on Operating Assets that exist before the Issuer or any of its Restricted Subsidiaries acquires them, provided that such Encumbrances have not been created exclusively as a result of such acquisition; |
| (vii) | Encumbrances on Operating Assets acquired from a person who merges with the Issuer or any of its Restricted Subsidiaries or any Encumbrance on Operating Assets of a person that exist before such person becomes a Restricted Subsidiary, in each case provided that such Encumbrances have not been created as a result of or before such acquisition; |
| (viii) | Encumbrances that guarantee Debt or a Guarantee of the Issuer or any of the Subsidiaries, as well as those to guarantee the fulfillment of bids, commercial contracts, leases, bonds and other obligations of a similar nature, in each case, that are executed in the ordinary course of business; |
| (ix) | Encumbrances granted by the Issuer or any of its Restricted Subsidiaries to secure Debt; provided that the maximum amount of such Debt secured by such Encumbrance does not exceed US$500,000,000.00 (five hundred million 00/100 dollars) (or its equivalent in any other currency) at any time; |
| (x) | Encumbrances created prior to the Date of Issue of the Stock Certificates and any renewal, extension or increase thereof; |
| (xi) | Encumbrances on accounts receivable or on the share capital of any Subsidiary other than a Restricted Subsidiary, in both cases, solely with respect to an operation or series of transactions entered into by the Issuer or any Restricted Subsidiary to sell, transmit, assign or transfer in any way any accounts receivable in order to obtain financing for the operations of the Issuer or its Restricted Subsidiary; |
| (xii) | Encumbrances granted pursuant to or in connection with any compensation or netting agreement entered into in the ordinary course of business; |
| (xiii) | Encumbrances constituted with the prior consent of the Common Representative, in accordance with the instructions of at least 51% (fifty-one percent) of the Holders; |
| (xiv) | Encumbrances guaranteeing Debt or obligations under coverage contracts, as well as any guarantee under these and any reimbursement obligations with respect to letters of credit that have not been repaid within 30 days after their execution, provided that, the maximum amount of the Debt guaranteed by said Encumbrance does not exceed US$200,000,000.00 (two hundred million dollars 00/100) (or its equivalent in any other currency); and |
| (xv) | Encumbrances other than those mentioned above, which guarantee obligations of the Issuer or its Restricted Subsidiaries, which together guarantee obligations for an amount not greater |
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| than the highest of (i) 20% (twenty percent) of the Total Consolidated Assets, or (ii) USD 1,500,000,000.00 (one billion five hundred million dollars 00/100) (or its equivalent in any other currency). |
(9) Mergers, asset sales. Not to merge or transfer or dispose of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, unless the following conditions are met: (i) if the Issuer or any of the Guarantors is the merged company or the company that transmits or disposes of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, that the surviving or acquiring company assumes the obligations of the Issuer or the Guarantor, as appropriate, under the Stock Certificates, (ii) once the corresponding operation takes effect, a Cause of Early Maturity does not occur under the Stock Certificates, and (iii) if the Issuer or any of the Guarantors is the merged company or the one that transmits or disposes of all or substantially all of the consolidated assets and assets of the Issuer and its Subsidiaries, the surviving or acquiring company delivers to the Common Representative a legal opinion that said merger or transfer complies with the provisions of subsection (i) above and a certificate signed by a responsible official indicating that said operation complies with the provisions of subsection (ii) above. For clarity, if the above conditions are met, the Issuer and the Guarantors may merge (as a merging company or merged company) or transfer or dispose of all or substantially all of the consolidated goods and assets of the Issuer and its Subsidiaries. The Issuer and the Guarantors shall not have to comply with such conditions if they enter into other types of transactions, including, without limitation, asset purchase or stock transactions or transactions for which the Issuer or the Guarantors sell or dispose of goods or assets that do not represent all or substantially all of the consolidated goods and assets of the Issuer and its Subsidiaries. The provisions of this section number (9) shall not apply when (a) the corresponding transfer or disposal of goods or assets is to the Issuer or between Guarantors, (b) the merger is between the Issuer and any Guarantor with the Issuer as a merger company or between Guarantors, or (c) the merger is between any Guarantor and a Restricted Subsidiary (as merger company) in which the Issuer, directly or indirectly, holds 99.5% (ninety-nine point five percent) or more of the shares or other stakes in the share capital.
(10) Tax Obligations. The Issuer and the Guarantors must comply with and be up to date in the payment of all taxes, contributions, government rights and charges that apply to them, determined, imposed or required, except for taxes, contributions, government rights and charges (regardless of the amount) whose constitutionality or determination is pending to be resolved for being the reason of a dispute with, or deferral requested before, the competent tax authority, provided that the Issuer or any of the Guarantors (a) has filed in good faith the means of defense established by applicable tax laws, (b) has established or maintains sufficient reserves, if required under applicable IFRS, in the event that the admissibility of the payment is declared by an enforceable judgment and (c) it has proceeded to guarantee the actual and potential tax liability in the terms required by the applicable tax provisions, given the case.
XIII. CAUSES OF EARLY MATURITY.
In the event that any of the following events occur (each one, a “Cause of Early Maturity”), the Stock Certificates may be considered to have matured in advance under the terms and conditions established below:
(1) Failure to Pay Interest on Time. If the Issuer fails to make the timely payment, when due, of any amount of interest under the Stock Certificate, and such payment is not made within 15 (fifteen) Business Days following the date on which it should have been made.
(2) Breach of Obligations under the Stock Certificate . If the Issuer or any Guarantor fails to comply with any of its obligations contained in the Stock Certificate other than the obligation to pay principal and interest under the Stock Certificates, on the understanding that the Issuer shall be deemed to be in default of such obligations if such default is not remedied within 90 (ninety) calendar days following the date on which the Issuer received written notification from the Common Representative specifying the default on the obligation in question.
(3) Default of Obligations that do not arise from the Stock Certificates. If the Issuer (i) fails to comply with the principal payment when due (whether on the scheduled due date or otherwise), with respect to any Debt of the Issuer for money borrowed, equal to or greater than USD 50,000,000.00 (fifty million Dollars 00/100) (or its equivalent in other currencies), or (ii) incurs in default or cause of early maturity (after its applicable grace
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period), and as a result of such breach or cause of early maturity such Debt is accelerated by whoever has the right to do so, through the corresponding statement, under any contract or instrument documenting or relating to Debt of the Issuer for money borrowed, equal to or greater than USD 50,000,000.00 (fifty million Dollars 00/100) (or its equivalent in other currencies).
(4) Insolvency. If the Issuer is declared in bankruptcy or insolvency by a competent judicial authority by means of a resolution that does not admit any appeal, or if the Issuer admits in writing its inability to pay debts in general when due.
(5) Validity of Stock Certificates. If the Issuer rejects, claims or challenges, through a procedure initiated in accordance with applicable law, the validity or enforceability of the Stock Certificates.
(6) Cancellation of the registration of Stock Certificates in the RNV. That the CNBV cancels the registration of the Stock Certificates in the RNV as a result of the Issuer’s failure to comply with the provisions established in the applicable regulation.
(7) Judgments. If the Issuer ceases to pay amounts pursuant to one or more final judicial judgments, not subject to appeal or remedy whatsoever, issued against it for a total amount of USD 100,000,000.00 (one hundred million Dollars 00/100) (or its equivalent in any other currency), and such judgments are not paid, guaranteed or suspended within 60 (sixty) calendar days following the date on which they must be paid.
If any of the events mentioned in the above paragraphs (4), (5) and (6) occur, the Stock Certificates will automatically mature, without the need for prior notice of default, presentation, payment requirement, protest or notification of any nature, whether legal or extralegal, and the unpaid principal amount of the Stock Certificates, the ordinary interest accrued and unpaid in respect thereof and all other amounts due thereunder will become immediately payable.
Should the event mentioned in paragraph (1) above occur (and the applicable grace period having elapsed), all amounts payable by the Issuer under the Stock Certificate may be declared mature in advance, provided that at least 1 (one) Holder provides written notice to the Common Representative indicating its intention to declare the Stock Certificates matured in advance, in which case the outstanding principal sum of the Stock Certificates, the ordinary interest accrued and unpaid with respect thereto and all other amounts due thereunder will become immediately payable. In the event that there is no request by any Holder whatsoever after 5 (five) Business Days after the date on which the Cause of Early Maturity mentioned in paragraph (1) above have elapsed, the Common Representative shall proceed to convene a Meeting of Holders in order to resolve it.
In the case that any of the events mentioned in paragraphs (2) (3) and (7) above occur (and the applicable grace periods have elapsed), all amounts payable by the Issuer pursuant to the Stock Certificates may be declared due in advance, provided that the meeting of Holders resolves to declare the Stock Certificates matured in advance and the Common Representative delivers a notice on the resolution of the meeting of Holders to the Issuer that declares the Stock Certificates matured in advance, in which case the Issuer shall become delinquent from the time it receives notice from the Common Representative, and the outstanding principal amount of the Stock Certificates, the accrued and unpaid interest thereon and all other amounts due thereunder, if any, shall become immediately enforceable. For the purpose of declaring the early maturity of the Stock Certificates, the attendance and voting quorums at the meeting of Holders shall be those indicated in paragraphs (h) and (g) of the “Meeting of Holders” section of this Stock Certificate.
The Common Representative shall inform the BMV (through the SEDI or the means it determines), the CNBV through the STIV 2, and the INDEVAL in writing (or through the means it determines) as soon as it is aware of and has verified any Cause of Early Maturity. Likewise, once the Stock Certificates are declared mature in advance, the Common Representative will inform the CNBV and the BMV, through the means determined thereby, including STIV 2 and SEDI (or any other means determined by the CNBV and the BMV, respectively). Likewise, the Common Representative must immediately inform Indeval in writing (or by the means it determines), that the Stock Certificates have been declared mature in advance, for which it will provide Indeval with the information requested for this purpose and that the Common Representative has at its disposal.
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For clarity, failure to deliver the Notice of Compliance shall not constitute a Cause of Early Maturity.
XIV. DESTINATION OF FUNDS.
A. Destination of Original Stock Certificate Funds
The Issuer used the resources it obtained from the Issuance to fully or partially redeem the outstanding balance under any of the following contracts or obligations, at the Issuer’s option:
| (i) | The 2023 Credit Agreement, which consists of a simple USD 1 billion 5-year credit line, with a Secured Over Night Rate (“SOFR”) + 100 basis points and a committed revolving USD 2 billion 5-year credit line, with a SOFR + 100 basis points, maturing in November 2028; |
| (ii) | The Banorte Credit Agreement for up to USD 345 million, with a TIIE + 100 basis points, maturing on December 2028; |
| (iii) | The credit agreement for up to EUR 500 million, with an Euro Interbank Offered Rate (“EURIBOR”) + 140 basis points dated October 7, 2022, entered into between Cemex, S.A.B. de C.V. as borrower, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México as an administrative agent and sustainability structurer, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BNP Paribas, Citigroup Global Markets Inc. and Mizuho Bank Ltd., New York Branch, as placement agents and lead coordinators, and the other borrowers that are part of it, which was used to amortize debt instruments, maturing in October 2025; and/or |
| (iv) | The Notes. |
“Notes” means any of the following outstanding notes of the Issuer exempt from registration pursuant to Rule 144A and Regulation S under the United States Securities Act of 1933:
| i. | Senior notes with specific guarantee denominated in Euros at 3.125%, issued on March 19, 2019, for an outstanding amount of EUR 400 million, maturing in 2026; |
| ii. | Senior notes with specific guarantee denominated in Dollars at 5.450%, issued on November 19, 2019, for an outstanding amount of USD 753 million, maturing in 2029; |
| iii. | Senior notes with specific guarantee denominated in Dollars at 5.200%, issued on September 17, 2020, for an outstanding amount of USD 717 million, maturing in 2030; and |
| iv. | Senior notes with specific guarantee denominated in Dollars at 3.875%, issued on January 12, 2021, for an outstanding amount of USD 1.108 billion, maturing in 2031. |
B. Destination of Additional Stock Certificate Funds
The Issuer will use the proceeds obtained from the Issue to repay all or part of the outstanding balance, at the Issuer’s election, under any of the Debt Instruments described in paragraph A above.
XV. ADDRESS OF ISSUER.
The Issuer’s registered office is Monterrey, Nuevo León.
The Issuer’s mailing address for purposes of this stock certificate is Avenida Ricardo Margain Zozaya #325, Col. Valle Campestre, San Pedro Garza García, N.L., C.P. 66265.
XVI. RIGHTS THAT STOCK CERTIFICATES CONFER ON HOLDERS.
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Each Stock Certificate shall represent for its holder the right to collect the principal and ordinary interest and, where appropriate, the default interest, as applicable, owed by the Issuer, under the terms described in this security and the Supplement, from the corresponding Date of Issue to the date of the full refund of its Nominal Value or Adjusted Nominal Value, as the case may be.
XVII. TRUSTEE.
This stock certificate that covers the Stock Certificates will be deposit with Indeval in accordance with the provisions of Article 64 of the LMV.
XVIII. WARRANTY.
The Stock Certificates shall be unsecured and shall not have a specific guarantee, but they will at all times be endorsed by the Guarantors; on the understanding that at any time during the term of the Stock Certificates and without the consent of the Meeting of Holders or the Common Representative being required, the Issuer shall have the right to release any Guarantor from their obligations in such capacity under the Stock Certificates, as well as the right (but not the obligation) to replace any Guarantor or include new guarantors, provided that after such release, addition or replacement takes effect, the Minimum Endorsement is met, based on a certification from the secretary of the Issuer’s Board of Directors.
The Issuer (i) within 5 (five) Business Days following the date on which any of the changes described in the preceding paragraph occur, will publish a notice via SEDI or any means that replaces it, describing the changes in Guarantors made in accordance with this Security, and (a) will submit the certification of the secretary of the Board of Directors of the Issuer referred to in the preceding paragraph, and (b) will obtain a legal opinion issued by an independent attorney (accrediting it with the letter referred to in Article 87 of the Provisions) that refers to the validity and enforceability of the Stock Certificates against persons who are constituted as Guarantors after such release, addition or replacement, as well as the powers of those who will subscribe the new security in their name and on their behalf (whose certification and legal opinion will be delivered to the CNBV (with a copy to the Common Representative) as part of the process of updating the registration of the Stock Certificates in the RNV), and (ii) once such notice is published, the redemption of the security shall be made by depositing the new security in Indeval as soon as possible and upon delivery of the Security then deposited, with the new security having to correctly reflect the Subsidiaries of the Issuer that will be Guarantors under the Stock Certificates from that moment on.
No change in the Guarantors shall constitute novation of the obligations contained in this stock certificate.
XIX. TAX REGIME.
The applicable withholding rate with respect to interest paid under the Stock Certificates is subject: (i) for individuals or legal entities residing in Mexico for tax purposes, to the provisions of Articles 54, 55, 135, and other applicable laws of the current Income Tax Law; and (ii) for individuals and legal entities resident abroad for tax purposes, to the provisions of Articles 153, 166, and other applicable laws of the current Income Tax Law, in the treaties to avoid double taxation that Mexico has in force, as applicable, and other applicable tax provisions, as amended at any time and provided that the requirements set forth by such provisions are met. Potential acquirers of the Stock Certificates should consult with their advisers about the tax consequences resulting from their investment in the Stock Certificates, including the application of specific rules regarding their particular situation. The current tax regime may be amended throughout the term of the Issue. The tax regime of the Issuance or investment in the Stock Certificates has not been validated or verified by the corresponding tax authorities. The Issuer assumes no obligation to report changes in applicable tax provisions throughout the term of the Issue, or to make gross or additional payments to cover any new taxes.
XX. COMMON REPRESENTATIVE.
The Holders of the Stock Certificates designate as common representative, under the terms of Articles 64 section XIII, 68 and 69 of the LMV, CIBanco, S.A., Institución de Banca Múltiple, who accepts the appointment and undertakes its faithful performance.
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The Common Representative shall have the rights and obligations and carry out all acts necessary to safeguard the rights of the Holders, in accordance with (i) this stock certificate, (ii) Articles 68, 69 et al. applicable to the LMV relating to the common representation, and where applicable, (iii) the LGTOC, particularly with respect to the obligations and powers of the common representative, as well as its designation, revocation or waiver, and (iv) Articles 65, 68 et al. applicable to the Sole Circular.
The Common Representative shall have the obligation to ensure the interests of the Holders, for which it shall review, through the information provided to it for such purposes, the compliance by the Issuer and the Guarantors in due time and form , with their obligations related to the this Issuance and payment of the Stock Certificates contained in this stock certificate (except for the accounting, tax, labor and administrative obligations that are not directly related to payment of the Stock Certificates).
The Common Representative shall act in accordance with the instructions of the Meeting of Holders (for the purposes of clarity, the Common Representative does not represent the Holders individually, but jointly).
The Common Representative shall at all times have the right to request from the Issuer and, if applicable, from the Guarantors, the information and documentation that is necessary to verify compliance with the obligations established in this security, as well as conduct visits or reviews; the Issuer and the Guarantors, shall have the obligation to deliver such information and documentation and to have its external auditors, legal advisers or third parties provide the Common Representative with the information and documentation within the time frames reasonably requested by the Common Representative for the performance of its duties, in the understanding that the Common Representative may make such information known to the Holders. The Common Representative may at any time conduct visits or reviews of the Issuer once a year and whenever it deems it necessary, provided that it is (i) on business days and during business hours, (ii) does not interfere with the Issuer’s operations, and (iii) has given the Issuer 15 (fifteen) days’ advance written notice, except in the case of justified urgent cases in which case it will be required to give one-day advance written notice.
The Common Representative shall have the obligation to immediately request the Issuer to make known to the public, through a relevant event, any breach of the obligations established in this security, in the understanding that in the event that the Issuer fails to disclose the relevant event in question within 2 (two) Business Days following the notice from the Common Representative, the latter will have the obligation to publish such relevant event immediately.
In order to be able to comply with all of the above and that detailed below, the Common Representative may request to the general meeting of Holders, or have it contract, in case of breach, at the expense of the Issuer, any third-party specializing in the matter in question, that it considers necessary or appropriate to aid in compliance with its review obligations referred to in the preceding paragraphs or established in applicable legislation, subject to the responsibilities established by the meeting itself and, as a result, the Common Representative may rely, act and/or abstain from acting based on the determinations made by such specialists, as determined by the meeting of Holders. In the event that the Meeting of Holders does not approve such a contract, it may not be carried out. In the latter case, the Common Representative shall only be liable for the activities that are directly attributable to it under the terms of applicable legal provisions, in the understanding that if the meeting of Holders authorizes the contracting but does not provide sufficient resources to the Common Representative for such purposes, the provisions of Article 281 of the Commercial Code will be followed as well as the provisions of Article 2577 of the Civil Code for the Federal District and its correlatives in relation to its capacity as agent in terms of Article 217 of the LGTOC, in the understanding, also, that the Common Representative shall not be obliged to anticipate the amounts necessary for contracting third-party specialists and shall not be liable under any circumstance for the delay in their contracting and/or for lack of resources to carry out said contracting and/or because they are not provided to them by either the Issuer or, if it does not comply with that obligation, the Holders.
The Common Representative shall only act or cease to act based on information received, without being obligated to verify its authenticity, integrity or accuracy. The Common Representative shall not be liable in cases involving malpractice, negligence, bad faith or illegal action (including fraud) by the Issuer.
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The Common Representative shall have the powers and obligations indicated by the LMV, the LGTOC and other applicable ones, as well as those attributed to it by way of example and not limitation in this Stock Certificate. For all matters not expressly provided for in this stock certificate or in the LGTOC, the Common Representative shall act in accordance with the instructions of the meeting of Holders.
The Common Representative shall have, among others, the following obligations and powers:
| (i) | Sign this representative stock certificate of the Stock Certificates; |
| (ii) | Power to monitor compliance with the use of the resources obtained from the Issuance and placement of the Stock Certificates in accordance with the provisions of this stock certificate; |
| (iii) | Convene and preside over the meetings of Holders when required by law, when deemed necessary or appropriate, or at the request of the Holders representing, individually or jointly, 10% (ten percent) or more of the circulating Stock Certificates or at the request of the Issuer; |
| (iv) | Sign, on behalf of the Holders and after approval of the Meeting of Holders, when applicable, the documents or agreements that must be signed or entered into with the Issuer. |
| (v) | Exercise the acts that are necessary for the purpose of safeguarding the rights of the Holders, including without limitation, the power to request the meeting to hire an auditor, when in its opinion it is necessary; |
| (vi) | Calculate and publish the Annual Gross Interest Rate applicable to the Stock Certificates in each Interest Period, as well as the amount of interest payable on each of the Interest Payment Dates or, if applicable, of principal on the Maturity Date; |
| (vii) | Act before the Issuer or before any competent authority as intermediary with respect to the Holders of the Stock Certificates; |
| (viii) | Monitor compliance with the obligations of the Issuer under the terms of this stock certificate; |
| (ix) | Publish, through the means determined for this purpose, any information to the large investing public regarding the status of the Issuance, in the understanding that any information that is confidential must always be identified as such, since the Common Representative may disclose to the investing public any information that has been made known to it and that has not been identified as confidential; |
| (x) | Request from the parties all the necessary information in the exercise of their powers and for the fulfillment of their obligations; |
| (xi) | Inform the CNBV, the BMV and the Indeval, through the means they determine, as soon as they become aware of a Cause of Early Maturity and when the Stock Certificates are declared matured in advance. |
| (xii) | At the instructions of the general Meeting of Holders or, if so deemed appropriate, the Common Representative requests it from the Meeting of Holders, contract third parties for the fulfillment of their review and supervision obligations established in this stock certificate; and |
| (xiii) | In general, exercise all functions and powers, as well as comply with all the obligations under its responsibility in terms of this stock certificate, the LMV, the LGTOC, the Sole Circular, and healthy trading uses and practices. |
Any and all acts carried out by the Common Representative on behalf of the Holders, in terms of this stock certificate or applicable law, shall be mandatory and shall be deemed accepted by the Holders.
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The Common Representative shall be responsible for the performance of its duties when requested by the Meeting of Holders or at the time of completing its assignment.
The Common Representative may be removed or replaced by agreement of the Meeting of Holders, with the understanding that such removal will only take effect from the date on which the substitute common representative has been appointed, accepted the position and has taken possession thereof. The appointment of a new common representative may only be from a brokerage or credit institution.
The Common Representative shall terminate its duties on the date that all amounts owed to the Holders pursuant to the Stock Certificates have been paid in full.
The Common Representative shall not at any time be obliged to pay any type of expense or amount whatsoever charged to its assets to carry out all the acts of authority and obligations that correspond to it by virtue of its assignment.
XXI. MEETING OF HOLDERS.
(a) The meetings of Holders shall represent all of them and shall be governed, at all times, by the provisions of this stock certificate, the LMV (Ley del Mercado de Valores Stock Market Act), and by the LGTOC (Ley General de Títulos y Operaciones de Crédito General Law on Credit Instruments and Operations) for unforeseen or inappropriate cases, its resolutions being valid with respect to all Holders, even with respect to those absent and dissenting. Accordingly, any act of the Issuer which, in terms of this stock certificate, is subject to the approval of the Holders shall be submitted to the relevant general Meeting of Holders.
(b) The Meeting of Holders shall meet whenever convened by the Common Representative, when required by law, or at the request of the Holders representing, individually or jointly, at least 10% (ten percent) or more of the outstanding Stock Certificates or at the request of the Issuer specifying in their request the items to be discussed at the meeting. The Common Representative must issue the call for the meeting within 15 (fifteen) calendar days from the date on which it receives the request. If the Common Representative breaches this obligation, the judge of first instance of the domicile of the Issuer, at the request of the Issuer or the requesting Holders, must issue the call for the meeting.
(c) The call for meetings of Holders shall be published at least once in any newspaper with wide circulation at the national level, at least ten (10) calendar days prior to the date on which the meeting must be held. The call will indicate the items that must be addressed at the meeting, and may not deal with items that are not foreseen on the agenda, unless 100% (one hundred percent) of the outstanding Stock Certificates is represented, taking into account that each Holder will be entitled to one vote for each Stock Certificate it accredits.
(d) To attend the Meetings of Holders, the Holders must deliver to the Common Representative the deposit certificates issued for this purpose by Indeval, as well as the list of owners who, if applicable, issues the corresponding financial entity in which the number of Stock Certificates of which the Holder in question is the holder is indicated, at the place designated in the call to the Meeting of Holders, at least the Business Day prior to the date on which the Meeting of Holders is to be held. The Holders may be represented at the meeting by proxy (with sufficient powers or a signed power of attorney letter before two witnesses).
(e) The meetings of Holders shall be held at the address of the Common Representative and in the absence or impossibility of this, at the address indicated in the corresponding call to order of the registered office of the Issuer.
(f) For a Meeting of Holders to be considered legally installed by virtue of the first call to meet to discuss matters other than those indicated in subsection (g) below, at least, half plus one of the outstanding Stock Certificates should be represented, and their decisions shall be valid when approved by the Holders representing the majority of those present at the meeting, taking into account that each Holder shall be entitled to one vote for each outstanding Stock Certificate it accredits.
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(g) If the Meeting of Holders meets by virtue of a second or subsequent call to discuss matters other than those indicated in subsection (h) below, there will be a quorum for its installation with any number of Stock Certificates represented therein and its decisions will be valid if they are made by the majority of the Holders present at the Meeting taking into account that each Holder will be entitled to one vote for each outstanding Stock Certificate it accredits.
(h) At least 75% (seventy-five percent) of the outstanding Stock Certificates must be represented at the meeting of Holders, by virtue of the first call, and the decisions must be approved by at least half plus one of the votes at said meeting, taking into account that each Holder will be entitled to one vote for each accredited outstanding Stock Certificate, in the following cases:
| (i) | when it comes to appointing or revoking the appointment of the Common Representative or appointing any other common representative to replace it; |
| (ii) | to exempt the Issuer or the Guarantors from compliance with any Obligation To Do and/or Not To Do in terms of this security; |
| (iii) | when it comes to granting extensions or delays to the Issuer with respect to the payments of principal and/or interest under this stock certificate; or |
| (iv) | when it comes to declaring the early maturity of the Stock Certificates in accordance with the provisions of the penultimate paragraph of the section “Causes of Early Maturity” contained above. |
When it comes to making any amendment to the terms or conditions of the Stock Certificates, unless the amendment in question is to (i) correct any omission or defect in the wording of this security, (ii) correct or add to any provision of this security that is inconsistent with the remainder thereof, (iii) satisfy any requirements, condition or guidelines contained in an order, judgment or applicable statutory provision or (iv) where such amendment does not materially alter the terms of this security, nor causes harm to the rights of the Holders, in the judgment of the Common Representative; cases in which the consent of the Holders will not be required. In the event that such amendments impact the stock certificate, the Common Representative shall carry out the procedures and comply with the requirements necessary to redeem the stock certificate before the Indeval, informing Indeval in writing or by the means determined by Indeval, at least 6 (six) Business Days in advance of the date of the aforementioned redemption, and notice shall indicate (i) the date on which the relevant redemption will take place, and (ii) any and all amendments made to the stock certificate, with the clarification that they do not affect, modify or limit the rights of the Holders. The Holders, by merely acquiring one or more Stock Certificates, accept and authorize the Issuer and the Common Representative to carry out, without holding a meeting, the amendments referred to in this section.
(i) If the meeting of Holders meets by virtue of a second or subsequent call to deal with any of the matters indicated in subsections (h) (i), (ii) and (iii) above, half plus one of the outstanding Stock Certificates shall be required to be present or represented and their decisions shall be valid if made by the majority of the Holders present at the meeting, based on the Nominal Value of the Stock Certificates, except in the case of any of the matters referred to in subsection (h) (iv) above, in which case it will be required that at least 75% (seventy-five percent) of the outstanding Stock Certificates be represented in the meeting of Holders and the decisions be approved by at least the majority vote of the Holders present, based on the Nominal Value of the Stock Certificates.
(j) In no case may Holders be represented at the meeting who, individually or jointly, hold stock certificates that have not been put into circulation, or that the Issuer, or any person related to the Issuer, has acquired in the market. In such a case, such Stock Certificates shall not be considered for the quorum to convene and vote at the general meetings of Holders provided for in this corresponding stock certificate.
(k) The minutes signed by those who have served as president and secretary shall be drawn up at each meeting. The attendance list will be added to the minutes, signed by the attendees and by the returning officers. The minutes and other data and documents that refer to the action of the meetings of Holders or the
24
Common Representative shall be kept by the latter and may, at all times, be consulted by the Holders, who shall have the right to have, at the expense of the applicant, the Common Representative issue certified copies of said documents to them.
(l) For the purposes of calculating the quorum of attendance at the Meetings of Holders, the number of outstanding Stock Certificates shall be taken as a basis.
(m) The meetings of Holders shall be chaired by the Common Representative and in the meetings, the Holders shall be entitled to as many votes as correspond to them by virtue of the Stock Certificates they hold, one vote for each outstanding Stock Certificate.
(n) The resolutions made outside of the meeting unanimously by the Holders representing all the Stock Certificates entitled to vote shall have, for all legal purposes, the same validity as if they had been adopted at the meeting, provided that they are confirmed in writing.
(o) Once the meeting is declared to be installed, the Holders may not prevent its holding by leaving. Holders who withdraw or who do not attend the resumption of a Meeting of Holders that has been adjourned in the terms indicated above shall be deemed have refrained from casting their vote on the matter(s) in question. The foregoing shall be without prejudice to the provisions of Articles 220, last paragraph and 223, section I, of the LGTOC.
(p) Any and all acts carried out by the Common Representative in the name or on behalf of the Holders, under the terms of this stock certificate or applicable legislation, shall be binding and shall be considered accepted by the Holders, including those absent and dissenting.
None of the above provisions shall limit or affect the rights that, where appropriate, the holders have in accordance with Article 220, last paragraph and Article 223 of the LGTOC.
XXII. APPLICABLE LAW AND JURISDICTION.
This stock certificate shall be governed by and construed in accordance with the laws of Mexico. The Issuer, the Guarantors, the Common Representative and, by virtue of the acquisition of Stock Certificates, the Holders, submit to the jurisdiction of the federal courts in Mexico City for any dispute related to the Stock Certificates and/or Holders’ assembly, waiving any other jurisdiction that may correspond to them by reason of domicile, present or future, or for any reason.
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This Security covers the entirety of the Stock Certificates and replaces the security originally issued and deposited with Indeval on October 5, 2023. This Security is issued and redeemed for the previously deposited security, on the occasion of the issuance of the Additional Stock Certificates corresponding to the First Reopening of the First Issue.
This stock certificate consists of 29 (twenty-nine) pages and is signed by the Issuer, the Guarantors and, for the purposes of recording their acceptance of their assignment and their functions, the Common Representative, in San Pedro Garza García, Nuevo León, on February 20, 2024.
| The Issuer | ||||
| Cemex, S.A.B. de C.V. | ||||
| /s/ Fernando José Reiter Landa | ||||
| By: Fernando José Reiter Landa | ||||
| Position: Proxy | ||||
| The Guarantors | ||||
| Cemex Concretos, S.A. de C.V. | CEMEX Corp. | |||
| /s/ Fernando José Reiter Landa |
/s/ Fernando José Reiter Landa | |||
| By: Fernando José Reiter Landa | By: Fernando José Reiter Landa | |||
| Position: Proxy | Position: Proxy | |||
| Cemex Operaciones México, S.A. de C.V. | Cemex Innovation Holding Ltd. | |||
| /s/ Fernando José Reiter Landa |
/s/ Fernando José Reiter Landa | |||
| By: Fernando José Reiter Landa | By: Fernando José Reiter Landa | |||
| Position: Proxy | Position: Proxy | |||
| Common Representative of the Holders | ||||
| CIBanco, S.A., Institución de Banca Múltiple | ||||
| /s/ Patricia Flores Milchorena |
/s/ Alfredo Basurto Dorantes | |||
| By: Patricia Flores Milchorena | By: Alfredo Basurto Dorantes | |||
| Position: Proxy | Position: Proxy | |||
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Exhibit 4.9-1
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO THE CREDIT AGREEMENT, dated as of June 5, 2023 (this “Amendment”), by and among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable, (the “Borrower”), Citibank, N.A., a national banking association organized and existing under the laws of the United States and acting through its Agency & Trust Division, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (the “Administrative Agent”), and the Lenders parties hereto. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Amended Credit Agreement.
RECITALS:
WHEREAS, the Borrower, the Administrative Agent, ING Capital LLC, as sustainability structuring agent, BofA Securities Inc., BNP Paribas, Citigroup Global Markets Inc., and JPMorgan Chase Bank, N.A., as joint bookrunners and lead arrangers (the “Lead Arrangers”), and each lender from time to time party thereto (the “Lenders”) have previously entered into that certain Credit Agreement, dated as of October 29, 2021 (as amended, restated, amended and restated, supplemented and/or otherwise modified prior to the date hereof, the “Credit Agreement”; the Credit Agreement as amended by this First Amendment, the “Amended Credit Agreement”);
WHEREAS, the Borrower and the Lenders parties hereto have determined in accordance with the Credit Agreement that the Eurodollar Rate should be replaced with Adjusted Term SOFR as a Benchmark Replacement for all purposes of the Credit Agreement and desire to amend the Credit Agreement, upon the terms and subject to the conditions set forth herein; and
WHEREAS, pursuant to Section 3.3(d) of the Credit Agreement, in connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent (acting at the direction of the Required Lenders) will have the right to make Benchmark Replacement Conforming Changes without any further action or consent of any other party to the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments. Subject to the satisfaction (or waiver) of the conditions set forth in Section 3 hereof, effective as of the Amendment Effective Date (as defined below) and subject to the terms and conditions set forth herein:
(a) The Credit Agreement is hereby amended by deleting the stricken text (indicated
textually in the same manner as the following example: stricken text) and to add the bold underlined
text (indicated textually in the same manner as the following example: underlined text) as set forth in
Annex A hereto;
(b) Schedule 1.1 of the Credit Agreement is hereby amended and restated in its entirety as set forth in Annex B attached hereto;
(c) Exhibit A of the Credit Agreement is hereby amended and restated in its entirety as set forth in Annex C attached hereto;
(d) Exhibit B of the Credit Agreement is hereby amended and restated in its entirety as set forth in Annex D attached hereto; and
(e) Exhibit G of the Credit Agreement is hereby amended and restated in its entirety as set forth in Annex E attached hereto.
SECTION 2. Representations and Warranties. In order to induce the Administrative Agent and the Lenders party hereto to enter into this Amendment, the Borrower represents and warrants to the Administrative Agent and such Lenders on and as of the Amendment Effective Date that:
(a) Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (i) is (1) duly organized or formed, validly existing and (2) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (ii) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (1) own or lease its assets and carry on its business and (2) execute, deliver and perform its obligations under this Amendment and the other the Loan Documents to which it is a party, if any, and (iii) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (i)(2), (ii)(1) or (iii), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
(b) Authorization; No Contravention. The execution and delivery by each Loan Party of this Amendment and performance by each Loan Party of this Amendment and each other Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (i) contravene the terms of any of such Person’s Organization Documents; (ii) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (1) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (2) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any Applicable Law in any material respect.
(c) Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
(d) Binding Effect. This Amendment has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Amendment constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
(e) Incorporation of Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party set forth in the Credit Agreement and in any other Loan Document
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are true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the Effective Date (or, in the case of any such representation or warranty expressly stated to have been made as of a specific date, as of such specific date).
SECTION 3. Conditions to Effectiveness. This Amendment and the amendments attached as Annex A, Annex B, Annex C, Annex D and Annex E hereto shall become effective on the date (the “Amendment Effective Date”) when each of the following conditions shall have been fulfilled to the reasonable satisfaction of the Lenders:
(a) the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of each of the other parties hereto;
(b) the representations and warranties made pursuant to Section 2 hereof shall be true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date;
(c) the Borrower shall have paid to the Administrative Agent all reasonable fees, costs and out-of-pocket expenses (including reasonable and documented fees, charges and disbursements of counsel) of the Administrative Agent for which invoices have been documented in one or more invoices presented at least one day prior to the Amendment Effective Date, incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment; and
(d) the Administrative Agent shall have received a certificate signed by a Responsible Officer of the Borrower certifying (A) that the representations and warranties made pursuant to Section 2 hereof are true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date and (B) that no Default exists, or would occur immediately after giving effect to this Amendment, on the Amendment Effective Date.
SECTION 4. Reaffirmation of Guarantees. Each of the Borrower and each other Loan Party party hereto hereby (a) acknowledges its receipt of a copy of this Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Amendment and the transactions contemplated thereby, (b) affirms and confirms, as applicable, its guarantees, pledges, grants and other undertakings under the Amended Credit Agreement and the other Loan Documents to which it is a party and (c) agrees that (i) each Loan Document to which it is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other undertakings thereunder shall continue to be in full force and effect (with the same priority, as applicable) and shall accrue to the benefit of the applicable secured party or parties thereunder.
SECTION 5. Transition to Term SOFR. Notwithstanding any other provision herein or in any other Loan Document, any Loan bearing interest by reference to the Eurodollar Rate (as defined in the Existing Credit Agreement) outstanding as of the Amendment Effective Date shall continue to bear interest at the Eurodollar Rate until the end of the applicable Interest Period for such Loan as in effect on the Amendment Effective Date and the Eurodollar-related provisions of the Existing Credit Agreement applicable thereto shall continue and remain in effect (notwithstanding the election of the Borrower to establish an alternate rate of interest to the Eurodollar Rate and the occurrence of the Amendment Effective Date) until the end of the applicable Interest Period for such Loans as in effect on the Amendment Effective Date, after which such provisions shall have no further force or effect and thereafter, all such Loans formerly bearing interest by reference to the Eurodollar Rate shall be SOFR Loans unless the Borrower specifies otherwise in accordance with the Amended Credit Agreement.
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SECTION 6. Miscellaneous.
(a) Survival. Except as expressly provided in this Amendment, all of the terms, provisions, covenants, agreements, representations and warranties and conditions of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect as written, unmodified hereby and are hereby ratified by the Borrower and each other Loan Party. In the event of any conflict between the terms, provisions, covenants, representations and warranties and conditions of this Amendment, on the one hand, and the Credit Agreement or any other applicable Existing Document, on the other hand, this Amendment shall control.
(b) Further Assurances. Each of the Borrower and each other Loan Party each agrees to execute such other documents, instruments and agreements and take such further actions reasonably requested by the Administrative Agent to effectuate the provisions of this Amendment.
(c) Severability. Any term or provision of this Amendment that is invalid, illegal or unenforceable in any jurisdiction shall, solely as to that jurisdiction, be ineffective solely to the extent of such invalidity, illegality or unenforceability without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Amendment or affecting the validity, legality or enforceability of any of the terms or provisions of this Amendment in any other jurisdiction. If any provision of this Amendment is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
(d) Entire Agreement. This Amendment, the Credit Agreement (as amended hereby) and the other applicable Loan Documents constitute the entire agreement among the parties to the Credit Agreement and such other applicable Loan Document with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and verbal, among such parties or any of them with respect to the subject matter hereof. Any exhibits or annexes attached hereto are hereby incorporated herein by reference and made a part hereof.
(e) Binding Effect, Beneficiaries. This Amendment shall be binding upon and inure to the benefit of the parties to the Credit Agreement and each other applicable Loan Document and their respective heirs, executors, administrators, successors, legal representatives and assigns, and no other party shall derive any rights or benefits herefrom.
(f) Governing Law, Etc.
(i) This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.
(ii) The provisions of Sections 10.15(b), 10.15(c), 10.15(d) and 10.16 of the Credit Agreement are hereby incorporated by reference mutatis mutandis as if full set forth herein.
(g) Construction. This Amendment shall be construed without regard to any presumption or other rule requiring construction against the party drafting this Amendment.
(h) Notices. All notices relating to this Amendment shall be delivered in the manner and subject to the provisions set forth in the Credit Agreement.
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(i) Counterparts; Effectiveness; Electronic Execution. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single agreement. Except as provided in Section 3, this Amendment shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of each other party hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” and words of like import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(j) Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.
(k) Reference to and Effect on the Credit Agreement and the Other Loan Documents. On and after the Effective Date, each reference in any Loan Document to the Credit Agreement and the use therein of “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall, in each case, mean and be a reference to the Credit Agreement as amended by this Amendment. Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect (with the same priority, as applicable) and are hereby ratified and confirmed and this Amendment shall not be considered a novation. The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender or any other party under, the Amended Agreement, any of the other Loan Documents or otherwise. This Amendment shall be deemed to be a “Loan Document”, “Credit Document”, “Transaction Document”, “Financing Agreement” or “Related Document” (or other analogous or similar defined term) for purposes of the Amended Agreement and the other Loan Documents.
(l) Administrative Agent Provisions.
(i) By their signatures hereto, each Lender (which collectively constitute the Required Lenders under the applicable Loan Documents), hereby (A) acknowledges, accepts, and consents to this Amendment, (B) designates this Amendment as a Loan Document in all respects in connection with the Credit Agreement and the other Loan Documents and (C) authorizes and instructs the Administrative Agent to execute, deliver, and perform this Amendment.
(ii) It is acknowledged and agreed that (A) this Amendment is executed and delivered by Citibank, N.A., not individually or personally but solely as Administrative Agent in the exercise of the powers and authority conferred and vested in it hereunder and under the Amended Credit Agreement, (B) the Administrative Agent has executed and delivered this Amendment in accordance with the instructions of the Lenders set forth in Section 6(l)(i) above, (C) the Administrative Agent assumes no responsibility for the correctness of the recitals contained herein and shall not be responsible or accountable in any way whatsoever for or with respect to the validity, execution (except with respect to itself) or sufficiency of this Amendment and makes no representation with respect thereto, and (D) in connection with its execution, delivery, and performance of this Amendment, the Administrative Agent (and its Related Parties) shall be entitled to the benefit of every provision of the Amended Credit Agreement limiting the liability of or affording rights, benefits, protections, privileges, immunities, exculpations, immunities, or indemnities to
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the Administrative Agent as if they were each expressly set forth herein mutatis mutandis. In the case of any reference herein to the taking or omitting to take any action and/or the giving of any consent, approval or direction by the Administrative Agent, it is understood and agreed that in all cases the Administrative Agent shall only take such action in accordance with the written direction of the Required Lenders. In the case of a conflict between this Amendment and the Amended Credit Agreement, the Amended Credit Agreement shall govern and control the liabilities, rights, obligations, privileges, protections, exculpations, immunities, indemnities and benefits of the Administrative Agent.
(m) Post-Closing Condition. Subject to Section 2.9(b) of the Credit Agreement, the Borrower shall, within ten (10) Business Days of the request of any Lender and upon the receipt by the Borrower at the Corporate Office or through the Custodian at the Lender’s election, of any then-existing Note, execute and deliver to such Lender one or more replacement Notes with respect to each such existing Note, substantially in the form of Annex D attached hereto.
[Remainder of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the day and year first above written.
| Cemex, S.A.B. de C.V., | ||
| as Borrower | ||
| By: | /s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Concretos, S.A. de C.V., | ||
| as a Loan Party | ||
| By: | /s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Operaciones México, S.A. de C.V., | ||
| as a Loan Party | ||
| By: | /s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Corp., | ||
| as a Loan Party | ||
| By: | /s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Innovation Holding Ltd., | ||
| as a Loan Party | ||
| By: | /s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| CITIBANK, N.A, | ||
| as Administrative Agent | ||
| By: | /s/ Pahtricia Arenas | |
| Name: Pahtricia Arenas | ||
| Title: Senior Trust Officer | ||
| ING Capital LLC, | ||
| as Sustainability Structuring Agent | ||
| By: | /s/ Ana Carolina Oliveria | |
| Name: Ana Carolina Oliveria | ||
| Title: Managing Director | ||
| By: | /s/ Bill James | |
| Name: Bill James | ||
| Title: Head of Lending Americas | ||
| BANK OF AMERICA, N.A., | ||
| as a Lender | ||
| By: | /s/ Gonzalo Isaacs | |
| Name: Gonzalo Isaacs | ||
| Title: Managing Director | ||
| BNP PARIBAS, | ||
| as a Lender | ||
| By: | /s/ Julien Pecoud-Bouvet | |
| Name: Julien Pecoud-Bouvet | ||
| Title: Director | ||
| By: | /s/ Karim Remtoula | |
| Name: Karim Remtoula | ||
| Title: Director | ||
| BANCO NACIONAL DE MEXICO S.A., | ||
| INTEGRANTE DEL GRUPO FINANCIERO BANAMEX, | ||
| as a Lender | ||
| By: | /s/ Eduardo Aldaco Borboa | |
| Name: Eduardo Aldaco Borboa | ||
| Title: Attorney-at-Fact | ||
| By: | /s/ Guadalupe Valdés | |
| Name: Guadalupe Valdés | ||
| Title: Attorney-at-Fact | ||
| CRÉDIT AGRICOLE CORPORATE AND | ||
| INVESTMENT BANK, | ||
| as a Lender | ||
| By: | /s/ Jaime Frontera | |
| Name: Jaime Frontera | ||
| Title: Managing Director | ||
| By: | /s/ Gordon Yip | |
| Name: Gordon Yip | ||
| Title: Director | ||
| ING BANK N.V., DUBLIN BRANCH, | ||
| as a Lender | ||
| By: | /s/ Cormac Langford | |
| Name: Cormac Langford | ||
| Title: Director | ||
| By: | /s/ Ciaran Dunne | |
| Name: Ciaran Dunne | ||
| Title: Director | ||
| JPMORGAN CHASE BANK, N.A., | ||
| as a Lender | ||
| By: | /s/ Christophe Vohmann | |
| Name: Christophe Vohmann | ||
| Title: Executive Director | ||
| MIZUHO BANK, LTD., | ||
| as a Lender | ||
| By: | /s/ Paul Grayson | |
| Name: Paul Grayson | ||
| Title: Director | ||
| BANK OF CHINA LTD. (PANAMA BRANCH), | ||
| as a Lender | ||
| By: | /s/ Ni Na | |
| Name: Ni Na | ||
| Title: Executive Vice President | ||
| INDUSTRIAL AND COMMERCIAL BANK OF | ||
| CHINA LTD. (PANAMA BRANCH), | ||
| as a Lender | ||
| By: | /s/ Zhu Liang | |
| Name: Zhu Liang | ||
| Title: Assistant General Manager | ||
| INTESA SANPAOLA S.P.A., NEW YORK | ||
| BRANCH, | ||
| as a Lender | ||
| By: | /s/ Javier Richard Cook | |
| Name: Javier Richard Cook | ||
| Title: Managing Director | ||
| By: | /s/ Jennifer Feldman Facciola | |
| Name: Jennifer Feldman Facciola | ||
| Title: Business Director | ||
| SUMITOMO MITUSI BANKING | ||
| CORPORATION, | ||
| as a Lender | ||
| By: | /s/ Raphael Dumas | |
| Name: Raphael Dumas | ||
| Title: Co-Head of Latam Corporate Finance | ||
| CITIZENS BANK, N.A., | ||
| as a Lender | ||
| By: | /s/ A. Paul Dawley | |
| Name: A. Paul Dawley | ||
| Title: Senior Vice President | ||
| SOCIÉTÉ GÉNÉRALE, | ||
| as a Lender | ||
| By: | /s/ Richard Bernal | |
| Name: Richard Bernal | ||
| Title: Managing Director | ||
| BANCO SANTANDER, S.A., | ||
| as a Lender | ||
| By: | /s/ Fatima Moreno | |
| Name: Fatima Moreno | ||
| Title: Vice President | ||
| By: | /s/ Lucas Videla | |
| Name: Lucas Videla | ||
| Title: Executive Director | ||
| CRÉDIT INDUSTRIEL ET COMMERCIAL, | ||
| LONDON BRANCH, | ||
| as a Lender | ||
| By: | /s/ Patrick Kitching | |
| Name: Patrick Kitching | ||
| Title: Head of Corporate Finance | ||
| By: | /s/ Ben Travers | |
| Name: Ben Travers | ||
| Title: Corporate Finance Manager | ||
| CITY NATIONAL BANK, | ||
| as a Lender | ||
| By: | /s/ Brian Myers | |
| Name: Brian Myers | ||
| Title: Managing Director | ||
| BANCO MERCANTIL DEL NORTE S.A. | ||
| INSTITUCIÓN DE BANCA MÚLTIPLE, | ||
| GRUPO FINANCIERO BANORTE, | ||
| as a Lender | ||
| By: | /s/ Manuel Ramirez Garcia | |
| Name: Manuel Ramirez Garcia | ||
| Title: Attorney-in-Fact | ||
| By: | /s/ Claudia Ailed de la Rosa Reyes | |
| Name: Claudia Ailed de la Rosa Reyes | ||
| Title: Attorney-in-fact | ||
| CREDIT SUISSE AG, NEW YORK BRANCH, | ||
| as a Lender | ||
| By: | /s/ Doreen Barr | |
| Name: Doreen Barr | ||
| Title: Authorized Signatory | ||
| By: | /s/ Michael Dieffenbacher | |
| Name: Michael Dieffenbacher | ||
| Title: Authorized Signatory | ||
ANNEX A
MARKED VERSION REFLECTING CHANGES
PURSUANT TO THE FIRST AMENDMENT TO THE CREDIT AGREEMENT
ADDED TEXT SHOWN UNDERSCORED
DELETED TEXT SHOWN STRIKETHROUGH
CREDIT AGREEMENT
DATED AS OF OCTOBER 29, 2021,
as amended by the First Amendment, dated as of June 5, 2023,
among
Cemex, S.A.B. de C.V.,
as the Borrower,
Citibank, N.A.,
as Administrative Agent,
ING Capital LLC,
as Sustainability Structuring Agent,
BofA Securities Inc.,
BNP Paribas,
Citigroup Global Markets Inc., and
JPMorgan Chase Bank, N.A.,
as Joint Bookrunners and Joint Lead Arrangers
and
The Other Lenders Party Hereto
TABLE OF CONTENTS
| Section | Page | |||||
| ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
35 | |||||
| Section 1.1 |
Defined Terms | 35 | ||||
| Section 1.2 |
Other Interpretive Provisions | 63 | ||||
| Section 1.3 |
Accounting Terms | 64 | ||||
| Section 1.4 |
Rounding | 65 | ||||
| Section 1.5 |
Times of Day | 65 | ||||
| Section 1.6 |
Interest Rates | 65 | ||||
| ARTICLE II THE COMMITMENTS AND LOANS |
65 | |||||
| Section 2.1 |
Loans | 65 | ||||
| Section 2.2 |
Borrowings, Conversions and Continuations of Loans | 65 | ||||
| Section 2.3 |
Prepayments | 67 | ||||
| Section 2.4 |
Termination or Reduction of Commitments. | 68 | ||||
| Section 2.5 |
Repayment of Loans | 68 | ||||
| Section 2.6 |
Interest | 69 | ||||
| Section 2.7 |
Fees | 69 | ||||
| Section 2.8 |
Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin | 70 | ||||
| Section 2.9 |
Evidence of Debt | 71 | ||||
| Section 2.10 |
Payments Generally; Administrative Agent’s Clawback | 71 | ||||
| Section 2.11 |
Sharing of Payments by Lenders | 73 | ||||
| Section 2.12 |
Defaulting Lenders | 73 | ||||
| Section 2.13 |
Sustainability Adjustments | 74 | ||||
| ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY |
76 | |||||
| Section 3.1 |
Taxes | 76 | ||||
| Section 3.2 |
Illegality | 79 | ||||
| Section 3.3 |
Benchmark Replacement | 79 | ||||
| Section 3.4 |
Increased Costs; Reserves on SOFR Loans | 82 | ||||
| Section 3.5 |
Compensation for Losses | 83 | ||||
| Section 3.6 |
Mitigation Obligations; Replacement of Lenders | 84 | ||||
| Section 3.7 |
Survival | 84 | ||||
| Section 3.8 |
Inability to Determine Rates | 84 | ||||
| ARTICLE IV CONDITIONS PRECEDENT TO LOANS |
85 | |||||
| Section 4.1 |
Conditions to Effective Date | 85 | ||||
| Section 4.2 |
Conditions to all Loans | 86 | ||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES |
89 | |||||
| Section 5.1 |
Existence, Qualification and Power | 89 | ||||
| Section 5.2 |
Authorization; No Contravention | 89 | ||||
| Section 5.3 |
Governmental Authorization; Other Consents | 90 | ||||
| Section 5.4 |
Binding Effect | 90 | ||||
| Section 5.5 |
Financial Statements; No Material Adverse Effect | 90 | ||||
| Section 5.6 |
Litigation | 91 | ||||
| Section 5.7 |
No Default | 91 | ||||
| Section 5.8 |
Ownership of Property; Liens | 91 | ||||
| Section 5.9 |
Environmental Compliance | 91 | ||||
| Section 5.10 |
Insurance | 91 | ||||
| Section 5.11 |
Taxes | 91 | ||||
| Section 5.12 |
ERISA Compliance | 92 | ||||
| Section 5.13 |
Subsidiaries; Equity Interests | 92 | ||||
| Section 5.14 |
Margin Regulations; Investment Company Act | 93 | ||||
| Section 5.15 |
Disclosure | 93 | ||||
| Section 5.16 |
Compliance with Laws | 93 | ||||
| Section 5.17 |
Intellectual Property; Licenses, Etc. | 93 | ||||
| Section 5.18 |
Sanctions | 94 | ||||
| Section 5.19 |
Anti-Corruption Laws | 94 | ||||
| Section 5.20 |
EEA Financial Institutions | 95 | ||||
| Section 5.21 |
Covered Entities | 95 | ||||
| Section 5.22 |
Solvency | 95 | ||||
| Section 5.23 |
Immunity | 95 | ||||
| Section 5.24 |
Pari Passu Status | 95 | ||||
| ARTICLE VI AFFIRMATIVE COVENANTS |
95 | |||||
| Section 6.1 |
Financial Statements | 95 | ||||
| Section 6.2 |
Certificates; Other Information | 96 | ||||
| Section 6.3 |
Notices | 98 | ||||
| Section 6.4 |
Pari Passu Obligations | 98 | ||||
| Section 6.5 |
Payment of Obligations | 98 | ||||
| Section 6.6 |
Preservation of Existence, Etc. | 98 | ||||
| Section 6.7 |
Maintenance of Properties | 99 | ||||
| Section 6.8 |
Maintenance of Insurance | 99 | ||||
| Section 6.9 |
Compliance with Laws | 99 | ||||
| Section 6.10 |
Books and Records | 99 | ||||
| Section 6.11 |
Use of Proceeds | 99 | ||||
| Section 6.12 |
Anti-Corruption Laws; Sanctions | 100 | ||||
| Section 6.13 |
Delivery of Notes and Appointment of Custodian | 100 | ||||
| Section 6.14 |
Sustainability Reporting | 100 | ||||
| ARTICLE VII NEGATIVE COVENANTS |
100 | |||||
| Section 7.1 |
Liens | 100 | ||||
| Section 7.2 |
Subsidiary Debt | 102 | ||||
| Section 7.3 |
Fundamental Changes and Asset Dispositions | 103 | ||||
| Section 7.4 |
Restricted Payments | 104 | ||||
| Section 7.5 |
Financial Covenants | 104 | ||||
| ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES |
105 | |||||
| Section 8.1 |
Events of Default | 105 | ||||
| Section 8.2 |
Remedies Upon Event of Default | 107 | ||||
| Section 8.3 |
Application of Funds | 108 | ||||
| ARTICLE IX ADMINISTRATIVE AGENT |
108 | |||||
| Section 9.1 |
Appointment and Authority | 108 | ||||
| Section 9.2 |
Rights as a Lender | 109 | ||||
| Section 9.3 |
Exculpatory Provisions | 109 | ||||
| Section 9.4 |
Reliance by Administrative Agent | 110 | ||||
| Section 9.5 |
Erroneous Payments | 111 | ||||
| Section 9.6 |
Delegation of Duties | 114 | ||||
| Section 9.7 |
Resignation of Administrative Agent | 114 | ||||
| Section 9.8 |
Non-Reliance on the Administrative Agent, the Lead Arrangers and the Other Lenders | 115 | ||||
| Section 9.9 |
No Other Duties, Etc. | 116 | ||||
| Section 9.10 |
Guaranty Matters | 116 | ||||
| Section 9.11 |
Certain ERISA Matters | 116 | ||||
| Section 9.12 |
Administrative Agent May File Proofs of Claim | 117 | ||||
| ARTICLE X MISCELLANEOUS |
118 | |||||
| Section 10.1 |
Amendments, Etc. | 118 | ||||
| Section 10.2 |
Notices; Effectiveness; Electronic Communication | 119 | ||||
| Section 10.3 |
Reliance by Administrative Agent and Lenders | 122 | ||||
| Section 10.4 |
No Waiver; Cumulative Remedies; Enforcement | 122 | ||||
| Section 10.5 |
Expenses; Indemnity; Damage Waiver | 122 | ||||
| Section 10.6 |
Payments Set Aside | 124 | ||||
| Section 10.7 |
Successors and Assigns | 125 | ||||
| Section 10.8 |
Treatment of Certain Information; Confidentiality | 127 | ||||
| Section 10.9 |
Right of Setoff | 128 | ||||
| Section 10.10 |
Interest Rate Limitation | 129 | ||||
| Section 10.11 |
Counterparts; Integration; Effectiveness | 129 | ||||
| Section 10.12 |
Survival of Representations and Warranties | 129 | ||||
| Section 10.13 |
Severability | 129 | ||||
| Section 10.14 |
Replacement of Lenders | 130 | ||||
| Section 10.15 |
Governing Law; Jurisdiction; Etc. | 131 | ||||
| Section 10.16 |
WAIVER OF JURY TRIAL | 132 | ||||
| Section 10.17 |
Waiver of Immunities | 132 | ||||
| Section 10.18 |
Judgment Currency | 133 | ||||
| Section 10.19 |
No Advisory or Fiduciary Responsibility | 133 | ||||
| Section 10.20 |
Electronic Execution of Assignments and Certain Other Documents | 133 | ||||
| Section 10.21 |
USA PATRIOT Act | 134 | ||||
| Section 10.22 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 134 | ||||
| Section 10.23 |
Acknowledgement Regarding Any Supported QFCs | 135 | ||||
| Section 10.24 |
Use of English Language | 136 | ||||
| Section 10.25 |
Swiss Guarantee Limitation | 136 | ||||
| SCHEDULES | ||
| 1.1 |
Applicable Margin and KPI Targets | |
| 2.1 |
Commitments and Applicable Percentages | |
| 5.6 |
Litigation and Environmental Matters | |
| 5.13 |
Subsidiaries and Other Equity Investments | |
| 5.17 |
Intellectual Property Matters | |
| 7.1 |
Existing Liens | |
| 7.2 |
Existing Indebtedness | |
| 10.2 |
Administrative Agent’s Office; Certain Addresses for Notices | |
| EXHIBITS | ||
| A |
Form of Committed Loan Notice | |
| B |
Form of Note | |
| C |
Form of Compliance Certificate | |
| D |
Form of Pricing Certificate | |
| E-1 |
Form of Assignment and Assumption | |
| E-2 |
Administrative Questionnaire | |
| F |
Form of Guaranty | |
| G |
Form of Notice of Loan Prepayment | |
| H |
Form of Acceptable Assumption Agreement | |
CREDIT AGREEMENT
This CREDIT AGREEMENT (“Agreement”) is entered into as of October 29, 2021, among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable (the “Borrower”), Citibank, N.A., a national banking association organized and existing under the laws of the United States and acting through its Agency & Trust Division, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (the “Administrative Agent”), ING Capital LLC, solely in its capacity as sustainability structuring agent (the “Sustainability Structuring Agent”), BofA Securities Inc., BNP Paribas, Citigroup Global Markets Inc., and JPMorgan Chase Bank, N.A., as joint bookrunners and joint lead arrangers (collectively, the “Lead Arrangers” and individually, a “Lead Arranger”), and each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”).
The Borrower has requested that the Lenders provide a term credit facility and a revolving credit facility, and the Lenders are willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“Acceptable Assumption Agreement” means an Assumption Agreement with respect to the Obligations of the Borrower or a Guarantor, as applicable, in substantially the form of Exhibit H.
“Additional Guarantor” means any Person that, with the written acknowledgment of the Borrower, executes a guaranty in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F, and who shall, promptly following any request from the Administrative Agent or any Lender, provide information and documentation reasonably requested by the Administrative Agent or such Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
“Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
“Administrative Agent” has the meaning set forth in the preamble of this Agreement.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.2, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
35
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Aggregate Commitments” means the Revolving Commitments of all the Lenders.
“Agreement” means this Credit Agreement.
“Alternative Fuels” are defined following the Global Cement and Concrete Association Sustainability Guidelines, as in effect on the Effective Date, for co-processing fuels and raw materials in cement manufacturing and include, but are not limited to, industrial waste, municipal solid waste, biomass residues and tires.
“Annual Period” means each calendar year.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person or to which such a Person is subject.
“Applicable Margin” means the percentage per annum, based on the Consolidated Leverage Ratio, applicable to each Loan as set forth in Schedule 1.1 hereto, and after giving effect to any Sustainability Margin Adjustment.
“Applicable Percentage” means, (a) with respect to any Lender in respect of the Revolving Facility, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Revolving Commitment at such time; provided, however, that if the Revolving Commitments have terminated pursuant to Section 8.2 or expired, the Applicable Percentage of each Lender shall be determined based upon the Revolving Commitments of each Lender most recently in effect, giving effect to any subsequent assignments and to any Revolving Lender’s status as a Defaulting Lender at the time of determination and (b) with respect to any Lender in respect of the Term Facility, (i) on or prior to the Initial Funding Date, the percentage of the total Initial Term Loan Commitments of all Term Lenders represented by such Lender’s Initial Term Loan Commitment at such time and (ii) thereafter, the percentage of the aggregate outstanding Term Loans under the Term Facility of all Term Lenders represented by the aggregate outstanding Term Loans under the Term Loan Facility of such Lender at such time. The initial Applicable Percentage of each Lender with respect to the Revolving Facility and the Term Loan Facility, as applicable, is set forth opposite the name of such Lender on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
36
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.7), and acknowledged by the Administrative Agent, in substantially the form of Exhibit E-1.
“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2020, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate (or component thereof), any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is removed pursuant to Section 3.3(f).
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time that is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliate (other than through liquidation, administration or other insolvency proceedings).
“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1⁄2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate,” and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%. The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.3 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Base Rate Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.
37
“Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.3. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, for any Available Tenor, the sum of (a) the alternate benchmark rate that has been selected by the Administrative Agent (acting at the written direction of the Required Lenders) and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent (acting at the written direction of the Required Lenders) and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Required Lenders decide may be appropriate to reflect the adoption and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice as determined by the Required Lenders (or, if the Required Lenders decide that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Required Lenders decide is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
38
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent (acting at the direction of the Required Lenders), which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
| (a) | in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof); or |
| (b) | in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. |
For the avoidance of doubt, if such Benchmark is a term rate, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark, in each case as notified to the Administrative Agent by the Borrower or any Lender:
| (a) | a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); |
| (b) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will |
39
| continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or |
| (c) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative. |
For the avoidance of doubt, if such Benchmark is a term rate, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.3 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.3.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Borrower” has the meaning specified in the preamble hereto.
“Borrower Materials” has the meaning specified in Section 6.2.
“Borrowing” means a borrowing of Term Loans or Revolving Loans under this Agreement.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, Mexico or New York, New York.
“Capital Stock” means:
(a) with respect to any Person that is a corporation, any and all shares, equity quotas (partes sociales), interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person; and
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(b) with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person.
“Cash” means the amount of “Cash and cash equivalents” as set out in the relevant line in the relevant financial statements as determined in accordance with IFRS.
“Cementitious Product” means all clinker volumes produced by a company for cement making or direct clinker sale, plus gypsum, limestone, cement kiln dust and all clinkers consumed for blending, plus all cement substitutes produced. Clinker bought from third parties for the production of cement shall not constitute Cementitious Product.
“Change in Law” means the occurrence, after the Effective Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means the beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Securities and Exchange Act of 1934, as amended) of twenty percent (20%) or more in voting power of the outstanding Voting Stock of the Borrower is acquired by any Person. Notwithstanding the foregoing, a transaction will not be deemed to constitute a Change of Control if (1) the Borrower becomes a direct or indirect Wholly Owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Borrower’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no Person (other than a holding company satisfying the requirements of this sentence) has beneficial ownership of twenty percent (20%) or more in voting power of the Voting Stock of such holding company.
“Code” means the Internal Revenue Code of 1986.
“Commitment” means an Initial Term Loan Commitment or a Revolving Commitment, as the context may require.
“Commitment Fee” has the meaning specified in Section 2.7.
“Committed Loan Notice” means a request for a Borrowing or a conversion or continuation of any Loan, which shall be substantially in the form of Exhibit A, duly completed and signed by a Responsible Officer of the Borrower.
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“Common Stock” of any Person means any and all shares, equity quotas (partes sociales), interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common equity interests, whether outstanding on the Effective Date or issued after the Effective Date, and includes, without limitation, all series and classes of such common equity interests. For the avoidance of doubt, “Common Stock” of the Borrower will be deemed to include the Borrower’s American Depositary Receipts and Ordinary Participation Certificates (Certificados de Participación Ordinarios).
“Compliance Certificate” means a certificate substantially in the form of Exhibit C.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Coverage Ratio” means, on any date of determination, the ratio of (a) ratio Consolidated EBITDA for the one (1) year period ending on such date to (b) Consolidated Interest Expense for the one (1) year period ending on such date.
“Consolidated Debt” means, at any date, the sum (without duplication) of (a) the aggregate amount of all Financial Debt of the Borrower and its Subsidiaries on a consolidated basis at such date, plus or minus, as applicable, (b) to the extent not included in Financial Debt, the aggregate net mark-to-market amount, which may be positive or negative, of all Swap Contracts (except to the extent such exposure is cash collateralized to the extent permitted under, or not restricted by, the Loan Documents). Notwithstanding the foregoing, Consolidated Debt shall exclude any existing or future obligations under any Securitization, any subordinated notes with no fixed maturity (which shall include, for the avoidance of doubt, the Borrower’s U.S.$1.0 billion 5.125% subordinated notes with no fixed maturity), and any Indebtedness (whether in the form of perpetual, convertible, hybrid or similar securities or financial instruments) that is subordinated to the Obligations.
“Consolidated EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, operating earnings before other (expenses) income, plus net depreciation and amortization expense, in each case determined in accordance with IFRS, as adjusted for any Discontinued EBITDA, and solely for the purpose of calculating the Consolidated Leverage Ratio on a Pro Forma Basis for any Material Disposition and/or Material Acquisition.
“Consolidated Interest Expense” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of: (a) consolidated interest expense, to the extent such expense was deducted (and not added back) in computing consolidated net income (or loss), including (i) amortization of original issue discount resulting from the issuance of indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances, (iii) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of obligations under any hedge agreements or other derivative instruments pursuant to IFRS), (iv) net payments, if any, made (less net payments, if any, received) pursuant to interest rate obligations under any hedge agreements with respect to indebtedness, (v) penalties and interest relating to taxes, (vi) any expensing of bridge, commitment or other financing fees, and excluding amortization of deferred
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financing fees, debt issuance costs, commissions, fees and expenses; plus (b) consolidated capitalized interest and the interest component of Leases that constitute Indebtedness of such person for such period, whether paid or accrued.
“Consolidated Leverage Ratio” means, on any date of determination, the ratio of (a) Consolidated Net Debt on such date to (b) Consolidated EBITDA for the one (1) year period ending on such date.
“Consolidated Net Debt” means, at any date, for the Borrower and its Subsidiaries on a consolidated basis, the Consolidated Debt net of Cash of the Borrower and its Subsidiaries that would not appear as “restricted” on a balance sheet in accordance with IFRS on such date.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Convertible Indebtedness” means any (a) Indebtedness the terms of which provide for conversion into, or exchange for, Common Stock of the Borrower, cash in lieu thereof and/or a combination of Common Stock of the Borrower and cash in lieu thereof or (b) contingent convertible units and related note purchase contracts.
“Corporate Office” means the Borrower’s corporate office located at Avenida Ricardo Margain Zozaya 325, Colonia Valle del Campestre, San Pedro Garza Garcia, Nuevo Leon, Mexico 66265, or any other office that might be notified from time to time to the Administrative Agent.
“Custodian” means any custodian of the Notes acting as agent for and on behalf of the Lenders for the time being appointed on behalf of the Lenders by the Administrative Agent (acting at the direction of the Required Lenders) with the Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed) provided that such Custodian must maintain an office in the metropolitan area of Monterrey, Nuevo León, Mexico.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, the Mexican Bankruptcy Law (Ley de Concursos Mercantiles), and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, concurso mercantil, quiebra or similar debtor relief Laws of the United States, Mexico or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means (a) with respect to any principal payable under or in respect of the Facilities not paid when due, the applicable interest rate plus 2.00% per annum and (b) with respect
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to other overdue amounts (including overdue interest), the interest rate applicable to Base Rate Loans plus 2.00% per annum.
“Defaulting Lender” means, subject to Section 2.12(b), any Lender that has failed to (a) fund all or any portion of its Loans on the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing prior to such date that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (b) pay to the Administrative Agent, or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, or has notified the Borrower or the Administrative Agent, in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, visitador, conciliador, síndico, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of (i) an Undisclosed Administration and (ii) the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent (in each case, acting at the written direction of the Required Lenders) that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.12(b)) upon written notice of such determination to the Borrower and each other Lender.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any comprehensive Sanction (at the time of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea region).
“Discontinued EBITDA” means, for any period, the sum for Discontinued Operations of the operating income for such period plus, without duplication and to the extent deducted in determining such discontinued operating income, depreciation, amortization expense and impairment of assets of the Discontinued Operations. For the avoidance of doubt, the
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Discontinued EBITDA will be added to the Consolidated EBITDA for any period for which the Disposition of the Discontinued Operations has not yet occurred.
“Discontinued Operations” means operations that are accounted for as discontinued operations for which the Disposition of such assets has not yet occurred.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Lender” means (a) certain financial institutions and other institutional lenders that have been specified to the Administrative Agent by the Borrower in writing at any time prior to the Effective Date, (b) any of the Borrower’s competitors that have been specified to the Administrative Agent by the Borrower in writing at any time and from time to time, and (c) in the case of each of clauses (a) and (b), any of their respective Affiliates that are either (x) identified in writing by the Borrower from time to time, or (y) clearly identifiable on the basis of such Affiliate’s name.
“Dividing Person” has the meaning assigned to it in the definition of “Division.”
“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
“Dollar” and “$” mean lawful money of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” means the first date all the conditions precedent in Section 4.1 are satisfied or waived in accordance with Section 10.1.
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“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.7 (subject to such consents, if any, as may be required under Section 10.7).
“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws (including common law), official standards (normas técnicas), regulations, ordinances, rules, applicable judgments, applicable orders, applicable decrees, permits and licenses relating to pollution and the protection of human health and safety with respect to exposure to Hazardous Materials, protection of the environment and natural resources or the release of Hazardous Materials into the environment, including any of the foregoing related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, pursuant to or arising from (a) any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of such Person and any warrants, rights or options to purchase any of the foregoing (but excluding any Convertible Indebtedness), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan (if any resulting liability has not been satisfied or payments of such liability are delinquent) or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of
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ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 9.5(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 9.5(d).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” has the meaning specified in Section 8.1.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) any Mexican withholding Taxes imposed on amounts payable under any Loan Document to or for the account of any Lender, in excess of the withholding Taxes that would have been imposed had such recipient been a Qualified Entity at the time of payment, and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Executive Compensation Plan” means any stock option plan, restricted stock plan or retirement plan which the Borrower or any of its Subsidiaries, any other obligor customarily provides to its employees, consultants and directors.
“Facilities” means the Term Facility and the Revolving Facility, together.
“Facilities Agreement” means that certain facilities agreement, dated as of July 19, 2017, entered into by and among the Borrower and certain of its Subsidiaries named therein, the financial institutions party thereto, as original lenders, Citibank Europe PLC, UK Branch, as agent, and Wilmington Trust (London) Limited, as security agent (as amended, amended and restated, supplemented or otherwise modified from time to time, including as amended and/or restated pursuant to an amendment and restatement agreement, dated April 2, 2019, an amendment and restatement agreement, dated November 4, 2019, an amendment agreement, dated May 22, 2020,
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an amendment and restatement agreement, dated October 13, 2020, and an amendment confirmation dated October 5, 2021).
“FATCA” means Sections 1471 through 1474 of the Code, as of the Effective Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.
“Federal Funds Rate” means, for any day, the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if the Federal Funds Rate as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Fee Letters” means, collectively, (a) the letter agreement, dated October 29, 2021, between the Borrower and the Lead Arrangers and (b) the letter agreement, dated September 24, 2021, between the Borrower and the Administrative Agent.
“Financial Debt” means, at any date with respect to any Person, the sum (without duplication) of the following, in each case, as determined in accordance with IFRS:
| (a) | Indebtedness of such Person pursuant to clause (a) of the definition thereof; |
| (b) | Indebtedness of such Person pursuant to clause (b) of the definition thereof; |
| (c) | Indebtedness of such Person pursuant to clause (c) of the definition thereof; |
| (d) | Indebtedness of such Person pursuant to clause (e) of the definition thereof; |
| (e) | Indebtedness of such Person pursuant to clause (f) of the definition thereof; and |
| (f) | all Guarantees of such Person in respect of any of the foregoing. |
“Floor” means a rate of interest equal to 0%.
“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“Governmental Authority” means the government of the United States, Mexico or any other nation, or of any political subdivision thereof, whether state or local, and any agency,
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authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guarantors” means (a) as of the Initial Funding Date, the Initial Guarantors, and (b) after the Initial Funding Date, the Initial Guarantors together with any Additional Guarantor.
“Guaranty” means the Guaranty made by the Guarantors in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“IFRS” means international accounting standards within the meaning of International Accounting Standards Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with IFRS (except as expressly set forth below):
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| (a) | all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; |
| (b) | all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments which, for the avoidance of doubt, shall not deemed Indebtedness until they are required to be funded; |
| (c) | net obligations of such Person under any Swap Contract (as determined in accordance with IFRS); |
| (d) | all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) if (i) one of the primary reasons behind entering into such obligation is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply; |
| (e) | Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) but only to the extent of the fair market value of the property secured thereby, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; |
| (f) | the aggregate amount of all financial obligations arising under any Leases of such Person recognized in the consolidated statement of financial position of such Person in accordance with IFRS less the sum (without duplication) of (i) all obligations of such Person to pay the deferred purchase price of property or services and (ii) all obligations of such Person with respect to product invoices incurred in connection with export financing; |
| (g) | all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment before the Maturity Date (other than at the option of such Person) in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and |
| (h) | all Guarantees of such Person in respect of any of the foregoing. |
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person, and in any case only to the extent of the recourse to such Person.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
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“Indemnitees” has the meaning specified in Section 10.5(b).
“Information” has the meaning specified in Section 10.8.
“Initial Funding Date” means the first date on which any Loans are funded.
“Initial Guarantors” means, collectively, CEMEX Concretos, S.A. de C.V., CEMEX Operaciones México, S.A. de C.V., CEMEX Corp. and CEMEX Innovation Holding Ltd. (formerly known as CEMEX TRADEMARKS HOLDING Ltd.).
“Initial Term Loan Commitment” means, as to each Term Lender, its obligation to make a Term Loan on the Initial Funding Date in the amount of such Term Lender’s Initial Term Loan Commitment set forth on Schedule 2.1, as such commitment shall be terminated pursuant to Section 2.4.
“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December of a fiscal year and the Maturity Date.
“Interest Period” means as to each SOFR Loan, the period commencing on the date such SOFR Loan is disbursed or converted to or continued as a SOFR Loan and ending on the date one, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a SOFR Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period pertaining to a SOFR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
“Inventory Financing” means any arrangement pursuant to which the Borrower or any of its Subsidiaries sells or otherwise disposes of inventory to a counterparty (including a bank or other institution or a special purpose vehicle or partnership incorporated or established by or on behalf of such bank or other institution or an Affiliate of such bank or other institution) and has an obligation to repurchase such inventory to the extent that it is not sold to a third party within a specified period.
“IP Rights” has the meaning specified in Section 5.17.
“IRS” means the United States Internal Revenue Service.
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“KPI Metrics” means:
| (a) | direct CO2 emissions measured in kg of CO2 per ton of Cementitious Product (excluding on site electricity production) minus emissions from biomass fuel sources and Alternative Fuels; |
| (b) | power consumption from clean energy sources in cement, including renewable energy sources such as solar, wind, hydro, and biomass, and power generated from waste heat recovery systems; and |
| (c) | the percentage of fuel consumption from Alternative Fuels compared to the total fuel consumption for cement plant operations in a given period. |
“KPI Metrics Auditor” means, with respect to any KPI Metric, KPMG Cárdenas Dosal, S.C.; provided that the Borrower may from time to time designate any independent public accountants of recognized national standing reasonably acceptable to the Sustainability Structuring Agent as a replacement KPI Metric Auditor, it being understood that any “big four” auditing firm or other auditing firm of recognized national standing acting in its capacity as an independent auditor of the Borrower shall be acceptable to the Sustainability Structuring Agent; provided, further, that the Borrower shall use commercially reasonable efforts to cause such replacement KPI Metric Auditor to apply substantially the same auditing standards and methodology used in the first KPI Metrics Report delivered by the Borrower.
“KPI Metrics Report” means a report that may take the form of any nonfinancial disclosure of the Borrower’s performance of one or more KPI Metrics, prepared by or on behalf of the Borrower for one or more KPI Metrics for a specific Annual Period, and published on an Internet or intranet website to which each Lender and the Administrative Agent have been granted access free of charge (or at the expense of the Borrower). Such KPI Metrics Report shall be audited by the KPI Metrics Auditor.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, official standards (normas técnicas), regulations, ordinances, codes, and all applicable administrative orders, directed duties, licenses, authorizations and permits issued by any Governmental Authority.
“Lease” means, as to any Person, the obligations of such Person under a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. For the avoidance of doubt, for purposes of this definition and its application to the Borrower, short-term and low-value leases as defined by the Borrower’s policy under IFRS are excluded.
“Lender” means a Term Lender or a Revolving Lender, as the context may require.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such
52
Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, easement, right-of-way or other encumbrance on title to real property, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing); provided, however, that the following shall only constitute a Lien in circumstances where the arrangement or transaction is entered into primarily as a method of raising Indebtedness or of financing the acquisition of an asset:
(i) the sale, transfer or other Disposition of any of the assets of the Borrower or its Subsidiaries on terms whereby they are or may be leased to or re-acquired the Borrower or its Subsidiaries;
(ii) the sale, transfer or other Disposition of any of the Borrower’s or its Subsidiaries’ receivables on recourse terms;
(iii) the entering into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv) the entering into any other preferential arrangement having a similar effect as those described in (i) to (iii) above.
“Loan” means an extension of credit by a Lender to the Borrower under Article II.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, each Note, the Guaranty, the Fee Letters (other than for purposes of Section 10.1), each Committed Loan Notice, and any amendments, modifications or supplements hereto or to any other Loan Document or waivers hereof or to any other Loan Document.
“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Material Acquisition” means any (a) acquisition of property or series of related acquisitions of property that constitutes assets comprising all or substantially all of an operating unit, division or line of business or (b) acquisition of or other investment in the Equity Interests of any Subsidiary or any person which becomes a Subsidiary or is merged or consolidated with the Borrower or any of its Subsidiaries, in each case, which involves the payment of consideration by the Borrower and its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Material Adverse Effect” means (a) a material adverse change in the business, financial condition, operations, performance or properties of the Borrower and its Subsidiaries taken as a whole; or (b) a material adverse effect on (i) the ability of any Loan Party to perform its payment Obligations under any Loan Document or (ii) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or (iii) the rights, remedies
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and benefits available to, or conferred upon, the Administrative Agent or any Lender under any Loan Documents.
“Material Disposition” means any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Maturity Date” means the date that is five years from the Initial Funding Date; provided, however, that if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.
“Mexico” means the United Mexican States (Estados Unidos Mexicanos).
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.1 and (b) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.
“Note” means a non-negotiable promissory note (pagaré no negociable) made by the Borrower as issuer (suscriptor), and by each Guarantor organized under the laws of Mexico as guarantor (avalista), in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B or any other form reasonably satisfactory to the Required Lenders in the case of a Benchmark Replacement, delivered pursuant to Section 2.9, Section 4.2(a), Section 4.2(b) or Section 6.13.
“Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit G, duly completed and signed by a Responsible Officer.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses,
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fees, indemnities, reimbursements and other amounts (including all fees, charges, expenses and disbursements of counsel to the Administrative Agent or any Lender) payable by any Loan Party under any Loan Document to the Administrative Agent or any Lender and (b) the obligation of the Loan Parties to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Loan Parties in accordance with the terms and conditions of the Loan Documents.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Organization Documents” means, as applicable (a) with respect to any corporation, the charter or certificate or articles of incorporation (including acta constitutiva) and the bylaws (estatutos sociales or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6).
“Outstanding Amount” means, with respect to Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Loans occurring on such date.
“Participant” has the meaning specified in Section 10.7(d).
“Participant Register” has the meaning specified in Section 10.7(d).
“PATRIOT Act” has the meaning specified in Section 10.21.
“Payment Recipient” has the meaning assigned to it in Section 9.5(a).
“PBGC” means the Pension Benefit Guaranty Corporation.
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“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum funding standards with respect to Pension Plans and set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan and other than a Multiemployer Plan) that is maintained by the Borrower and any ERISA Affiliate or with respect to which the Borrower or any ERISA Affiliate has any liability and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained by the Borrower and any Pension Plan maintained by an ERISA Affiliate.
“Platform” has the meaning specified in Section 6.2.
“Preferred Stock” of any Person means any Equity Interests of such Person that has preferential rights over any other Equity Interests of such Person with respect to dividends, distributions or mandatory redemptions or upon liquidation.
“Pricing Certificate” means a certificate substantially in the form of Exhibit D signed by a Responsible Officer of the Borrower attaching (a) true and correct copies of each KPI Metrics Report for the immediately preceding Annual Period and setting forth the Sustainability Margin Adjustment for the period covered thereby and for the KPI Metrics disclosed therein, and computations in reasonable detail in respect thereof and (b) if any KPI Metrics Report was audited or reviewed by the KPI Metrics Auditor, a review report of the KPI Metrics Auditor containing its customary limited assurances with respect to the computations in such KPI Metrics Report.
“Process Agent” means (a) as of the Effective Date, CEMEX NY Corporation, and (b) after the Effective Date, such other Person as the Borrower may appoint from time to time pursuant to provisions substantially similar to Section 10.15(d) and designated in writing to the Administrative Agent.
“Pro Forma Basis” means, with respect to compliance with any test or covenant hereunder in respect of a specified measurement period, compliance with such covenant or test after giving effect to any Material Acquisition or Material Disposition, using, for purposes of determining such compliance, the historical financial statements of all entities or assets so acquired or disposed of and the consolidated financial statements of the Borrower and its Subsidiaries which shall be reformulated as if such Material Acquisition or Material Disposition which has been consummated during such period had been consummated on the first day of such period.
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“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.2.
“Qualified Entity” means any Lender (or, if such Lender acts through a branch, agency, the principal office of such Lender) that (a) is the effective beneficiary of the payments made by any Loan Party organized under the laws of Mexico hereunder, (b) meets the requirements imposed by article 166-I, paragraph (a), Section (2) (or any other successor provision) of the Mexican Income Tax Law (Ley del Impuesto Sobre la Renta) and delivers to the Borrower the information described in Sections 3.18.18. and/or 3.18.19, as applicable, of the Resolución Miscelánea Fiscal para 2021 (Tax Resolution for 2021) (or any substitute or successor provisions), and (c) is a resident for tax purposes of a country with which Mexico has entered into a treaty for the avoidance of double taxation that is in effect.
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Register” has the meaning specified in Section 10.7(c).
“Regulation U” means Regulation U of the FRB, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents, and advisors of such Person and of such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor thereto.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.
“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chairman of the board, the chief executive officer, president, chief financial officer, any vice president, treasurer, assistant treasurer, controller, secretary, assistant secretary or attorney-in-fact of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.1 or Section 4.2 and notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the
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applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“Revolving Availability Period” means the period from and including the Effective Date to the earliest of (a) the Maturity Date and (b) the date of termination of the commitment of each Revolving Lender to make Revolving Loans.
“Revolving Commitment” means, as to each Revolving Lender, its obligation to make Revolving Loans to the Borrower pursuant to Section 2.1(b), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Lender’s name on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Revolving Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans.
“Revolving Facility” means the senior unsecured revolving credit facility in an aggregate principal amount of U.S.$1.75 billion provided under this Agreement.
“Revolving Lender” means the Persons listed on Schedule 2.1 holding a Revolving Loan under the Revolving Facility and any other Person that shall have become party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption.
“Sanctioned Lender” means any Person reasonably believed by the Borrower to be either a sanctioned person or any Person an assignment to which could put the Borrower and/or any of its Affiliates in a position of actual or potential non-compliance with Applicable Law (including, but not limited to, Sanctions).
“Sanctions” means any economic or financial sanction administered or enforced by the United States Government (including without limitation, OFAC), the United Nations Security Council, the European Union, or His Majesty’s Treasury.
“Sanctions Target” means any Person that is (a) listed on, or 50% or more owned or Controlled by a Person listed on, a Sanctions list, (b) the government of a Designated Jurisdiction
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or a member of the government of a Designated Jurisdiction, or (c) located in or incorporated under the laws of any Designated Jurisdiction.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Securitization” means a transaction or series of related transactions providing for the securitization of receivables and related assets by the Borrower or its Subsidiaries, including a sale at a discount; provided that (i) such receivables have been transferred, directly or indirectly, by the originator thereof to a person that is not the Borrower or any of its Subsidiaries in a manner that satisfies the requirements for an absolute conveyance (or, where the originator is organized under the laws of Mexico, a true sale), and not merely a pledge, under the laws and regulations of the jurisdiction in which such originator is organized; and (ii) except for customary representations, warranties, covenants and indemnities, such sale, transfer or other securitization is carried out on a non-recourse basis or on a basis where recovery is limited solely to the collection of the relevant receivables (other than where such recourse or recovery is required pursuant to the Applicable Laws or regulations in any jurisdiction).
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Borrowing” means, as to any Borrowing, the SOFR Loans comprising such Borrowing.
“SOFR Loan” means a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (c) of the definition of “Base Rate.”
“Solvent” means, with respect to the Borrower, that as of the date of determination, (a) the sum of the debt (including contingent liabilities) of the Borrower and its Subsidiaries on a consolidated basis does not exceed the present fair saleable value of the present assets of the Borrower and its Subsidiaries on a consolidated basis; (b) the capital of the Borrower and its Subsidiaries on a consolidated basis is not unreasonably small in relation to its business as contemplated on the date of determination; or (c) the Borrower and its Subsidiaries on a consolidated basis do not intend to incur, or believe that they will incur, debts beyond their ability to pay such debts as they become due in the ordinary course of business. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under FASB Accounting Standards Codification Topic 450-20).
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at
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the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Sustainability Margin Adjustment” means an adjustment to the Applicable Margin for any KPI Metric as provided by this Agreement.
“Sustainability Structuring Agent” has the meaning set forth in the preamble of this Agreement.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swiss Federal Tax Administration” means the tax authorities referred to in article 34 of the Swiss Federal Act on Withholding Tax of 13 October 1965, as from time to time amended (Bundesgesetz über die Verrechnungssteuer).
“Swiss Guarantor” means a Guarantor which is incorporated in Switzerland.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Term Loans.
“Term Facility” means the senior unsecured term loan facility in an aggregate principal amount of U.S.$1.5 billion provided under this Agreement.
“Term Lender” means the Persons listed on Schedule 2.1 holding an Initial Term Loan Commitment or Term Loans under the Term Facility and any other Person that shall have become party hereto holding Term Loans under the Term Facility pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto holding Term Loans under the Term Facility pursuant to an Assignment and Assumption.
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“Term Loan” has the meaning specified in Section 2.1(a).
“Term SOFR” means,
(a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day.
“Term SOFR Adjustment” means, for any calculation with respect to a Base Rate Loan or a SOFR Loan, a percentage per annum as set forth below for the applicable Type of such Loan and (if applicable) Interest Period therefor:
| Base Rate Loans: |
0.11448% |
SOFR Loans:
| Interest Period |
Percentage | |
| One month |
0.11448% | |
| Three months |
0.26161% | |
|
Six months |
0.42826% |
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“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent, acting at the written direction of the Required Lenders).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination and Release” means the existing commitments under the Facilities Agreement being cancelled, all principal, interest, fees and other amounts payable thereunder (other than contingent obligations for which no claim has been made) being paid in full, and all liens on collateral (including, without limitation, under the security trust (fideicomiso de garantía) number No. F/111517-9) and guarantees under the Facilities Agreement and the Borrower’s existing high yield notes (other than guarantees from the Guarantors thereunder) being terminated.
“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments, Term Credit Exposure and Revolving Credit Exposure of such Lender at such time.
“Transfer and Inconvertibility Event” means any action by Mexico, Banco de México or any other Governmental Authority of Mexico asserting or exercising de jure governmental, legislative, regulatory, administrative, judicial or police powers which (a) renders any Loan Party unable legally to convert Pesos to make any payment in Dollars to the Administrative Agent or any Lender in respect of any Obligation in accordance with the Loan Documents, or (b) restricts the availability of Dollars through the Mexican banking system or authorized exchange bureaus (“casas de cambio” as defined by Banco de México) to enable each Loan Party to lawfully perform its payment Obligations under the Loan Documents.
“Type” means, with respect to a Term Loan or a Revolving Loan, its character as a Base Rate Loan or a SOFR Loan.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain Affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Undisclosed Administration” means, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.
“United States” and “U.S.” mean the United States of America.
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“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Voting Stock” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether pursuant to contract or otherwise, or at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.
“Wholly Owned Subsidiary” means, for any Person, any Subsidiary of which at least 99.5% of the outstanding Equity Interests (other than, in the case of a Subsidiary not organized in the United States, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to Applicable Law) is owned by such Person or any other Person that satisfies this definition in respect of such Person.
“Withholding Agent” means the Borrower, the Guarantors organized under the laws of Mexico and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.2 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall
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be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law, rule or regulation shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) Unless the context otherwise requires, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a statutory division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any statutory division of a limited liability company shall constitute a separate Person hereunder (and each such division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
Section 1.3 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, IFRS applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Changes in IFRS. If at any time any change in IFRS or the application thereof would affect the computation or interpretation of any financial ratio, basket, requirement or other provision set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Lenders and the Borrower shall negotiate in good faith to amend such ratio, basket, requirement or other provision to preserve the original intent thereof in light of such change in IFRS (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio, basket, requirement or other provision shall continue to be computed or interpreted in accordance with IFRS or the application thereof prior to such change therein and (B) the Borrower shall provide to the Administrative Agent (for distribution to the Lenders) financial statements and
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other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio, basket, requirement or other provision made before and after giving effect to such change in IFRS.
Section 1.4 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.5 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
Section 1.6 Interest Rates. The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Base Rate,” “Term SOFR Reference Rate,” “Adjusted Term SOFR,” “Term SOFR,” “SOFR” or with respect to any rate that is an alternative or replacement for or successor to any of such rate (including, without limitation, any Benchmark Replacement) or the effect of any of the foregoing, or of any Benchmark Replacement Conforming Changes.
ARTICLE II THE COMMITMENTS AND LOANS
Section 2.1 Loans.
(a) Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make a loan (each, a “Term Loan” and, collectively, the “Term Loans”) to the Borrower, on the Initial Funding Date, in an aggregate amount equal to such Term Lender’s Initial Term Loan Commitment. Any amount borrowed under this Section 2.1(a) and repaid or prepaid may not be reborrowed. The Term Loans may take the form of a Base Rate Loan or a SOFR Loan, as further provided herein.
(b) Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make revolving loans (each such loan, a “Revolving Loan”) to the Borrower from time to time, on any Business Day during the Revolving Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Revolving Lender’s Revolving Commitment; provided, however, that after giving effect to any Borrowing, (i) the Outstanding Amount shall not exceed the Aggregate Commitments, and (ii) the Revolving Credit Exposure of any Revolving Lender shall not exceed such Revolving Lender’s Revolving Commitment. Within the limits of each Revolving Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1, prepay under Section 2.5, and reborrow under this Section 2.1. Revolving Loans may be Base Rate Loans or SOFR Loans, as further provided herein.
Section 2.2 Borrowings, Conversions and Continuations of Loans.
(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of SOFR Loans shall be made upon the Borrower’s irrevocable notice to the
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Administrative Agent, which shall be given by a Committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. New York City time (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of SOFR Loans or of any conversion of Base Rate Loans to SOFR Loans, and (ii) one (1) Business Day prior to the requested date of any Borrowing of or conversion to Base Rate Loans. Each Borrowing of, conversion to or continuation of SOFR Loans shall be in a principal amount of U.S.$5.0 million or a whole multiple of U.S.$1.0 million in excess thereof. Except as provided in Section 2.3(b), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of U.S.$500,000 or a whole multiple of U.S.$100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of SOFR Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, SOFR Loans with an Interest Period of one month. Any such automatic conversion to SOFR Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Base Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of SOFR Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of three months.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 11:00 a.m. New York City time on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.2 (or waiver thereof by the Lenders), the Administrative Agent shall make all funds so received available to the Borrower by crediting the account of the Borrower designated by the Borrower in the Committed Loan Notice.
(c) Except as otherwise provided herein, a SOFR Loan may be continued or converted only on the last day of an Interest Period for such SOFR Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as SOFR Loans without the consent of the Required Lenders.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for SOFR Loans upon determination of such interest rate.
(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Loans.
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(f) Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
Section 2.3 Prepayments.
(a) The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. New York City time (A) three (3) Business Days prior to any date of prepayment of SOFR Loans and (B) one (1) Business Day prior to any date of prepayment of Base Rate Loans; (ii) any prepayment of SOFR Loans shall be in a principal amount of U.S.$5.0 million or a whole multiple of U.S.$1.0 million in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of U.S.$500,000 or a whole multiple of U.S.$100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided, further, that such notice may be conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 5:00 p.m. New York City time one (1) Business Day prior to the specified effective date) if such condition is not satisfied. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if SOFR Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a SOFR Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.5. Subject to Section 2.13, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages in the order selected by the Borrower.
(b) If for any reason the Outstanding Amount at any time exceeds the Aggregate Commitments then in effect, the Borrower shall prepay Revolving Loans in an aggregate amount equal to such excess within one (1) Business Day.
(c) SOFR Loans may be prepaid at any time without premium or penalty, other than the payment of breakage costs reasonably determined by the Lenders and notified in writing to the Administrative Agent in the case of such a prepayment before the last day of an Interest Period. Base Rate Loans may be prepaid at any time without premium or penalty.
(d) Upon the occurrence of a Change of Control, (i) the Facilities will be immediately payable in full, (ii) any outstanding Commitments will be immediately terminated and (iii) any prepayment of SOFR Loans and Base Rate Loans shall be accompanied by all accrued interest on the amount prepaid, together with, in the case of a SOFR Loan, any additional amounts required pursuant to Section 3.5. Subject to Section 2.13, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.
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Section 2.4 Termination or Reduction of Commitments.
(a) Termination of Term Loan Commitments. The Initial Term Loan Commitments shall automatically and permanently terminate on the Initial Funding Date upon the funding of the Term Loans under the Term Facility.
(b) Optional Termination or Reduction of Revolving Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Commitments, or from time to time permanently reduce the Revolving Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. New York City time, three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of U.S.$5.0 million or any whole multiple of U.S.$1.0 million in excess thereof, and (iii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount would exceed the aggregate Revolving Commitments; provided, further, that such notice may be conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 5:00 p.m. New York City time one (1) Business Day prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Revolving Commitments. Any reduction of the Revolving Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the date of any termination of the Revolving Commitments shall be paid on the date of such termination.
Section 2.5 Repayment of Loans.
(a) Term Facility. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Lenders the aggregate principal amount of all Term Loans outstanding under the Term Facility on the following dates in the respective amounts set forth opposite such dates (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.3):
| Date
|
Amount
| |
| 36 months after the Initial Funding Date
|
20% | |
| 42 months after the Initial Funding Date
|
20% | |
| 48 months after the Initial Funding Date
|
20% | |
| 54 months after the Initial Funding Date
|
20% |
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|
Date
|
Amount
| |
| Maturity Date | The aggregate principal amount of all Term Loans outstanding under the Term Facility on the Maturity Date
|
(b) Revolving Facility. Any outstanding Revolving Loans will be due and payable on the Maturity Date.
Section 2.6 Interest.
(a) Subject to the provisions of subsection (i) below, (i) each SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to Adjusted Term SOFR for such Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin.
(i) If any amount of principal of any Loan is not paid when due, whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(b) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.7 Fees. Commitment Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender (other than Defaulting Lenders), in accordance with its Applicable Percentage with respect to Revolving Commitments, a fee equal to 35% of the Applicable Margin times the actual daily amount (commencing with the Initial Funding Date) by which the Aggregate Commitments exceed the Outstanding Amount (the “Commitment Fee”). The Commitment Fee shall accrue at all times during the period commencing with the Initial Funding Date and ending upon the expiration of the Revolving Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Initial Funding Date, and on the last day of the Revolving Availability Period. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For the avoidance of doubt, (i) the
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Commitment Fee will always be calculated utilizing the Applicable Margin for SOFR Loans, regardless of the amount of SOFR Loans outstanding at such time, and (ii) the calculation of the Commitment Fee payable for the account of any Lender shall not include any day on which such Lender is or was a Defaulting Lender.
(b) Other Fees. The Borrower shall pay to the Administrative Agent and the Lead Arrangers the fees and expenses payable in the amounts and at the times separately agreed upon in the applicable Fee Letter between the Borrower and such Person, together with the expenses of the Administrative Agent and the Lead Arrangers as specified in Section 10.5.
(c) Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds, for distribution, in the case of the fees set forth in Section 2.7(a), to the Lenders. Fees paid shall not be refundable under any circumstances.
Section 2.8 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin.
(a) All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to Adjusted Term SOFR) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day. The computation of interest rate shall be determined by the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error.
(b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent or any Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This clause (b) shall not limit the rights of the Administrative Agent or any Lender, as the case may be, under Section 2.6(a)(i) or under Article VIII; provided that any inaccuracy described in this clause (b) shall not constitute a Default or Event of Default with respect to Section 8.1(a) or Section 8.1(c) so long as (x) the Borrower complies with the terms of this clause (b) and (y) the Borrower was in compliance with the covenants in Section 7.5 at the date the Consolidated Leverage Ratio was inaccurately calculated (as evidenced by a proper calculation of the Consolidated Leverage Ratio as of such date). The
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Borrower’s obligations under this clause (b) shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
Section 2.9 Evidence of Debt.
(a) The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of business. The Administrative Agent shall maintain the Register in accordance with Section 10.7(c). The accounts, records and Register maintained pursuant to this clause (a) shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the Register, the Register shall control in the absence of manifest error. Upon the request of any Lender, including due to an assignment or transfer of Loans, made through the Administrative Agent, the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista), shall execute and deliver to such Lender a Note (pagaré), which shall evidence such Lender’s Loans in addition to such accounts or records. It is the intent of the Loan Parties and the Lenders that the Notes qualify as pagarés under Mexican law.
(b) In the event that the Applicable Margin increases or a Benchmark Replacement occurs in accordance with the provisions herein with respect to a Loan held by such Lender, the Borrower shall, within ten (10) Business Days of the request of such Lender and only upon the receipt by the Borrower at the Corporate Office or through the Custodian at the Lender’s election, of any then-existing Notes evidencing such Loan, execute and deliver to such Lender one or more replacement Notes with respect to each such existing Note, reflecting the new Applicable Margin or Benchmark Replacement as of the date of such increase or replacement, as applicable. Any such replacement Notes shall, at the Lender’s election, be made available at the Corporate Office or delivered to the Custodian on behalf of such Lender, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such replacement Note by courier or other nationally recognized delivery service.
Section 2.10 Payments Generally; Administrative Agent’s Clawback.
(a) Payments by Borrower. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office (or to such other account as the Administrative Agent may from time to time specify in writing) in Dollars and in immediately available funds not later than 12:00 noon New York City time on the date specified herein. The Administrative Agent will, to the extent funds are received from the Borrower as provided herein, promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 12:00 noon New York City time shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall
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continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. All payments hereunder shall be made in Dollars.
(b) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of SOFR Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may (but shall not be obligated to) assume that such Lender has made such share available on such date in accordance with Section 2.2 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.2) and may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(c) Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may (but shall not be obligated to) assume that the Borrower has made such payment on such date in accordance herewith and may (but shall not be obligated to), in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.5(c) are several and not joint. The failure of
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any Lender to make any Loan or to make any payment under Section 10.5(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 10.5(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
Section 2.11 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall notify the Administrative Agent of such fact and make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:
(a) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(b) the provisions of this Section 2.11 shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.11 shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
Section 2.12 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.1.
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(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.9 shall be applied at such time or times as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; third, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans and (y) such Loans were made at a time when the applicable conditions set forth in Section 4.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(b) Defaulting Lender Cure. If the Borrower determines that a Lender is no longer a Defaulting Lender, the Borrower will instruct the Administrative Agent to notify the parties hereto, whereupon as of the date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.13 Sustainability Adjustments.
(a) Following the date on which the Borrower provides a Pricing Certificate pursuant to Section 6.14(a) in respect of its most recently ended Annual Period, the Applicable Margin (including for purposes of determining the Commitment Fee) shall be increased or decreased (or neither increased nor decreased), as applicable, pursuant to the Sustainability Margin Adjustment as set forth in such Pricing Certificate. For purposes of the foregoing, (A) the Sustainability Margin Adjustment shall be determined as of the fifth (5th) Business Day following receipt by the Administrative Agent of a Pricing Certificate based upon the KPI Metrics set forth in such Pricing Certificate and the calculation of the Sustainability Margin Adjustment therein (such day, the
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“Sustainability Pricing Adjustment Date”) and (B) each change in the Applicable Margin (including for purposes of determining the Commitment Fee) resulting from a Pricing Certificate shall be effective during the period commencing on and including the applicable Sustainability Pricing Adjustment Date and ending on the date immediately preceding the next such Sustainability Pricing Adjustment Date (or, in the case of non-delivery of a Pricing Certificate, the last day such Pricing Certificate could have been delivered pursuant to Section 6.14(a)); provided that if any Sustainability Pricing Adjustment Date shall occur before the last day of an Interest Period, no change to the Applicable Margin as a result of the Sustainability Margin Adjustment shall be effective for purposes of Section 2.6 until the first day of the immediately succeeding Interest Period.
(b) For the avoidance of doubt, it is understood and agreed that (i) only one Pricing Certificate may be delivered in respect of any Annual Period, (ii) any Sustainability Margin Adjustment shall be iterative and shall not be cumulative year-over-year and (iii) Sustainalytics delivered a second party opinion to the Borrower on August 17, 2021.
(c) It is hereby understood and agreed that if no Pricing Certificate is delivered by the Borrower within the period set forth in Section 6.14(a), the Sustainability Margin Adjustment will be positive five (5) basis points, commencing on the last day such Pricing Certificate could have been delivered pursuant to the terms of Section 6.14(a) and continuing until the Borrower delivers a Pricing Certificate to the Administrative Agent and a new Applicable Margin is determined pursuant to Section 2.13(a) above and, pending delivery of a Pricing Certificate no Default or Event of Default shall occur in relation to the failure to deliver such Pricing Certificate.
(d) If (i)(A) any of the Borrower or any Lender becomes aware of any material inaccuracy in the Sustainability Margin Adjustment or the KPI Metrics as reported on the applicable Pricing Certificate (a “Pricing Certificate Inaccuracy”) and, not later than thirty (30) Business Days after obtaining knowledge thereof delivers a written notice to the Administrative Agent describing such Pricing Certificate Inaccuracy in reasonable detail (who shall furnish a copy to each of the Lenders and the Borrower) or (B) the Borrower and the Lenders agree that there was a Pricing Certificate Inaccuracy at the time of delivery of the relevant Pricing Certificate and (ii) a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in an increase in the Applicable Margin and the Commitment Fee for such period, then the Borrower shall be obligated to pay to the Administrative Agent for the account of the Lenders, promptly on demand by the Administrative Agent (acting at the direction of the Required Lenders) (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, automatically and without further action by the Administrative Agent or any Lender), but in no event less than ten (10) Business Days after the Borrower has received written notice of, or has agreed in writing that there was, a Pricing Certificate Inaccuracy, an amount equal to: (x) the excess of the amount of interest and fees that should have been paid for such period over (y) the amount of interest and fees actually paid for such period (the “True-Up Amount”). If the Borrower becomes aware of any Pricing Certificate Inaccuracy and, in connection therewith, if a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in a decrease in the Applicable Margin and the Commitment Fee for such period, then, upon receipt by the Administrative Agent of notice from the Borrower of such Pricing Certificate Inaccuracy (which notice shall include corrections to the calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable),
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commencing on the Business Day following receipt by the Administrative Agent of such notice, the Applicable Margin and the Commitment Fee shall be adjusted to reflect the corrected calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable.
(e) To the extent any event occurs (which would include, without limitation, a material disposal or material acquisition) which, in the opinion of the Borrower and the Sustainability Structuring Agent, acting reasonably and in good faith, means that one or more of the KPI Metrics is no longer appropriate, then the Borrower and the Sustainability Structuring Agent will report to the Lenders that such KPI will no longer apply in relation to the Loans for the remainder of the Facilities. In such a scenario, the Borrower will then cease to refer to the applicable KPI Metrics in the Pricing Certificate for such period and the Applicable Margin shall be adjusted to reflect the corrected calculations of such KPI Metrics.
(f) To the extent the Sustainability Structuring Agent ceases to be a Lender, the Borrower undertakes to use reasonable endeavors to seek to appoint another entity that is a Lender to fulfil the role of Sustainability Structuring Agent.
(g) It is understood and agreed that any Pricing Certificate Inaccuracy shall not constitute a Default or Event of Default under this Agreement, provided that the Borrower complies with the terms of this Section 2.13 with respect to such Pricing Certificate Inaccuracy. Notwithstanding anything to the contrary herein, unless such amounts shall be due upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, (i) any additional amounts required to be paid pursuant to clause (d) above shall not be due and payable until a written demand is made for such payment by the Administrative Agent in accordance with clause (d) above, (ii) any nonpayment of such additional amounts prior to such demand for payment by Administrative Agent shall not constitute a Default (whether retroactively or otherwise), and (iii) none of such additional amounts shall be deemed overdue prior to such a demand or shall accrue interest at the Default Rate prior to such a demand.
(h) The Administrative Agent and Sustainability Structuring Agent shall not have any responsibility for (or liability in respect of) reviewing, auditing or otherwise evaluating any calculation by the Borrower of any Sustainability Margin Adjustment (or for the KPI Metrics or any of the other data or computations that are part of or related to any such calculation) set forth in any Pricing Certificate, or for evaluating or determining any Pricing Certificate Inaccuracy (and the Administrative Agent may rely conclusively, and shall not incur any liability in so relying, on any such certificate or related notice, without further inquiry).
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
Section 3.1 Taxes.
(a) Defined Terms. For purposes of this Section 3.1, the term “Applicable Law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding
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of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the relevant Governmental Authority any Other Taxes in accordance with Applicable Law.
(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.1) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. A payment shall not be increased under this clause (d) by reason of a tax deduction on account of Tax imposed by Switzerland if so required under Applicable Law (including double tax treaties), to the extent that on the date on which payment falls due, increasing such payment in such way would breach any Swiss law; provided that the Borrower or a Swiss Guarantor, as applicable, shall use commercially reasonable efforts to avoid such tax deduction on account of Tax imposed by Switzerland or to prevent such increase in payment from breaching any Swiss law, including, without limitation, by causing such payment to a Recipient to be made by or through an entity which is not a tax resident in Switzerland.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.7(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (e).
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(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority as provided in this Section 3.1, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent (acting at the direction of the Required Lenders).
(g) Status of Lenders; Tax Documentation.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation and information reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding, including the information set forth in Sections 3.18.18 and/or 3.19.19 of the Resolución Miscelánea Fiscal para 2021 (or any substitute or successor provisions). In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.1 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. Unless required by Applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or have any obligation to pay to any Lender any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.1, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Recipient, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental
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Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the applicable Recipient be required to pay any amount to the Borrower pursuant to this clause (h) the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.
(i) Survival. Each party’s obligations under this Section 3.1 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
Section 3.2 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or to determine or charge interest rates based upon SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, then, upon notice thereof by such Lender to the Borrower and the Administrative Agent, (a) any obligation of such Lender to make or continue SOFR Loans or to convert Base Rate Loans to SOFR Loans shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Adjusted Term SOFR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (i) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all SOFR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such SOFR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such SOFR Loans and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon Adjusted Term SOFR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Adjusted Term SOFR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon Adjusted Term SOFR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted., together with any additional amounts required pursuant to Section 3.5.
Section 3.3 Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document:
(a) [Reserved.]
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(b) Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent (acting at the direction of the Required Lenders) to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders (and any such objection shall be conclusive and binding absent manifest error).
(c) At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent (acting at the direction of the Required Lenders) that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During the period referenced in the foregoing sentence, the component of Base Rate based upon the Benchmark will not be used in any determination of Base Rate.
(d) In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent (acting at the direction of the Required Lenders) will have the right to make Benchmark Replacement Conforming Changes from time to time and, subject to Section 3.3(j) and the proviso in Section 10.1 but otherwise notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(e) The Administrative Agent (acting at the direction of the Required Lenders) will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Benchmark Replacement Conforming Changes. The Administrative Agent (acting at the direction of the Required Lenders) will notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.3(f). Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.3, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, (x) in the case of any determination, decision or election by the Administrative Agent pursuant to this Section 3.3 will be made at the written direction of the Required Lenders, and (y) in the case of any determination, decision or election by any Lender (or group of Lenders), if applicable, pursuant to this Section 3.3, may be made in its or their sole discretion, and, in each case will be conclusive and binding absent manifest error and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.3.
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(f) At any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR), then the Administrative Agent (acting at the direction of the Required Lenders) may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (B) the Administrative Agent (acting at the direction of the Required Lenders) may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
(g) Notwithstanding anything herein or in any other Loan Document to the contrary, the Administrative Agent shall not be under any obligation (i) to monitor, determine or verify the unavailability or cessation of any rate hereunder (including, without limitation, any applicable Benchmark), or whether or when there has occurred, or to give notice to any other party to this Agreement or any other Loan Document of, the occurrence of, any Benchmark Transition Event, or matter related to any of the foregoing, (ii) to select, determine or designate any Benchmark Replacement or Benchmark Replacement Conforming Changes, or any other successor or replacement benchmark index, or whether any conditions to the designation of such a rate have been satisfied, or (iii) to select, determine or designate any modifier to any replacement or successor index.
(h) The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (i) the administration, submission or any other matter related to any rate hereunder (including, without limitation, the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR, or any other Benchmark), or any component definition thereof or rates referred to in the definition thereof, or any alternative or successor rate thereto, or replacement rate thereof (including, without limitation any Benchmark Replacement implemented hereunder), (ii) the composition or characteristics of any Benchmark Replacement, including whether it is similar to, or produces the same value or economic equivalence to or have the same volume or liquidity as any other rate hereunder (including the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR (or any other Benchmark)), (iii) any actions or use of its discretion or other decisions or determinations made with respect to any matters covered by this Section 3.3, including, without limitation, whether or not a Benchmark Transition Event has occurred, the removal or lack thereof of unavailable or non-representative tenors, the implementation or lack thereof of any Benchmark Replacement Conforming Changes, the delivery or non-delivery of any notices required by clause (e) above or otherwise in accordance herewith, and (iv) the effect of any of the foregoing provisions of this Section 3.3.
(i) The Administrative Agent shall not be liable for any inability, failure or delay on its part to perform any of its duties set forth in this Agreement or any other Loan Document as a result of the unavailability of any rate hereunder (including, without limitation, the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR (or other applicable Benchmark)) and absence of a designated replacement Benchmark, including as a result of any inability, delay, error or inaccuracy on the part of any other party to this Agreement or any other Loan Document, including, without limitation, the Borrower or the Lenders, in providing any direction, instruction, notice or information required or contemplated by the terms of this Agreement or any other Loan Document and reasonably required for the performance of such duties.
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(j) The Administrative Agent shall not be bound to follow or agree to any amendment or supplement to this Agreement (including any Benchmark Replacement Conforming Changes) that would increase or materially change or affect the duties, obligations or liabilities of the Administrative Agent (including the opposition or expansion of discretionary authority), or reduce, eliminate, limit or otherwise change any right, privilege or protection of the Administrative Agent, or would otherwise materially and adversely affect the Administrative Agent, in each case in its sole judgment, without the Administrative Agent’s express written consent.
Section 3.4 Increased Costs; Reserves on SOFR Loans.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.4(e));
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender any other condition, cost or expense affecting this Agreement or SOFR Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 3.4(a) for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
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(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in clauses (a) or (b) of this Section 3.4 and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.4 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.4 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Reserves on SOFR Loans. The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits, additional interest on the unpaid principal amount of each SOFR Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.
Section 3.5 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or
(c) any assignment of a SOFR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.14; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.5, each Lender shall be deemed to have funded each SOFR Loan made by it at Adjusted Term SOFR for such
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Loan by a matching deposit or other borrowing for a comparable amount and for a comparable tenor, whether or not such SOFR Loan was in fact so funded.
Section 3.6 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. Each Lender may make any Loan to the Borrower through any Lending Office; provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Loan in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.4, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, or if any Lender gives a notice pursuant to Section 3.2, then at the request of the Borrower such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.1 or 3.4, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.2, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 3.4, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.6(a), the Borrower may replace such Lender in accordance with Section 10.14.
Section 3.7 Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
Section 3.8 Inability to Determine Rates. Notwithstanding anything to the contrary herein or in any other Loan Document, but subject to Section 3.3, if in connection with any request for a SOFR Loan or a conversion to or continuation thereof, (a) the Required Lenders reasonably determine that adequate and reasonable means do not exist for determining Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan or (b) the Required Lenders reasonably determine that for any reason in connection with any request for a SOFR Loan or a conversion thereto or a continuation thereof that Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan does not adequately and fairly reflect the cost to such Lenders of making and maintaining such Loan, and the Required Lenders have provided notice of such determination to the Administrative Agent, then, in each case, the Required Lenders will instruct the Administrative Agent to promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain SOFR Loans shall be suspended (to the extent of the affected SOFR Loans or Interest Periods), and in the event of a determination described in the preceding sentence with respect to the Adjusted Term SOFR component of the Base Rate, the utilization of the Adjusted Term SOFR component in determining the Base Rate shall be suspended, in each case, until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may
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revoke any pending request for a Borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.
ARTICLE IV CONDITIONS PRECEDENT TO LOANS
Section 4.1 Conditions to Effective Date. The effectiveness of this Agreement and the obligation of each Lender to make its initial Loans hereunder is subject to satisfaction to each Lender (or waiver by each Lender in accordance with Section 10.1) of the following conditions precedent:
(a) The Administrative Agent’s receipt of the following (in the case of certificates of governmental officials, dated no earlier than a recent date before the Effective Date), each in form and substance satisfactory to the Lenders:
(i) an executed counterpart of this Agreement, properly executed by a duly authorized signatory (apoderado) of the Borrower and a duly authorized signatory of each other party hereto, dated the Effective Date;
(ii) with respect to the Borrower, true, correct and complete copies of (A) the resolutions of the board of directors authorizing the execution and delivery of this Agreement, (B) incorporation deed (escritura constitutiva) and current bylaws (estatutos sociales vigentes) evidencing that the execution of this Agreement is contemplated within the corporate purpose of the Borrower, and (C) the public deeds containing the powers of attorney granted to the individuals executing this Agreement on behalf of the Borrower (including poderes para actos de administración and poderes para suscribir títulos de crédito conforme al artículo 9 de la Ley General de Títulos y Operaciones de Crédito);
(iii) favorable opinions of (A) Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to the Borrower and (B) the Borrower’s General Counsel, addressed to the Administrative Agent and each Lender, as to such customary matters concerning the Borrower and this Agreement as the Required Lenders may reasonably request;
(iv) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the representations and warranties of the Borrower contained in Article V are true and correct on and as of the Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date and (B) that no Default exists, or would occur immediately after giving effect to this Agreement, on the Effective Date;
(v) evidence that, upon the payment of a specified amount, the Termination and Release shall occur;
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(vi) the acceptance by the Process Agent of an irrevocable appointment to act as agent for service of process for the Borrower in connection with any proceeding relating to the Loan Documents brought in the State of New York
(vii) a copy certified by a Mexican notary public of the irrevocable special power of attorney for lawsuits and collections (poder especial irrevocable para pleitos y cobranzas) granted by the Borrower before a Mexican notary public in favor of the Process Agent; and
(viii) the Audited Financial Statements and the unaudited financial statements of the Borrower referred to in Section 5.5(a) and (b) required to be delivered prior to the Effective Date.
(b) (i) Upon the reasonable request of any Lender or the Administrative Agent made at least ten (10) Business Days prior to the Effective Date, the Borrower shall have provided to such Lender or the Administrative Agent, as applicable, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least three (3) Business Days prior to the Effective Date and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Borrower shall have delivered to each Lender that so requests a Beneficial Ownership Certification in relation to the Borrower at least ten (10) Business Days prior to the Effective Date.
Without limiting the generality of the provisions of the last paragraph of Section 9.3, for purposes of determining compliance with the conditions specified in this Section 4.1, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Effective Date specifying its objection thereto.
Section 4.2 Conditions to all Loans.
(a) The obligation of each Lender to honor any Committed Loan Notice on the Initial Funding Date is subject to satisfaction of the following conditions precedent satisfactory to each Lender (unless waived by each Lender in accordance with Section 10.1):
(i) The Administrative Agent shall have received:
| (1) | an executed counterpart of the Guaranty, properly executed by a Responsible Officer of each Initial Guarantor organized under the laws of a country other than Mexico and by a duly authorized signatory (apoderado) of each Initial Guarantor organized under the laws of Mexico, dated the Initial Funding Date; |
| (2) | with respect to each Loan Party organized under the laws of Mexico, true, correct and complete copies of (A) incorporation deed (escritura constitutiva) and current bylaws (estatutos sociales vigentes) and (B) the public deeds containing the powers of attorney |
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| granted to the individuals executing on behalf of the relevant Loan Party, the Loan Documents to which such Loan Party is a party (including poderes para actos de administración and poderes para suscribir títulos de crédito conforme al artículo 9 de la Ley General de Títulos y Operaciones de Crédito); |
| (3) | with respect to each Loan Party other than a Loan Party organized under the laws of Mexico, a certificate of a Responsible Officer of the Borrower evidencing (A) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party and (B) that each Loan Party is duly organized or formed, and that each such Loan Party is validly existing, in good standing (to the extent such concept exists in the relevant jurisdiction) and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; |
| (4) | favorable opinions favorable opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to the Borrower, (ii) the Borrower’s General Counsel, and (iii) GHR Rechtsanwälte AG, special Swiss counsel to the Borrower, addressed to the Administrative Agent and each Lender, as to such customary matters concerning the Loan Parties and the Loan Documents as the Required Lenders may reasonably request; |
| (5) | the acceptance by the Process Agent of an irrevocable appointment to act as agent for service of process for the Loan Parties in connection with any proceeding relating to the Loan Documents brought in the State of New York; |
| (6) | a copy certified by a Mexican notary public of the irrevocable special power of attorney for lawsuits and collections (poder especial irrevocable para pleitos y cobranzas) granted by each of the Loan Parties organized under the laws of Mexico before a Mexican notary public in favor of the Process Agent; and |
| (7) | a Committed Loan Notice in accordance with the requirements hereof. |
(ii) The representations and warranties of the Loan Parties contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of the proposed Borrowing, except to the extent that such representations and
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warranties specifically refer to another date, in which case they shall be true and correct as of such other date.
(iii) No Default shall exist, or would result from the proposed Borrowing, or from the application of the proceeds thereof.
(iv) Any fees of the Lenders, the Lead Arrangers and the Administrative Agent required to be paid on or before the Initial Funding Date shall have been (or, substantially simultaneously with the initial funding of the Loans on the Initial Funding Date, shall be) paid.
(v) To the extent invoiced at least three (3) Business Days prior to the Initial Funding Date, the Borrower shall have paid (or, substantially simultaneously with the initial funding of the Loans on the Initial Funding Date, shall pay) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent), plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).
(vi) Upon the request of any Lender at least one (1) Business Day prior to the date of the proposed Loan, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the Loan to be disbursed by that Lender and the relevant Applicable Margin, on the date of the relevant Loan.
(vii) The Termination and Release shall have occurred.
(viii) Not more than five (5) Business Days (or such greater number of days as the Required Lenders may reasonably agree) shall have elapsed since the Effective Date.
Without limiting the generality of the provisions of the last paragraph of Section 9.3, for purposes of determining compliance with the conditions specified in this Section 4.2(a), each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Initial Funding Date specifying its objection thereto.
(b) The obligation of each Lender to honor any Committed Loan Notice after the Initial Funding Date (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of SOFR Loans) is subject to satisfaction of the following conditions precedent (unless waived in accordance with Section 10.1):
(i) The representations and warranties of the Borrower contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of
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the proposed Borrowing, conversion or continuation, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date, and except that for purposes of this Section 4.2(b), the representations and warranties contained in subsections (a) and (b) of Section 5.5 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.1.
(ii) No Default shall exist, or would result from the proposed Borrowing, conversion or continuation or from the application of the proceeds thereof.
(iii) The Administrative Agent shall have received a Committed Loan Notice in accordance with the requirements hereof. Such notice shall include a certification by a Responsible Officer of the Borrower (upon which the Administrative Agent may conclusively rely) that the conditions specified in Sections 4.2(b)(i), 4.2(b)(ii) and 4.2(b)(iv) will be fulfilled on the date of the proposed Borrowing.
(iv) Upon the request of any Lender at least one (1) Business Day prior to the date of the proposed Borrowing, conversion or continuation, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the Loan to be disbursed by that Lender and the relevant Applicable Margin, on the date of the relevant Loan.
ARTICLE V REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders on the Effective Date (other than with respect to Section 5.22) and on each other occasion to the extent required by the Loan Documents, that:
Section 5.1 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a) is (i) duly organized or formed, validly existing and (ii) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, if any, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (a)(ii), (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 5.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or
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affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Applicable Law in any material respect.
Section 5.3 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
Section 5.4 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
Section 5.5 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(b) The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated June 30, 2021, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
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Section 5.6 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or (b) would reasonably be expected to have a Material Adverse Effect if determined adversely, except as specifically disclosed in Schedule 5.6.
Section 5.7 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to any Contractual Obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 5.8 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in or other rights to use, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.9 Environmental Compliance. The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties. Except as specifically disclosed in Schedule 5.6 or as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Borrower: (a) the Borrower and its Subsidiaries have been and are in compliance with such Environmental Laws; (b) there are no claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, or threatened claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, pursuant to such Environmental Laws; and (c) there are no facts and circumstances relating to the business or operations of the Borrower and its Subsidiaries that are reasonably likely to cause the Borrower or its Subsidiaries to incur Environmental Liabilities.
Section 5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured by financially sound companies (which may be Affiliates of the Borrower), in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
Section 5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other tax returns and reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided to the extent required by IFRS, or (b) to the extent that the failure to do so would not have a Material Adverse Effect.
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Section 5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is sponsored by the Borrower or an ERISA Affiliate and that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Pension Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that would reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except where any events set forth in clauses (i)-(v) would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that would reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date.
(d) The Borrower represents and warrants as of the Effective Date that the Borrower’s assets are not and will not be deemed to constitute “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA).
Section 5.13 Subsidiaries; Equity Interests. As of the Effective Date: (a) the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and except as indicated in Part (a) of Schedule 5.13 all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower and/or one or more Subsidiaries of the Borrower free and clear of all Liens (other than non-consensual
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Liens which may arise by operation of law), (b) the Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13, and (c) all of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.
Section 5.14 Margin Regulations; Investment Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower or any Subsidiary is required to be registered as an “investment company” under the Investment Company Act of 1940.
Section 5.15 Disclosure.
(a) No written report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party as of the Effective Date to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement (in each case, as modified or supplemented by other information furnished by or on behalf of any Loan Party) contains any material misstatement of material fact or omits to state any material fact necessary to make the statements therein, when furnished and after giving effect to all supplements thereto, in the light of the circumstances under which they were made, not misleading in any material respect; provided that, with respect to projected financial information and other projections, the Borrower represents only that such projections were prepared in good faith based upon assumptions believed to be reasonable at the time such projections were furnished (it being understood by the Administrative Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may significantly differ from the projected results and such differences may be material).
(b) As of the Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
Section 5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 5.17 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, license or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, trade secrets, know-how and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses as currently conducted, without, to the knowledge of the Borrower, infringement,
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misappropriation or other violation of the IP Rights of any other Person, except for any such failure to own, license or possess, or such infringement, that would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, no product, service, process, method, substance, part or other material now used by the Borrower or any Subsidiary in the conduct of their business as currently conducted infringes, misappropriates or otherwise violates upon any IP Rights held by any other Person, except for any such infringement, misappropriation or violation which would not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, in the two (2) year period preceding the Effective Date, there has been no unauthorized use, access, interruption, modification, or corruption of any information technology systems (or any sensitive or personal information stored or contained therein or transmitted thereby) owned or controlled by the Borrower or any of its Subsidiaries, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.18 Sanctions. None of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any director, officer, agent, employee, or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries is, or is controlled or 50% or more owned in the aggregate by or is acting on behalf of, one or more individuals or entities that are currently the subject or the target of any Sanctions (including the designation as a “specially designated national” or “blocked person”), nor is the Borrower, any of its Subsidiaries located, organized or resident in a Designated Jurisdiction; and the Borrower will not directly or knowingly indirectly use the proceeds of the Agreement hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Designated Jurisdiction or (iii) in any other manner that will result in a violation by any person participating in the transaction, whether as an Initial Purchaser, advisor, investor or otherwise, of Sanctions. The Borrower and its Subsidiaries are not now knowingly engaged in any dealings or transactions with any person that is the subject or the target of Sanctions or with any Designated Jurisdiction.
Section 5.19 Anti-Corruption Laws. During the five (5) years prior to the Effective Date, none of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or -controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) except for any violation of Applicable Law resulting from matters under investigation on the Effective Date as disclosed in the Borrower’s annual report on Form 20-F for 2020, violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, the Mexican Ley General del Sistema Nacional Anticorrupción, the Mexican Federal Criminal Code (Código Penal Federal), the
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Mexican Ley General de Responsabilidades Administrativas, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit; except, in each case, for matters under investigation by the U.S. Department of Justice and the staff of the SEC. During the five (5) years prior to the Effective Date, the Borrower and its Subsidiaries have instituted, and maintain and enforce, policies and procedures reasonably designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
Section 5.20 EEA Financial Institutions. No Loan Party is an EEA Financial Institution.
Section 5.21 Covered Entities. No Loan Party is a Covered Entity.
Section 5.22 Solvency. As of the Initial Funding Date, immediately after the consummation of the Transactions to occur on such date, the Borrower is Solvent.
Section 5.23 Immunity. Each Loan Party is subject to civil and commercial law with respect to its obligations under the Loan Documents to which it is a party, and the execution, delivery and performance by it of such Loan Documents constitute private and commercial acts rather than public or governmental acts. None of the Loan Parties nor any of their respective properties is entitled to any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from any action, suit, set-off or proceeding, or service of process in connection therewith, arising under the Loan Documents.
Section 5.24 Pari Passu Status. The obligations of the Borrower and each Guarantor under the Loan Documents to which such Person is a party constitute direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor, as applicable, and, under current law, rank at least pari passu in right of payment with all other direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor resulting from any Indebtedness of the Borrower or such Guarantor (other than Indebtedness having priority by operation of law).
ARTICLE VI AFFIRMATIVE COVENANTS
Commencing on the Initial Funding Date and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.1, 6.2, and 6.3) cause each Subsidiary to:
Section 6.1 Financial Statements. Deliver to the Administrative Agent:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2021), a consolidated
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balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with IFRS, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception as to the scope of such audit (except for any such qualification pertaining to the maturity of the Facilities occurring within twelve (12) months of the relevant audit or any breach or anticipated breach of any financial covenant); and
(b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and the related consolidated statements of changes in shareholders’ equity, and cash flows for the portion of the Borrower’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with IFRS, subject only to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section 6.2(c), the Borrower shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in subsection (a) or (b) above at the times specified therein.
Section 6.2 Certificates; Other Information. Deliver to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in Sections 6.1(a) and (b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery may be by electronic communication including email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(b) promptly after any request by the Administrative Agent (acting at the direction of the Required Lenders), copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;
(c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities
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Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(d) promptly after the furnishing thereof, copies of any financial statements, compliance certificate, and notice of default furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement relating to debt for borrowed money and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.2; provided that this clause (d) shall not apply to any such indenture, loan or credit or similar agreement with an outstanding principal amount or unused commitments less than U.S.$50.0 million; and
(e) promptly following any request therefor, provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
Documents required to be delivered pursuant to Section 6.1 or Section 6.2 (whether or not any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.2; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Borrower shall notify the Administrative Agent (by electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Lead Arrangers may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Lead Arrangers and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided,
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however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.7); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Lead Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
Section 6.3 Notices. Promptly notify the Administrative Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect; and
(c) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein in reasonable particularity and stating what action, if any, the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.3(a) shall describe with reasonable particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
Section 6.4 Pari Passu Obligations. Ensure that its Obligations hereunder and under the Notes at all times constitute direct, senior, unsecured and unsubordinated obligations of the Borrower ranking at least pari passu in right of payment with all other present or future direct, senior, unsecured and unsubordinated obligations of the Borrower resulting from any Indebtedness of the Borrower (other than Indebtedness having priority by operation of law).
Section 6.5 Payment of Obligations. Generally pay and discharge as the same shall become due and payable (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being maintained by the Borrower or such Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except in each case to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 6.6 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except (i) in a transaction not prohibited by Section 7.3 or (ii) to the extent that failure of any Subsidiary that is not a Loan Party to do so would not reasonably be expected to have a Material Adverse Effect; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the
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extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (c) to the extent reasonably able to do so under Applicable Law, preserve or renew all of its issued patents and registered trademarks and service marks, the non-preservation or non-renewal of which would reasonably be expected to have a Material Adverse Effect.
Section 6.7 Maintenance of Properties. (a) Maintain, preserve and protect all of its material tangible properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except, in the case of (a) and (b) where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 6.8 Maintenance of Insurance. Maintain with financially sound companies (which may be Affiliates of the Borrower), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.
Section 6.9 Compliance with Laws. Comply in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.
Section 6.10 Books and Records. Maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with IFRS consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.
Section 6.11 Use of Proceeds. Use the proceeds of the Facilities to refinance existing indebtedness under the Facilities Agreement, pay related transaction costs, fees and expenses, and for general corporate purposes (including refinancing other financial obligations of the Borrower and its Affiliates). The Borrower (a) shall procure that no payments received under the Facilities will be directly or indirectly used in Switzerland or be, directly or indirectly, remitted to any Swiss tax resident company or Swiss tax resident permanent establishment unless a written confirmation or countersigned tax ruling application from the Swiss Federal Tax Administration has been obtained confirming that such use does not result in interest payments under the Agreement being subject to Swiss withholding tax, (b) shall not permit or authorize any Person to use, directly or knowingly indirectly, of all or any part of the Loans to finance any transaction, business or activity (i) involving any Sanctions Target or Designated Jurisdiction, in each case, in violation of Sanctions or (ii) that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target and (c) shall not finance, directly or knowingly indirectly, any payments in respect of this Agreement to any of the Administrative Agent or the Lenders with income from or involving (i) a Sanctions Target or a Designated Jurisdiction, in each case, in violation of Sanctions or (ii) any activity that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target.
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Section 6.12 Anti-Corruption Laws; Sanctions. Conduct its businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and other applicable anti-corruption legislation and with all applicable Sanctions, and maintain policies and procedures reasonably designed to promote and achieve compliance with such laws and Sanctions (it being understood that any violation of Applicable Law resulting from matters under investigation on the Effective Date as disclosed in the Borrower’s annual report on Form 20-F for 2020 shall not constitute a violation of this Section 6.12).
Section 6.13 Delivery of Notes and Appointment of Custodian. Subject to the terms of Section 2.9, the Borrower shall deliver a Note executed by the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista) in favor of each Lender that requests a Note within ten (10) Business Days of such request. Any such Note shall be made available at the Corporate Office or delivered to the Custodian on behalf of the applicable Lender, at such Lender’s election, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such Note by courier or other nationally recognized delivery service.
Section 6.14 Sustainability Reporting. The Borrower shall:
(a) promptly after becoming available and in any event within 150 days following the end of each fiscal year of the Borrower (commencing with the fiscal year ending December 31, 2021), a Pricing Certificate for the most recently ended Annual Period for each KPI Metric; provided that, in any fiscal year the Borrower may elect not to deliver a Pricing Certificate, and such election shall not constitute a Default or Event of Default (but such failure to so deliver a Pricing Certificate by the end of such 150-day period shall result in the Sustainability Margin Adjustment being applied as set forth in Section 2.13(c)).
(b) The Borrower shall provide the KPI Metrics Auditor with all information the KPI Metrics Auditor may reasonably request in order to perform the tasks contemplated to be performed by it under the Loan Documents.
ARTICLE VII NEGATIVE COVENANTS
Commencing on the Initial Funding Date, and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied:
Section 7.1 Liens. The Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly create, incur, assume or suffer to exist any Liens upon any of its owned property, assets or revenues, whether now owned or hereafter acquired, other than the following Liens:
(a) Liens for taxes, assessments and other governmental charges the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
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(b) Liens granted pursuant to or in connection with (i) any netting or set-off arrangements entered into in the ordinary course of trading (including, for the avoidance of doubt, any cash pooling or cash management arrangements with a bank or financial institution) or (ii) any intragroup loans granted or any intragroup Indebtedness incurred or entered into or any cash pooling or cash management arrangements entered into by and between the Borrower and its Subsidiaries or between Subsidiaries (for so long as such Persons continue to be Subsidiaries);
(c) statutory liens of landlords and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
(d) Liens incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security, or (ii) other insurance maintained by the Borrower or any of its Subsidiaries in accordance with Section 6.8;
(e) any attachment or judgment lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;
(f) Liens existing as of the Effective Date and set forth on Schedule 7.1 and Liens in relation to any Indebtedness that is refinancing or replacing any Indebtedness over which Liens are in place; provided that the principal amount secured thereby is not increased, save that principal amounts secured by Liens in respect of (i) Swap Contracts where there are fluctuations in the mark-to-market exposures of those Swap Contracts and (ii) Indebtedness where principal may increase by virtue of capitalization of interest, may be increased by the amount of such fluctuations or capitalizations, as the case may be;
(g) any Liens permitted by the Administrative Agent, acting on the instructions of the Required Lenders;
(h) licenses of, or other grants of rights to use, IP Rights granted by Borrower or any Subsidiary (i) in the ordinary course of business and not materially interfering with the business of Borrower and its Subsidiaries, taken as a whole, (ii) existing as of the Initial Funding Date, or (iii) between or among Borrower and any of its Subsidiaries or between or among any of its Subsidiaries;
(i) any Liens created or deemed created pursuant to a Securitization;
(j) any Liens granted in connection with any Swap Contract; provided that the aggregate value of the assets that are the subject of such Liens does not exceed U.S.$200.0 million (or its equivalent in other currencies) at any time;
(k) Liens granted or arising over receivables, inventory, plant or equipment that fall within Section 7.2(d);
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(l) (i) any Liens over bank accounts arising under clause 24 or clause 25 of the general terms and conditions (algemene bankvoorwaarden) of any member of the Dutch Bankers’ Association (Nederlandse Vereniging van Banken) and (ii) other Liens granted to any financial institution with whom it maintains accounts to the extent required by the relevant institution’s (or custodian’s or trustee’s, as applicable) standard terms and conditions, in each case, which are within the general parameters customary in the banking industry;
(m) any Liens that are created or deemed created on shares of the Borrower or any of its Subsidiaries, pursuant to an obligation in respect of an Executive Compensation Plan by virtue of such shares being held on trust for the holders of the convertible securities pending exercise of any conversion option, where such Lien is customary for such transaction;
(n) any Liens granted in connection with any Indebtedness referred to Section 7.2(f);
(o) other Liens securing obligations of the Borrower and its Subsidiaries at any one time outstanding equal to the greater of (x) 10% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$1.5 billion; and
(p) Liens granted in connection with or arising out of a Lease; provided that such Liens are over the right to use the asset or equipment that is the subject of the Lease pursuant to the terms of the Lease, or the rights of the Borrower or any of its Subsidiaries over the asset or equipment which is the subject of the Lease.
Section 7.2 Subsidiary Debt. The Borrower will not permit any of its Subsidiaries that is not a Loan Party to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, except:
(a) Indebtedness outstanding on the Effective Date and set forth on Schedule 7.2 and any renewals, extensions, replacements or refinancings thereof; provided that Indebtedness of any Loan Party shall not be refinanced with Indebtedness of a Subsidiary that is not a Loan Party and that the aggregate principal amount of such Indebtedness is not increased except by the amount of any capitalized interest under any facility or instrument that provided for capitalization of interest on those terms as at the Effective Date or by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with any renewal, extension or refinancing thereof and by an amount equal to any existing commitments unutilized thereunder;
(b) Indebtedness owed by any Subsidiary to the Borrower or to any other Subsidiary (which shall include, without limitation, liabilities arising from cash management obligations, tax and accounting operations); provided that such Indebtedness shall not have been transferred or assigned to any Person other than the Borrower or any Subsidiary;
(c) Indebtedness constituting a Securitization;
(d) Indebtedness arising under factoring arrangements, Inventory Financing arrangements or export credit facilities or any similar arrangements (including Leases) for the purchase of equipment (provided that any Lien granted in relation to any such facility relates solely
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to equipment, the purchase of which was financed under such facility) or pursuant to sale and lease-back transactions provided that the maximum aggregate Indebtedness of members of the Borrower and its Subsidiaries, which are not Loan Parties under such transactions does not exceed U.S.$500.0 million at any time (disregarding, for the purpose of such limit, any amount of Indebtedness of the Borrower and its Subsidiaries arising under such arrangements permitted under this paragraph (d) and in place as at the Initial Funding Date including any amounts under such Indebtedness which has been repaid and reborrowed whether pursuant to the terms of the arrangement constituting such Indebtedness when originally advanced or otherwise);
(e) Indebtedness of the Borrower and its Subsidiaries pursuant to any acquisition provided that: (i) such Indebtedness existed prior to the date of the acquisition and was not incurred, increased or extended in contemplation of, or since, the acquisition; and (ii) the aggregate amount of any such Indebtedness of the Borrower and its Subsidiaries which are not Loan Parties does not exceed U.S.$200.0 million at any time;
(f) Indebtedness incurred pursuant to or in connection with any cash pooling or other cash management agreements with a bank or financial institution, but only to the extent of offsetting credit balances of the Borrower and its Subsidiaries which are not Loan Parties pursuant to such cash pooling or other cash management arrangement;
(g) Indebtedness for taxes levied, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of trading; and
(h) additional Indebtedness, if, after giving effect to the incurrence of any such Indebtedness, the aggregate outstanding amount of Indebtedness of all non-guarantor Subsidiaries would not exceed the greater of (x) 15% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$2.0 billion.
For the avoidance of doubt, the aggregate amount of any Indebtedness will be calculated for purposes of this Section 7.2 solely by reference to such Indebtedness of each of the Borrower’s Subsidiaries that is not a Loan Party.
Section 7.3 Fundamental Changes and Asset Dispositions.
(a) The Borrower will not, nor will it permit any of its Subsidiaries, whether in a single transaction or in a series of related transactions to enter into any consolidation or merger with any other Person, unless no Default would exist and such transaction would not be prohibited by clause (b) below; provided that (i) in the case of a merger or consolidation involving the Borrower, the surviving entity thereof (1) is the Borrower or (2) (A) assumes the Obligations of the Borrower pursuant to an Acceptable Assumption Agreement and (B) is a Person organized and validly existing under the laws of Mexico, the United States, any State thereof or the District of Columbia, Canada, France, Belgium, Germany, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland or the United Kingdom, or any political subdivision thereof or any other jurisdiction reasonably acceptable to the Required Lenders and (ii) in the case of a merger or consolidation involving a Guarantor, (1) the surviving entity thereof is the Borrower, is (or will concurrently become) a Guarantor or otherwise assumes the Obligations of a Guarantor pursuant to an
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Acceptable Assumption Agreement or (2) such transaction (A) results in the Guarantor no longer being a direct or indirect Subsidiary of the Borrower and (B) is not prohibited by Section 7.3(b).
(b) The Borrower will not, nor will it permit any of its Subsidiaries to, whether in a single transaction or in a series or related transactions (including through liquidation, division, administration or other insolvency proceedings), Dispose all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, other than through a contribution of assets to a newly-formed Wholly Owned Subsidiary of the Borrower.
Section 7.4 Restricted Payments.
The Borrower will not, nor will it permit any of its Subsidiaries, to make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiary of the Borrower and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may make Restricted Payments payable solely in the Common Stock or other common Equity Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its Common Stock or other common Equity Interests;
(d) the Borrower may make Restricted Payments to comply with any obligation in respect of any Executive Compensation Plan of the Borrower; and
(e) the Borrower and each Subsidiary may make any Restricted Payment, so long as (i) no Default shall have occurred and be continuing at the time of such Restricted Payment, or would result therefrom and (ii) the Borrower shall be in compliance with the covenants in Section 7.5 after giving pro forma effect to such Restricted Payment.
Section 7.5 Financial Covenants.
(a) The Borrower will not permit the Consolidated Leverage Ratio to be greater than 3.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended after the Initial Funding Date.
(b) The Borrower will not permit the Consolidated Coverage Ratio to be less than 2.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended after the Initial Funding Date.
Each of the ratios referred to above will be calculated for the Borrower and its Subsidiaries on a consolidated basis for each consecutive four fiscal quarter period.
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ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
Section 8.1 Events of Default. Any of the following shall constitute an event of default (each, an “Event of Default”):
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three (3) Business Days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) within three (3) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in Article VI (and such failure shall continue uncured for a period of 30 days after the Borrower becomes aware of such failure) or Article VII; or
(c) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading, in any material respect, when made or deemed made; provided that any such representation, warranty, certification or statement of fact that is curable by its nature may be cured within a period of 30 days after the Borrower becomes aware of such representation, warranty, certification or statement of fact being incorrect or misleading; or
(d) Cross Payment Default. The Borrower or any Subsidiary fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder), after giving effect to any applicable grace period, having an outstanding aggregate principal amount equal to or greater than U.S.$50.0 million (or the equivalent thereof in other currencies); provided that such failure is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2; or
(e) Cross-Default. The Borrower or any of its Subsidiaries shall default in the observance or performance of any agreement, covenant or condition relating to any Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, or contained in any agreement or instrument evidencing, securing, governing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity and such default shall continue unremedied beyond the applicable period of grace set forth in the documents evidencing such Indebtedness; or any such Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; provided that this clause (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the Disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness, (ii) Guarantees of Indebtedness that are satisfied promptly on demand or (iii) with respect to Indebtedness incurred under any Swap
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Contract, termination events or equivalent events pursuant to the terms of the relevant Swap Contract which are not the result of any default thereunder by the Borrower or any of its Subsidiaries; provided, further, that such default is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2; or
(f) Insolvency Proceedings, Etc. (i) Any Loan Party or any of its Subsidiaries institutes, or consents to the institution of any proceeding under any Debtor Relief Law, including, but not limited to, reorganization, concurso mercantil, quiebra or bankruptcy, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for it or for all or substantially all of its property; or
(ii)(1) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Loan Party in an involuntary case under any Debtor Relief Laws, which decree or order is not stayed; or any other similar relief shall be granted under any Applicable Law; or (2) an involuntary case shall be commenced against any Loan Party under any Debtor Relief Laws; or a decree or order of a court having jurisdiction for the appointment of a receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for any Loan Party or for all or substantially all of its property over any Loan Party, or over all or substantially all of its property, shall have been entered, and any such event described in clauses (1) and (2) above shall continue for 60 consecutive calendar days; or
(iii) any Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due or any Loan Party organized under the laws of Mexico becomes in a generalized default of its payment obligations (incumplimiento generalizado en el pago de sus obligaciones) within the meaning of Section I of Article 10 of the Mexican Bankruptcy Law (Ley de Concursos Mercantiles); or
(g) Judgments. There is entered against the Borrower or any Subsidiary one or more final non-appealable judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding U.S.$100.0 million (to the extent not (i) covered by independent third-party insurance as to which the insurer does not dispute coverage or (ii) paid, discharged or bonded within 60 days after the entry of such judgment); or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Borrower or any of its Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount that would reasonably be expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount that would reasonably be expected to have a Material Adverse Effect; or
(i) Invalidity of Loan Documents. Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or
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thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(j) Invalidity of Guarantees. Any guarantee issued under any Loan Document ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any guarantee issued under any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(k) Exchange Controls. There occurs any Transfer and Inconvertibility Event and shall continue for 60 or more consecutive days; or
(l) Condemnation; Nationalization. Any Governmental Authority asserting or exercising governmental or police powers or any Person acting or purporting to act under such Governmental Authority shall condemn, seize or appropriate, or shall assume custody or control of, all or a substantial portion of the property of the Loan Parties, taken as a whole, such that, based on the value of the asset attached, expropriated or seized, such action would reasonably be expected to have a Material Adverse Effect; or
(m) Moratorium. Any Governmental Authority shall, by moratorium laws or other similar laws (except for any such law relating to matters of public health or national emergency), cancel, suspend or defer any material payment Obligation when the same becomes due and payable and such cancellation, suspension or deferral shall continue for 60 or more consecutive days.
For the avoidance of doubt, no Default or Event of Default shall occur solely by reason of a failure by the Borrower to comply with its obligations under clause (a) of Section 6.14 (Sustainability Reporting).
Section 8.2 Remedies Upon Event of Default.
If any Event of Default occurs and is continuing, the Administrative Agent upon the request of the Required Lenders, shall, by notice to the Borrower, (a) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable and (b) terminate the Revolving Commitments (and thereupon the Revolving Commitments shall terminate immediately), in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of an event described in Section 8.1(f), the obligation of each Lender to make Loans and any obligation shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable and exercise any other remedy available under the Loan Documents, in each case without further act of the Administrative Agent or any Lender.
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Section 8.3 Application of Funds.
After the exercise of remedies provided for in Section 8.2 (or after the Loans have automatically become immediately due and payable), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.13, be applied by the Administrative Agent in the following order:
First. to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second. to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders and (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third. to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
Fourth. payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
ARTICLE IX ADMINISTRATIVE AGENT
Section 9.1 Appointment and Authority. Each of the Lenders hereby irrevocably appoints Citibank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party and authorizes the Administrative Agent to take such actions on its behalf and to exercise such rights, powers, authorities and privileges as are expressly delegated to the Administrative Agent by the terms hereof or thereof. For such purposes, each Lender hereby appoints and authorizes the Administrative Agent as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, and authorities specifically given to the Administrative Agent under or in connection with the Loan Documents. The provisions of this Article IX are solely for the benefit of the Administrative Agent, the Lenders and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
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Section 9.2 Rights as a Lender. If any Person serving as the Administrative Agent hereunder is or becomes a Lender, it shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 9.3 Exculpatory Provisions. The Administrative Agent and the Sustainability Structuring Agent, as applicable, shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents to which it is a party, and its duties hereunder shall be administrative in nature.
(a) Without limiting the generality of the foregoing, the Administrative Agent and the Sustainability Structuring Agent, as applicable:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers (including providing any request, consent, approval, waiver or authorization), except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law;
(iii) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent, Lead Arrangers or any of their Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein;
(iv) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party) or (ii) in the absence of its own gross negligence or willful
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misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. In no event shall the Administrative Agent be liable under or in connection with this Agreement or any other Loan Document for indirect, special, incidental, punitive, or consequential losses or damages of any kind whatsoever, including, but not limited to, lost profits, whether or not foreseeable, even if the Administrative Agent has been advised of the possibility thereof and regardless of the form of action. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender; and
(v) shall not be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents or accuracy of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith (including recalculating or determining, confirming or verifying any calculation or information set forth therein), (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the legality, validity, enforceability, effectiveness, genuineness or sufficiency of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or (vi) the properties, books or records of the Borrower.
(b) The Administrative Agent shall not be required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties hereunder or under any Loan Document to which it is a party, or be required to take any action that is contrary to this Agreement or Applicable Law.
(c) The Administrative Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Administrative Agent (including but not limited to any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).
(d) The authorizations, rights, privileges, protections and benefits given to the Administrative Agent are extended to, and shall be enforceable by, the Administrative Agent, under any Loan Document to which it is a party. In the event any claim of inconsistency between this Agreement and the terms of any Loan Document arises with respect to the duties, liabilities and rights of the Administrative Agent, the terms of this Agreement shall control.
(e) In no event shall the Administrative Agent be responsible or liable for the actions or omissions of the Sustainability Structuring Agent or the Custodian.
Section 9.4 Reliance by Administrative Agent. (a) The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic
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message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may (but shall not be obligated to) rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Whenever reference is made in this Agreement or any other Loan Document to any discretionary action by consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent, it is understood that in all cases that the Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such written instruction, advice or concurrence from the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party), in each case as it deems appropriate. Notwithstanding anything else to the contrary herein, the Administrative Agent may refrain from acting in accordance with any instructions or requests unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability, cost and expense that may be incurred by it by reason of taking or continuing to take any such action in compliance with the instruction or request. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future Lenders.
Section 9.5 Erroneous Payments.
(a) If the Administrative Agent (x) notifies a Lender or any Person who has received funds on behalf of a Lender (any such Lender or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 9.5 and held in trust for the benefit of the Administrative Agent, and such Lender shall (or, with respect to any Payment Recipient who
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received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or any Person who has received funds on behalf of a Lender (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender shall (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.5(b).
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 9.5(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 9.5(a) or on whether or not an Erroneous Payment has been made.
(c) Each Payment Recipient hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned.
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(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to the Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Custodian, at the Lender’s election, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency.
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
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(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 9.5 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
Section 9.6 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article IX shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 9.7 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the
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“Removal Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Date.
(c) With effect from the Resignation Date or the Removal Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.1(f) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Date or the Removal Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 9.6). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.5 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent. Any corporation or entity into which the Administrative Agent may be merged or converted or with which it may be consolidated or any corporation or entity resulting from any merger, conversion or consolidation to which the Administrative Agent shall be a party, or any corporation or entity succeeding to the business of the Administrative Agent or its corporate trust operations shall be the successor of the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party without the execution or filing of any paper with any party hereto or thereto or any further act on the part of any of the parties hereto or thereto, anything herein or in any other Loan Document to the contrary notwithstanding.
Section 9.8 Non-Reliance on the Administrative Agent, the Lead Arrangers and the Other Lenders. Each Lender expressly acknowledges that none of the Administrative Agent nor the Lead Arrangers has made any representation or warranty to it, and that no act by the Administrative Agent or the Lead Arrangers hereafter taken, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent or the Lead Arrangers to any Lender as to any matter, including whether the Administrative Agent or the Lead Arrangers have disclosed material information in their (or their Related Parties’) possession. Each Lender represents to the Administrative Agent and the Lead Arrangers that it has, independently and without reliance upon the Administrative Agent, the Lead Arrangers, any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to
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the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Lead Arrangers, any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
Section 9.9 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Lead Arrangers or the Sustainability Structuring Agent shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
Section 9.10 Guaranty Matters. The Administrative Agent shall, upon the written instructions of the Required Lenders, release any Guarantor from its obligations under the Guaranty. If any Guarantor ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents, then such Guarantor shall automatically be released from its obligations under the Guaranty. The Administrative Agent shall, promptly upon the written request of the Borrower and at the Borrower’s sole cost, execute all such documentation as may reasonably requested to evidence or confirm such release.
Section 9.11 Certain ERISA Matters.
(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments or this Agreement,
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(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
Section 9.12 Administrative Agent May File Proofs of Claim.
(a) In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Loan Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
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(1) (i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other obligations of the Loan Parties under any Loan Document that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 10.5) allowed in such judicial proceeding; and
(2) (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.
(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 10.5.
ARTICLE X MISCELLANEOUS
Section 10.1 Amendments, Etc. Subject to Section 3.3(c), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders (or by the Administrative Agent on behalf and at the written direction of the Required Lenders) and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.1(a), Section 4.2(a) and Section 4.2(b) (other than clause (iv) thereof) without the written consent of each Lender;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2) without the written consent of such Lender;
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Margin that would result in a reduction of any interest rate on any Loan or any fee payable hereunder without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to
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(i) amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) amend the definition of “KPI Metrics” or any related provision of this Agreement;
(e) change Section 8.3 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;
(f) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or
(g) release all or substantially all of the value of the Guaranty without the written consent of each Lender, except to the extent the release of any Guarantor is permitted pursuant to Section 9.9 (in which case such release may be made by the Administrative Agent acting alone);
provided, further, no amendment, waiver or consent (including any Benchmark Replacement Conforming Changes) shall, unless in writing and signed by the Administrative Agent, amend, modify or otherwise affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document (including any fees, expenses, indemnities or other amounts payable to, or any other provisions expressly for the benefit of Administrative Agent); and any Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended or the maturity of any of its Loans may not be extended, the rate of interest on any of its Loans may not be reduced and the principal amount of any of its Loans may not be forgiven, in each case without the consent of such Defaulting Lender and (y) any waiver, amendment, consent or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Section 10.2 Notices; Effectiveness; Electronic Communication.
(a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows:
(i) if to the Borrower or any other Loan Party, or the Administrative Agent, to the address or electronic mail address specified for such Person on Schedule 10.2; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its
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Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in sub clause (b) below, shall be effective as provided in such clause (b). All notices from or to a Loan Party shall be sent through the Administrative Agent. The Borrower may make and/or deliver as agent of each Loan Party notices and/or requests on behalf of each Loan Party.
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications; provided, further, that any notice or other communication delivered by e-mail to the Administrative Agent shall include and contain a scanned or imaged attachment (such as .pdf or similar widely used format). Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available return e-mail or other written acknowledgment), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet.
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(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address or email address (and the department or officer, if any, for whose attention a communication is to be made) for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address or telecopy number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e) Guarantor Agent. Each Guarantor by its execution of any Loan Document (as the case may be) irrevocably appoints the Borrower to act on its behalf as its agent in relation to the Loan Documents and irrevocably authorizes:
(i) the Borrower on its behalf to supply all information concerning itself contemplated by any Loan Document to the Administrative Agent and the Lenders and to give all notices and instructions, to execute on its behalf any documents required hereunder and to make such agreements capable of being given or made by any Guarantor notwithstanding that they may affect such Guarantor, without further reference to or consent of such Guarantor;
(ii) the Borrower on its behalf as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Loan Documents; and
(iii) each of the Administrative Agent and the Lenders to give any notice, demand or other communication to such Guarantor pursuant to the Loan Documents to the Borrower on its behalf,
and in each case such Guarantor shall be bound thereby as though such Guarantor itself had given such notices and instructions or executed or made such agreements or received any notice, demand or other communication.
Every act, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Borrower, or given to the Borrower, in its capacity as agent in accordance with paragraph this clause (e), in connection with any Loan Document shall be binding for all purposes on such Guarantor as if such Guarantor had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Borrower and any Guarantor, those of the Borrower shall prevail.
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Section 10.3 Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including Committed Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.
Section 10.4 No Waiver; Cumulative Remedies; Enforcement. No failure by any party hereto to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.9 (subject to the terms of Section 2.12), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clause (b) of the preceding proviso and subject to Section 2.12, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
Section 10.5 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. Each Loan Party agrees, jointly and severally, to pay (i) (1) all reasonable and documented out-of-pocket expenses of the Administrative Agent (including the reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of United Stated legal counsel) associated with the preparation, execution, delivery and administration of this Agreement and the other Loan Documents and any amendment, modification or waiver with respect thereto (whether or not the transactions contemplated hereby or thereby shall be consummated); provided that, except with respect to any fees, disbursements and other charges of one firm of United States legal counsel to the Administrative Agent, such expenses incurred prior to the Effective Date will be limited to U.S.$25,000 plus VAT, as applicable, taken together with any such expenses incurred in the Administrative Agent’s (or its Affiliate’s) capacity as a Lead Arranger for the Facilities, and (2) all reasonable and documented out-of-pocket fees,
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disbursements and other charges of one firm of United States legal counsel and one firm of Mexican legal counsel to the Lenders, taken as a whole, as applicable, and (ii) all out-of-pocket costs and expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one firm of counsel to each of (1) the Lenders, taken as a whole, and (2) the Administrative Agent, in each relevant jurisdiction) in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Documents, including its rights under this Section 10.5, or in connection with the Loans hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) Indemnification by the Borrower. Each Loan Party shall jointly and severally indemnify the Administrative Agent (and any sub-agent thereof), the Sustainability Structuring Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee), of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.1), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim not involving an act or omission of the Borrower or any Subsidiary and that is solely among Indemnitees (other than against the Administrative Agent in its capacity as such). Without limiting the provisions of Section 3.1(c), this Section 10.5(a) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clauses (a) or (b) of this Section 10.5 to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among
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them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.10(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, no party hereto shall assert, and each party hereto hereby waives, and acknowledges that no other Person shall have, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof; provided, however, that this provision shall not apply to any damages in respect of any indemnity obligations to the Administrative Agent under the terms of this Agreement. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section 10.5 shall be payable not later than ten (10) Business Days after demand therefor. To the extent that any undertaking in paragraph (b) of this Section 10.5 may be unenforceable because it contravenes any Applicable Law or public policy, the Loan Parties shall contribute the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of such undertaking.
(f) Survival. The agreements in this Section 10.5 and the indemnity provisions of Section 10.5 shall survive the resignation or removal of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
(g) No Personal Liability. If an individual signs a certificate on behalf of the Borrower or any of its Subsidiaries and the certificate proves to be incorrect, the individual will incur no personal liability as a result, unless the individual acted fraudulently in giving the certificate.
Section 10.6 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b)
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each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the resignation or removal of the Administrative Agent and the payment in full of the Obligations and the termination of this Agreement.
Section 10.7 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (except as otherwise permitted pursuant to Section 7.3) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section 10.7 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), subject to the consent of the Borrower (not to be unreasonably withheld or delayed; it being understood that withholding or delaying consent with respect to an assignment to any Disqualified Lender or any Sanctioned Lender shall not be deemed unreasonable) unless (a) an event of default has occurred and is continuing, in which case such assignment may be made to any Person other than a Disqualified Lender or a Sanctioned Lender, or (b) the assignment is to a Lender, an Affiliate of a Lender or an Approved Fund in each case that is not a Disqualified Lender. Each such assignment (other than an assignment to a Lender, Affiliate of a Lender or an Approved Fund) shall (i) not be less than U.S.$5.0 million in respect of loans and commitments under the Revolving Facility and (ii) U.S.$1.0 million in respect of loans and commitments under the Term Facility. For any assignments for which the Borrower’s consent is required, such consent shall be deemed to have been given if the Borrower shall not have responded within ten (10) Business Days of a written request for such consent.
Neither the Administrative Agent nor any Lead Arranger shall be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Lenders or Sanctioned Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or prospective Lender is a Disqualified Lender or
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Sanctioned Lender or (y) have any liability with respect to or arising out of any assignment, or disclosure of confidential information, to any Disqualified Lender or Sanctioned Lender.
The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of U.S.$3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
No such assignment shall be made to (i) any Loan Party or any Loan Party’s Affiliates or Subsidiaries or (ii) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof.
No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for Tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of one or more natural Persons, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations. A participant shall have the same benefits as the Lender granting such participation with respect to (a) yield protection and increased cost (but not requiring payments in excess of those payable to such Lender in the absence of such participation), (b) with respect to pro rata treatment provisions and (c) Section 3.1, except such Participant shall not be entitled to receive any greater payment under Section 3.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Voting rights of participants shall be limited to those matters with respect to which the affirmative vote of each affected Lender or all Lenders are required as described in Section 10.1. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower,
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maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banks; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
Section 10.8 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties on a need-to-know basis (it being understood that (i) the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof and (ii) the Borrower’s prior written consent shall be required prior to providing any such Information to any controlling persons or equity holders of any Arranger or Lender), (b) to the extent required or requested by any regulatory authority having jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), in which case the disclosing Person agrees to inform the Borrower promptly thereof prior to such disclosure, unless such Person is prohibited by Applicable Law from so informing the Borrower, or except in connection with any request as part of any audit or regulatory examination, (c) to the extent required by Applicable Laws or regulations or by any subpoena or similar legal process, in which case the disclosing Person (except in connection with any order or request as part of any routine audit or examination conducted by bank accountants or any regulatory examination or audit) agrees to inform the Borrower promptly thereof prior to disclosure, (d) to any other party hereto, (e) to the extent necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.8, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) potential investors and re-insurance and insurance brokers or (iii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in
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connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the application, issuance, publishing and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the prior written consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 10.8, (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates from a source other than the Borrower that is not to the recipient’s (or any of its Related Party’s) knowledge subject to confidentiality obligations to the Borrower or any of its Related Parties or (z) is independently discovered or developed by a party hereto without utilizing any Information received from the Borrower or violating the terms of this Section 10.8. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information limited solely to economic and structural terms of the Loans to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section 10.8, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the applicable disclosing party on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section 10.8 shall be principally liable on a several basis to the extent any confidentiality restrictions set forth herein are violated by one or more of its Related Parties.
Section 10.9 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or their respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.13 and, pending such payment, shall be segregated on its books and records by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and their respective Affiliates under this Section 10.8 are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
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Section 10.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 10.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.12 Survival of Representations and Warranties. All covenants, agreements, representations and warranties of the Loan Parties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and the making of any Loans. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. The provisions of Section 3.1, Section 10.5, Section 10.8, Section 10.15, Section 10.16, Section 10.17, Section 10.18 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of the Administrative Agent.
Section 10.13 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect
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of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.13, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined by the Administrative Agent (acting at the direction of the Required Lenders, acting in good faith), then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 10.14 Replacement of Lenders. If the Borrower is entitled to replace a Lender pursuant to the provisions of Section 3.6, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.7), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.1 and 3.4) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(a) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in (b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.4 or payments required to be made pursuant to Section 3.1, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with Applicable Laws; and
(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.13 may be effected pursuant to an Assignment and Assumption executed by the Borrower and the assignee, and acknowledged by the Administrative Agent and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the
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applicable Lender; provided, further, that any such documents shall be without recourse to or warranty by the parties thereto.
Notwithstanding anything in this Section 10.14 to the contrary, the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.6.
Section 10.15 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents (except, as to any Note, as expressly set forth therein) and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.
(b) SUBMISSION TO JURISDICTION. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANOTHER PARTY TO THIS AGREEMENT IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT AND EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT TO ANY OTHER JURISDICTION TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(c) WAIVER OF VENUE. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (b) OF THIS SECTION 10.15. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT
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FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER (I) IRREVOCABLY APPOINTS THE PROCESS AGENT FOR A PERIOD ENDING TWELVE (12) MONTHS AFTER THE MATURITY DATE, HAVING OFFICES ON THE EFFECTIVE DATE AT 590 MADISON AVENUE, 27TH FLOOR, NEW YORK, NY 10022 AS ITS AGENT TO RECEIVE ON BEHALF OF SUCH LOAN PARTY SERVICE OF PROCESS IN ANY PROCEEDINGS (WITH RESPECT TO THIS AGREEMENT AND THE LOAN DOCUMENTS GOVERNED BY NEW YORK LAW) IN NEW YORK, NEW YORK; AND (II) DESIGNATES AS ITS CONVENTIONAL ADDRESS THE ADDRESS OF THE PROCESS AGENT REFERRED TO ABOVE OR ANY OTHER ADDRESS NOTIFIED IN THE FUTURE BY THE PROCESS AGENT TO THE BORROWER. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER, IN CASE OF THE PROCESS AGENT AT THE ADDRESS SPECIFIED ABOVE, AND THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF.
Section 10.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.16.
Section 10.17 Waiver of Immunities. To the extent permitted by Applicable Law, if the Borrower has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, the Borrower hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement and the Notes. The Borrower agrees that the waivers set forth above shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States of America and are intended to be irrevocable and not subject to withdrawal for purposes of such Act.
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Section 10.18 Judgment Currency. The obligation of the Borrower hereunder to make payments in Dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than Dollars, except to the extent to which such tender or recovery shall result in the effective receipt by the Lenders or, as the case may be, the Administrative Agent of the full amount of Dollars expressed to be payable hereunder, and the Borrower agrees to indemnify the Administrative Agent and the Lenders (as an alternative or additional cause of action) for the amount (if any) by which such effective receipt shall fall short of the full amount of Dollars expressed to be payable hereunder and such obligation to indemnify shall not be affected by judgment being obtained for any other sums due hereunder.
Section 10.19 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Lead Arrangers, the Sustainability Structuring Agent and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Lead Arrangers and the Lenders, on the other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Lead Arrangers and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Lead Arrangers nor any Lender has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Lead Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Lead Arrangers nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, the Lead Arrangers or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 10.20 Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Committed Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually
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executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
Section 10.21 USA PATRIOT Act. Each Lender that is subject to the PATRIOT Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each other Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and each other Loan Party in accordance with the PATRIOT Act. The Borrower and each other Loan Party shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.
Section 10.22 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(c) a reduction in full or in part or cancellation of any such liability;
(d) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(e) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
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Section 10.23 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.23, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
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Section 10.24 Use of English Language. This Agreement has been negotiated and executed in the English language, which such English language version shall be the original instrument and shall govern among the parties hereto. Except for any Notes and such documents required to be delivered in connection with the Effective Date or the Initial Funding Date in a different language, all certificates, reports, notices and other documents and communications given or delivered pursuant to this Agreement (including any modifications or supplements hereto) shall be in the English language, or accompanied by an English translation thereof. Except in the case of (i) laws or official communications of Mexico, (ii) documents filed with any Governmental Authority in Mexico or (iii) corporate documents of the Borrower or any Guarantor, and (iv) any other document originally issued in a language other than English, the English language version of any such document shall for purposes of this Agreement, and absent manifest error, control the meaning of the matters set out therein; provided that, the Administrative Agent’s sole obligation in respect of any documents delivered in a language other than English (without limiting its obligations under any corresponding document in the English language) shall be to make such documents available to the Lenders on the Platform, and the Administrative Agent shall have no duties or obligations in respect of such documents.
Section 10.25 Swiss Guarantee Limitation. Any guarantee, indemnity or other obligation provided under this Agreement or any other Loan Document by a Swiss Guarantor shall be deemed not to be provided by such Swiss Guarantor to the extent that the same would constitute a breach of the financial assistance prohibitions under Swiss law. Under Swiss law, the following restrictions shall be applicable to each Swiss Guarantor:
(a) Any guarantee, indemnity or other obligation and liability by a Swiss Guarantor under this Agreement or any Loan Documents in relation to the obligations, undertakings, indemnities or liabilities of a Guarantor other than that Swiss Guarantor or any of its fully owned or controlled subsidiaries (the “Restricted Obligations”) shall be limited to the amount of that Swiss Guarantor’s Free Reserves Available for Distribution at the time payment is requested or the maximum amount permitted by Swiss law applicable at such time. Such limitations shall only apply to the extent it is a requirement under Applicable Law (including any case law) at the point in time payment is requested. Such limitation (as may apply from time to time or not) shall not free such Swiss Guarantor from payment obligations under this Agreement or any other Loan Documents in excess thereof, but merely postpone the payment date therefor until such times as payment is again permitted notwithstanding such limitation.
(b) For the purpose of this Section 10.25, “Free Reserves Available for Distribution” means an amount equal to the maximum amount in which the relevant Swiss Guarantor can make a dividend payment to its shareholder(s) (being the year to date balance sheet profit and any freely disposable equity available for this purpose, in each case in accordance with applicable Swiss law). The freely disposable equity represents, inter alia, but not by way of limitation, the total shareholder equity less the total of: (i) the aggregate share capital, (ii) the statutory reserves (including reserves for own shares and revaluations), to the extent such reserves cannot be transferred into unrestricted, distributable reserves, and (iii) any freely disposable equity that has to be blocked for any loans granted by the Swiss Guarantor to a direct or indirect shareholder or a direct or indirect subsidiary of such shareholder.
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(c) As soon as reasonably practicable after having been requested to discharge a Restricted Obligation, the respective Swiss Guarantor shall provide the Administrative Agent with an interim statutory balance sheet audited by the statutory auditors of such Swiss Guarantor setting out the Free Reserves Available for Distribution and, promptly thereafter, pay the lesser of (i) the Restricted Obligation and (ii) the amount corresponding to the Free Reserves Available for Distribution or the maximum amount permitted by Swiss law applicable at the time payment is requested to the Administrative Agent (acting at the written direction of the Required Lenders) (save to the extent provided below).
(d) In case a Swiss Guarantor who must make a payment in respect of the Restricted Obligations under this Agreement or any other Loan Document is obliged to withhold Swiss withholding tax in respect of such payment, such Swiss Guarantor shall:
| (i) | if and to the extent required by Applicable Law in force at the relevant time: |
| (1) | procure that such payments can be made without deduction of Swiss withholding tax, or with deduction of Swiss withholding tax at a reduced rate, by discharging the liability to such tax by notification (Meldeverfahren) pursuant to Applicable Law (including double tax treaties) rather than payment of the Tax; |
| (2) | if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above does not apply, deduct Swiss withholding tax at the rate of 35% (or such other rate as in force from time to time), or if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above applies for a part of the Swiss withholding tax only, deduct Swiss withholding tax at the reduced rate resulting after the discharge of part of such Tax by notification under Applicable Law, from any payment made by it in respect of Restricted Obligations and promptly pay any such Taxes to the Swiss Federal Tax Administration; and |
| (3) | notify the Administrative Agent that such notification or, as the case may be, deduction has been made and provide evidence to the Administrative Agent that such a notification of the Swiss Federal Tax Administration has been made, or, as the case may be, that such Swiss withholding tax has been paid to the Swiss Federal Tax Administration; |
(ii) to the extent such deduction is made, not be required to make a gross-up, indemnify or otherwise hold harmless the Lenders for the deduction of the Swiss withholding tax notwithstanding anything to the contrary contained in the Loan Documents, unless grossing-up is permitted under the laws of Switzerland then in force and provided that this should not in any way limit any obligations of any non-Swiss Guarantors under the Loan Documents to indemnify the Lenders in respect of the deduction of the Swiss withholding tax.
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(e) The Swiss Guarantor shall use all reasonable efforts to procure that any person which is entitled to a full or partial refund of any Swiss withholding tax paid pursuant to paragraph (d) above will, as soon as possible after the deduction of the Swiss withholding tax: (i) request a refund of the Swiss withholding tax under any Applicable Law (including double taxation treaties) and (ii) pay to the Administrative Agent upon receipt any amount so refunded. The Administrative Agent (acting at the written direction of the Required Lenders) shall take all reasonable steps to cooperate with the Swiss Guarantor to secure such refund.
(f) In case the proceeds irrevocably received by the Administrative Agent and any Lender pursuant to paragraph (e)(ii) above have the effect that the proceeds received by the Administrative Agent and any Lender exceed the amount of obligations guaranteed by the relevant Swiss Guarantor, then the Administrative Agent (acting at the written direction of the Required Lenders) or the relevant Lender, as the case may be, shall promptly return such overcompensation to the relevant Swiss Guarantor.
(g) The Swiss Guarantor will take, and cause to be taken, as soon as reasonably practicable, all and any other action, including, without limitation, the passing of any shareholders’ resolutions to approve any payment or other performance under this Agreement or any other Loan Document and the receipt of any confirmations from the Swiss Guarantor’s auditors, whether following a request to discharge a Restricted Obligation or which may be required as a matter of mandatory Swiss law in force at the time it is required to make a payment or perform other obligations under this Agreement or any other Loan Document in order to allow a prompt payment of amounts owed by the Swiss Guarantor or the prompt performance of other obligations under this Agreement or any other Loan Document.
(h) If the enforcement of the Restricted Obligations would be limited due to the effects referred to in this Section 10.25 and if any asset of the Swiss Guarantor has a book value that is less than its market value (an “Undervalued Asset”), the Swiss Guarantor shall, to the extent permitted by Applicable Law and its accounting standards, (i) write up the book value of such Undervalued Asset such that its balance sheet reflects a book value that is equal to the market value of such Undervalued Asset, and (ii) make reasonable efforts to realize the Undervalued Asset for a sum which is at least equal to the market value of such asset. Without prejudice to the rights of the Administrative Agent under this Agreement or any other Loan Document, the Swiss Guarantor will only be required to realize an Undervalued Asset if such asset is not necessary for the Swiss Guarantor’s business (nicht betriebsnotwendig).
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Exhibit 4.9-2
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO THE CREDIT AGREEMENT, dated as of October 30, 2023 (this “Amendment”), by and among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable, (the “Borrower”), Citibank, N.A., a national banking association organized and existing under the laws of the United States and acting through its Agency & Trust Division, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (the “Administrative Agent”), ING Capital LLC, as sustainability structuring agent (in such capacity, the “Sustainability Structuring Agent”) and the Lenders parties hereto. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Amended Credit Agreement (as defined below).
RECITALS:
WHEREAS, the Borrower, the Administrative Agent, ING Capital LLC, as sustainability structuring agent, BofA Securities Inc., BNP Paribas, Citigroup Global Markets Inc., and JPMorgan Chase Bank, N.A., as joint bookrunners and lead arrangers, and each lender from time to time party thereto (the “Lenders”) have previously entered into that certain Credit Agreement, dated as of October 29, 2021 (as amended by that certain first amendment dated June 5, 2023, and as further amended, restated, amended and restated, supplemented and/or otherwise modified prior to the date hereof, the “Existing Credit Agreement”; the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”);
WHEREAS, pursuant to Section 2.3 of the Existing Credit Agreement, prior to the Amendment Effective Date (as defined herein), the Borrower has prepaid all principal amounts of the Revolving Loans under the Existing Credit Agreement (the “2021 Revolving Loans”);
WHEREAS, the Borrower (i) has requested and the other parties hereto have agreed to waive compliance with the requirement to deliver written termination notice three (3) Business Days prior to the date of termination as set forth in Section 2.4 of the Existing Credit Agreement in connection with the termination of the Revolving Commitments of the Revolving Lenders under the Existing Credit Agreement (the “2021 Revolving Commitments”), so long as the Borrower delivers such written termination notice two (2) Business Days prior to such termination, (ii) has delivered on October 26, 2023 a written notice requesting the termination of the 2021 Revolving Commitments substantially concurrently with the Amendment Effective Date, and (iii) has requested that, automatically and immediately upon giving effect to this Amendment, without any further instructions, notices or consents, each of the entities listed on Schedule 1 hereto (the “Consenting Revolving Lenders”) make available revolving commitments equal to the amounts set forth on Schedule 1 hereto under the column labelled “2023 Revolving Commitments” (the “2023 Revolving Commitments”), so that the aggregate amount of 2023 Revolving Commitments will be equal to US$2,000,000,000;
WHEREAS, the Consenting Revolving Lenders have agreed to provide the 2023 Revolving Commitments in the amounts indicated therein under the column labelled “2023 Revolving Commitments”, subject to the terms and conditions set forth herein;
WHEREAS, (i) the Administrative Agent has, and each of the Lenders party hereto have, agreed to waive compliance with the requirement to deliver a Notice of Loan Prepayment three (3) Business Days prior to the prepayment date as set forth in Section 2.3 of the Existing Credit Agreement in connection with the prepayment of US$500,000,000 of the 2021 Term Loans (as defined below), so long as such Notice of Loan Prepayment is delivered two (2) Business Days prior to such prepayment date, and (ii) the Borrower
has delivered on October 24, 2023 a Notice of Loan Prepayment in connection with the prepayment of US$500,000,000 of the 2021 Term Loans;
WHEREAS, pursuant to Section 2.3 of the Existing Credit Agreement, prior to or substantially concurrently with the Amendment Effective Date, the Borrower will (i) prepay an outstanding principal amount of US$500,000,000 of the Term Loans outstanding under the Existing Credit Agreement (the “2021 Term Loans”), and all accrued and unpaid interest on such 2021 Term Loans, and (ii) pay any additional amounts required pursuant to the Existing Credit Agreement in connection with such prepayment, in each case of (i) and (ii), to the existing Term Lender as of such prepayment date (but, in any case, immediately prior to the Amendment Effective Date) pursuant to the terms of the applicable Notice of Loan Prepayment delivered by the Borrower in connection therewith;
WHEREAS, the Borrower has requested that the remaining portion of the 2021 Term Loans be refinanced with a new tranche of replacement Term Loans pursuant to a new term facility (such Term Loans, collectively, and including for the avoidance of doubt, Continuing Term Loans (as defined below) and Additional Term Loans (as defined below), the “2023 Term Loans”);
WHEREAS, the Borrower has requested that (i) certain Term Lenders under the Existing Credit Agreement listed on Schedule 2 hereto (the “Continuing Term Lenders”) continue their outstanding 2021 Term Loans in the amounts set forth on Schedule 2 hereto under the column labelled “Continuing Term Loans” (the “Continuing Term Loans”) as 2023 Term Loans in a principal amount equal to the aggregate principal amount of such 2021 Term Loans so continued, and (ii) certain Continuing Term Lenders that desire to make 2023 Term Loans in amounts that are greater than their Continuing Term Loans (the “Incremental Continuing Term Lenders”) (1) provide term loan commitments in the amounts set forth on Schedule 2 hereto under the column labelled “2023 Term Loan Commitments” (the “2023 Term Loan Commitments”), effective as of the Amendment Effective Date, and (2) make 2023 Term Loans to the Borrower on the Amendment Effective Date in an amount equal to their respective 2023 Term Loan Commitments (the “Additional Term Loans”);
WHEREAS, (i) the Continuing Term Lenders have agreed to continue the Continuing Term Loans and (ii) the Incremental Continuing Lenders have agreed to provide the 2023 Term Loan Commitments and make the Additional Term Loans, subject to the terms and conditions set forth herein;
WHEREAS, the proceeds of the Additional Term Loans will be used to prepay the outstanding principal amount of the 2021 Term Loans that are not continued as 2023 Term Loans by the Continuing Term Lenders, so that, after giving effect to this Amendment, the aggregate amount of the 2023 Term Loans will be equal to US$1,000,000,000;
WHEREAS, pursuant to Section 10.01 of the Existing Credit Agreement, the Borrower, the Administrative Agent (acting at the direction of the Required Lenders), the Sustainability Structuring Agent and the Lenders under the Existing Credit Agreement party hereto (which collectively constitute the Required Lenders) wish to amend the Existing Credit Agreement in connection with the transactions contemplated hereby on the terms and subject to the conditions set forth herein;
WHEREAS, (i) Citibank, N.A., not in its individual capacity but solely in its capacity as administrative agent for the Lenders, will act as administrative agent in connection with the Amended Credit Agreement (in such capacity, the “Administrative Agent”), (ii) ING Capital LLC, will act as sustainability structuring agent in connection with the Amended Credit Agreement (in such capacity, the “Sustainability Structuring Agent”), (iii) Citigroup Global Markets Inc. will act as joint global coordinator, joint lead arranger and joint bookrunner (the “Global Coordinator”), and (iv) BBVA Mexico S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Mexico, BofA Securities Inc., BNP Paribas
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Securities Corp, Credit Agricole Corporate and Investment Bank, ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A. and Mizuho Bank, Ltd., will act as joint lead arrangers and joint bookrunners (in connection with the Amended Credit Agreement, in such capacity, and together with the Global Coordinator, collectively, the “Bookrunners” and individually, a “Bookrunner”);
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments. Subject to the satisfaction of the Lenders (or waiver thereof by the Lenders) of the conditions set forth in Section 4 hereof, effective as of the Amendment Effective Date (as defined below) and subject to the terms and conditions set forth herein the Existing Credit Agreement is hereby amended and restated in the form attached as Exhibit A hereto, except that any Schedule, Exhibit or other attachment to the Existing Credit Agreement not amended pursuant to the terms of this Amendment or otherwise included as part of said Exhibit A shall remain in effect without any amendment or other modification thereto.
SECTION 2. Additional Agreements.
(a) Subject to the terms and conditions set forth herein, the Borrower hereby irrevocably agrees and acknowledges that the 2021 Revolving Commitments shall be deemed (i) terminated substantially concurrently with the Amendment Effective Date, and (ii) automatically and immediately upon giving effect to this Amendment, without any further instructions, notices or consents, replaced by the 2023 Revolving Commitments.
(b) Subject to the terms and conditions set forth herein, each Consenting Revolving Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment and (ii) severally commits to provide the 2023 Revolving Commitment in the amount set forth opposite its name on Schedule 1 hereto simultaneously concurrently with the cancellation and termination of the 2021 Revolving Commitments. The 2023 Revolving Commitments shall be on the terms set forth in the Amended Credit Agreement for the Revolving Commitments.
(c) Subject to the terms and conditions set forth herein, each Continuing Term Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment, and (ii) severally agrees to continue its Continuing Term Loans as 2023 Term Loans in the amount set forth opposite its name on Schedule 2. The Continuing Term Loans shall be on the terms set forth in the Amended Credit Agreement for the Term Loans.
(d) Subject to the terms and conditions set forth herein, each Incremental Continuing Term Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment, (ii) severally commits to provide the 2023 Term Loan Commitment in the amount set forth opposite its name on Schedule 2; and (iii) agrees to make the Additional Term Loans to the Borrower on the Amendment Effective Date. The 2023 Term Loan Commitments shall be on the terms set forth in the Amended Credit Agreement for the Term Loans, and shall automatically and permanently terminate upon funding of the Additional Term Loans on the Amendment Effective Date.
(e) Subject to the terms and conditions set forth herein, the Borrower hereby (i) commits to apply the net proceeds of the Additional Term Loans on the Amendment Effective Date to prepay in full the outstanding principal amount of the 2021 Term Loans that are not continued as Continuing Term Loans, and all accrued and unpaid interest on such 2021 Term Loans, and any additional amounts required pursuant to the Existing Credit Agreement in connection with such prepayment, and (ii) hereby
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instructs the Administrative Agent to apply such net proceeds to make such prepayments as set forth in the flow of funds memorandum attached hereto as Exhibit B. On the Amendment Effective Date, immediately after the Additional Term Loans are made and the net proceeds are applied as set forth in this Section, each 2023 Term Lender will have a Term Credit Exposure equal to the amount set forth opposite its name on Schedule 2 hereto under the column labelled “Resulting Credit Exposure”.
(f) Subject to the terms and conditions set forth herein, (i) each 2023 Term Loan Commitment shall constitute a “Term Loan Commitment” and “Commitment”, (ii) the 2023 Term Loans (including the Continuing Term Loans and the Additional Term Loans) shall constitute “Term Loans” and “Loans,” (iii) each 2023 Revolving Commitment shall constitute a “Revolving Commitment” a “Commitment” and (iv) each Consenting Revolving Lender shall become a “Revolving Lender” and a “Lender” (if and to the extent such Consenting Revolving Lender is not already a Lender or a Revolving Lender, as applicable, prior to the effectiveness of this Amendment) and shall have all the rights and obligations of a Lender holding a Revolving Loan.
SECTION 3. Representations and Warranties. In order to induce the Administrative Agent and the Lenders party hereto to enter into this Amendment, the Borrower represents and warrants to the Administrative Agent and such Lenders on and as of the Amendment Effective Date that:
(a) Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (i) is (1) duly organized or formed, validly existing and (2) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (ii) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (1) own or lease its assets and carry on its business and (2) execute, deliver and perform its obligations under this Amendment and the other the Loan Documents to which it is a party, if any, and (iii) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (i)(2), (ii)(1) or (iii), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
(b) Authorization; No Contravention. The execution and delivery by each Loan Party of this Amendment and performance by each Loan Party of this Amendment and each other Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (i) contravene the terms of any of such Person’s Organization Documents; (ii) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (1) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (2) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any Applicable Law in any material respect.
(c) Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
(d) Binding Effect. This Amendment has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Amendment constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto
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in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
(e) Incorporation of Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party set forth in the Amended Credit Agreement and in any other Loan Document are true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the Amendment Effective Date (or, in the case of any such representation or warranty expressly stated to have been made as of a specific date, as of such specific date).
SECTION 4. Conditions to Effectiveness. This Amendment shall become effective as of the date (the “Amendment Effective Date”) on which each of the following conditions shall have been satisfied (or waived) as determined by the Lenders:
(a) The Administrative Agent’s receipt of the following (in the case of certificates of governmental officials, dated no earlier than a recent date before the Amendment Effective Date), each in form and substance satisfactory to the Lenders:
(i) an executed counterpart of this Amendment, properly executed by a duly authorized signatory (apoderado) of the Borrower and a duly authorized signatory of each other party hereto, dated the Amendment Effective Date;
(ii) an executed counterpart of the amended and restated Guaranty, properly executed by a Responsible Officer of each Initial Guarantor organized under the laws of a country other than Mexico and by a Person holding powers for acts of ownership (actos de dominio) of each Initial Guarantor organized under the laws of Mexico, dated the Amendment Effective Date (the “A&R Guaranty”);
(iii) with respect to each Loan Party organized under the laws of Mexico, true, correct and complete copies of (A) the resolutions of the board of directors authorizing the execution and delivery of this Amendment and the other Loan Documents, (B) incorporation deed (escritura constitutiva) and current bylaws (estatutos sociales vigentes) evidencing that the execution of this Amendment and the other Loan Documents to which such Loan Party is a party is contemplated within the corporate purpose of such Loan Party, and (C) the public deeds containing the powers of attorney granted to the individuals executing this Amendment and the other Loan Documents to which such Loan Party is a party on behalf of such Loan Party (including poderes para actos de administración (in case of the Borrower) and poderes para actos de dominio (in case of the Guarantors) and registered poderes para suscribir títulos de crédito conforme al artículo 9 de la Ley General de Títulos y Operaciones de Crédito);
(iv) with respect to each Loan Party other than a Loan Party organized under the laws of Mexico, a certificate of a Responsible Officer of the Borrower evidencing (A) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which such Loan Party is a party and (B) that each Loan Party is duly organized or formed, and that each such Loan Party is validly existing, in good standing
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(to the extent such concept exists in the relevant jurisdiction) and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect;
(v) favorable opinions of (A) Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to the Borrower, (B) the Borrower’s General Counsel, and (C) GHR Rechtsanwälte AG, special Swiss counsel to the Borrower, addressed to the Administrative Agent and each Lender, as to such customary matters concerning the Borrower, this Amendment and the other Loan Documents, as the Required Lenders may reasonably request;
(vi) a certificate signed by a Responsible Officer of the Borrower certifying (A) that the representations and warranties of the Borrower contained in Section 3 hereof are true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date and (B) that no Default exists, or would occur immediately after giving effect to this Amendment, on the Amendment Effective Date;
(vii) the acceptance by the Process Agent of an irrevocable appointment to act as agent for service of process for the Loan Parties in connection with any proceeding relating to this Amendment and the other Loan Documents brought in the State of New York;
(viii) a copy certified by a Mexican notary public of the irrevocable special power of attorney for lawsuits and collections (poder especial irrevocable para pleitos y cobranzas) granted by each of the Loan Parties organized under the laws of Mexico before a Mexican notary public in favor of the Process Agent; and
(ix) the Audited Financial Statements and the unaudited financial statements of the Borrower referred to in Section 5.5(a) and (b) of the Amended Credit Agreement.
(b) The Borrower shall have paid (or, substantially concurrently with the Amendment Effective Date, shall pay) any fees of the Lenders, the Bookrunners and the Administrative Agent required to be paid on or before the Amendment Effective Date.
(c) To the extent invoiced at least three (3) Business Days prior to the Amendment Effective Date, the Borrower shall have paid (or, substantially concurrently with the Amendment Effective Date, shall pay) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent), plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).
(d) (i) Upon the reasonable request of any Lender or the Administrative Agent made at least ten (10) Business Days prior to the Amendment Effective Date, the Borrower shall have provided to such Lender or the Administrative Agent, as applicable, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least three (3) Business Days prior to the Amendment Effective Date and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Borrower shall have delivered to each Lender that so requests a
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Beneficial Ownership Certification in relation to the Borrower at least ten (10) Business Days prior to the Amendment Effective Date.
(e) The 2021 Revolving Commitments shall have been terminated (or, substantially concurrently with the Amendment Effective Date, shall be terminated) and as of the Amendment Effective Date, the aggregate outstanding principal amount of 2021 Revolving Loans shall be zero.
(f) The Borrower shall have prepaid (or, substantially concurrently with the Amendment Effective Date, shall pay) (i) U.S.$500.0 million of principal amount of the 2021 Term Loans and (ii) all accrued and unpaid interest (to, but not including, the Amendment Effective Date) on such loans.
(g) The Administrative Agent shall have received a Committed Loan Notice with respect to the 2023 Term Loans no later than 10:00 p.m., New York City time, two (2) Business Days prior to the Amendment Effective Date.
(h) The representations and warranties of the Loan Parties contained in Article V of the Amended Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date.
(i) No Default shall exist, or would result from this Amendment, the proposed Borrowing, or from the application of the proceeds thereof.
(j) Upon the request of any Lender at least one (1) Business Day prior to the Amendment Effective Date, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the Loan to be disbursed by that Lender and the relevant Applicable Margin, on the date of the relevant Loan.
SECTION 5. Reaffirmation of Guarantees. Each of the Borrower and each other Loan Party party hereto hereby (a) acknowledges its receipt of a copy of this Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Amendment and the transactions contemplated thereby, (b) affirms and confirms, as applicable, its guarantees, pledges, grants and other undertakings under the Amended Credit Agreement and the other Loan Documents to which it is a party and (c) agrees that, except to the extent amended on the Amendment Effective Date, (i) each Loan Document to which it is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other undertakings thereunder shall continue to be in full force and effect (with the same priority, as applicable) and shall accrue to the benefit of the applicable secured party or parties thereunder.
SECTION 6. Miscellaneous.
(a) Survival. Except as expressly provided in this Amendment, all of the terms, provisions, covenants, agreements, representations and warranties and conditions of the Existing Credit Agreement and the other Loan Documents shall be and remain in full force and effect as written, unmodified hereby and are hereby ratified by the Borrower and each other Loan Party. In the event of any conflict between the terms, provisions, covenants, representations and warranties and conditions of this Amendment, on the one hand, and the Existing Credit Agreement, on the other hand, this Amendment shall control.
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(b) Further Assurances. Each of the Borrower and each other Loan Party each agrees to execute such other documents, instruments and agreements and take such further actions reasonably requested by the Administrative Agent to effectuate the provisions of this Amendment.
(c) Severability. Any term or provision of this Amendment that is invalid, illegal or unenforceable in any jurisdiction shall, solely as to that jurisdiction, be ineffective solely to the extent of such invalidity, illegality or unenforceability without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Amendment or affecting the validity, legality or enforceability of any of the terms or provisions of this Amendment in any other jurisdiction. If any provision of this Amendment is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
(d) Entire Agreement. This Amendment, the Amended Credit Agreement and the other applicable Loan Documents constitute the entire agreement among the parties to the Amended Credit Agreement and such other applicable Loan Document with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and verbal, among such parties or any of them with respect to the subject matter hereof. Any exhibits or annexes attached hereto are hereby incorporated herein by reference and made a part hereof.
(e) Binding Effect, Beneficiaries. This Amendment shall be binding upon and inure to the benefit of the parties to the Amended Credit Agreement and each other applicable Loan Document and their respective heirs, executors, administrators, successors, legal representatives and assigns, and no other party shall derive any rights or benefits herefrom.
(f) Governing Law, Etc.
(i) This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.
(ii) The provisions of Sections 10.15(b), 10.15(c), 10.15(d) and 10.16 of the Amended Credit Agreement are hereby incorporated by reference mutatis mutandis as if full set forth herein.
(g) Construction. This Amendment shall be construed without regard to any presumption or other rule requiring construction against the party drafting this Amendment.
(h) Notices. All notices relating to this Amendment shall be delivered in the manner and subject to the provisions set forth in the Amended Credit Agreement.
(i) Counterparts; Effectiveness; Electronic Execution. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single agreement. Except as provided in Section 4, this Amendment shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of each other party hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” and words of like import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or
8
enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(j) Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.
(k) Reference to and Effect on the Credit Agreement and the Other Loan Documents. On and after the Amendment Effective Date, each reference in any Loan Document to “the Credit Agreement” shall mean and be a reference to the Amended Credit Agreement, each reference in the Existing Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Amended Credit Agreement and each reference in each of the other Loan Documents to the “Credit Agreement,” “thereunder,” “thereof,” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Amended Credit Agreement. Except as specifically amended by, or contemplated to be amended pursuant to, this Amendment, the Loan Documents shall remain in full force and effect (with the same priority, as applicable) and are hereby ratified and confirmed and this Amendment shall not be considered a novation. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender or any other party under, the Amended Credit Agreement, any of the other Loan Documents or otherwise. This Amendment shall be deemed to be a “Loan Document”, “Credit Document”, “Transaction Document”, “Financing Agreement” or “Related Document” (or other analogous or similar defined term) for purposes of the Amended Credit Agreement and the other Loan Documents.
(l) Administrative Agent Provisions.
(i) By their signatures hereto, each Lender (which collectively constitute the Required Lenders under the applicable Loan Documents) hereby (A) acknowledges, accepts, and consents to this Amendment, (B) designates this Amendment as a Loan Document in all respects in connection with the Amended Credit Agreement and the other Loan Documents and (C) authorizes and instructs the Administrative Agent to execute, deliver, and perform this Amendment and the A&R Guaranty.
(ii) It is acknowledged and agreed that (A) this Amendment and the A&R Guaranty are executed and delivered by Citibank, N.A., not individually or personally but solely as Administrative Agent in the exercise of the powers and authority conferred and vested in it hereunder and under the Amended Credit Agreement, (B) the Administrative Agent has executed and delivered this Amendment and the A&R Guaranty in accordance with the instructions of the Lenders set forth in Section 6(l)(i) above, (C) the Administrative Agent assumes no responsibility for the correctness of the recitals contained herein and shall not be responsible or accountable in any way whatsoever for or with respect to the validity, execution (except with respect to itself) or sufficiency of this Amendment or the A&R Guaranty and makes no representation with respect thereto, and (D) in connection with its execution, delivery, and performance of this Amendment and the A&R Guaranty, the Administrative Agent (and its Related Parties) shall be entitled to the benefit of every provision of the Amended Credit Agreement limiting the liability of or affording rights, benefits, protections, privileges, immunities, exculpations, immunities, or indemnities to the Administrative Agent as if they were each expressly set forth herein mutatis mutandis. In the case of any reference herein to the taking or omitting to take any action and/or the giving of any consent, approval or direction by the Administrative Agent, it is understood and agreed that in all cases the Administrative Agent shall only take such action in accordance with the written direction of the Required Lenders. In the case of a conflict between this Amendment and the Amended Credit Agreement, the Amended Credit
9
Agreement shall govern and control the liabilities, rights, obligations, privileges, protections, exculpations, immunities, indemnities and benefits of the Administrative Agent.
[Remainder of this page intentionally left blank.]
10
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the day and year first above written.
| Cemex, S.A.B. de C.V., as Borrower | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Concretos, S.A. de C.V., as a Loan Party | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Operaciones México, S.A. de C.V., as a Loan Party | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Corp., as a Loan Party | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Cemex Innovation Holding Ltd., as a Loan Party | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| Citibank, N.A, as Administrative Agent | ||
| By: |
/s/ Pahtricia Arenas | |
| Name: Pahtricia Arenas | ||
| Title: Senior Trust Officer | ||
| ING Capital LLC, as Sustainability Structuring Agent | ||
| By: |
/s/ Ana Carolina Oliveria | |
| Name: Ana Carolina Oliveria | ||
| Title: Managing Director | ||
| By: |
/s/ Bill James | |
| Name: Bill James | ||
| Title: Head of Lending Americas | ||
| BANK OF AMERICA, N.A., as a Lender | ||
| By: |
/s/ Maxim Volkov | |
| Name: Maxim Volkov | ||
| Title: Managing Director | ||
| BBVA MEXICO S.A. INSTITUCIÓN DE BANCA MULTIPLE, GRUPO FINANCIERO BBVA
MEXICO, | ||
| By: |
/s/ Ismael De La Garza | |
| Name: Ismael De La Garza | ||
| Title: Attorney-in-Fact | ||
| By: |
/s/ David Licon | |
| Name: David Licon | ||
| Title: Attorney-in-Fact | ||
| BNP PARIBAS, as a Lender | ||
| By: |
/s/ Julien Pecoud-Bouvet | |
| Name: Julien Pecoud-Bouvet | ||
| Title: Director | ||
| By: |
/s/ Karim Remtoula | |
| Name: Karim Remtoula | ||
| Title: Director | ||
| BANCO NACIONAL DE MEXICO S.A., INTEGRANTE DEL GRUPO FINANCIERO BANAMEX, | ||
| By: |
/s/ Gerardo Obregón Suarez | |
| Name: Gerardo Obregón Suarez | ||
| Title: Attorney-at-Fact | ||
| By: |
/s/ Salvador David Guerra Pérez | |
| Name: Salvador David Guerra Pérez | ||
| Title: Attorney-at-Fact | ||
| CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK, | ||
| By: |
/s/ Jaime Frontera | |
| Name: Jaime Frontera | ||
| Title: Managing Director | ||
| By: |
/s/ Gordon Yip | |
| Name: Gordon Yip | ||
| Title: Director | ||
| ING Bank N.V., Dublin Branch, as a Lender | ||
| By: |
/s/ Robert O’Donoghue | |
| Name: Robert O’Donoghue | ||
| Title: Country Manager | ||
| By: |
/s/ Sean Hassett | |
| Name: Sean Hassett | ||
| Title: Director | ||
| JPMORGAN CHASE BANK, N.A., as a Lender | ||
| By: |
/s/ Christophe Vohmann | |
| Name: Christophe Vohmann | ||
| Title: Executive Director | ||
| MIZUHO BANK, LTD., as a Lender | ||
| By: |
/s/ Paul Grayson | |
| Name: Paul Grayson | ||
| Title: Director | ||
| BANK OF CHINA LTD. (PANAMA BRANCH), as a Lender | ||
| By: |
/s/ Ni Na | |
| Name: Ni Na | ||
| Title: Executive Vice President | ||
| BANK OF CHINA MEXICO S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, | ||
| By: |
/s/ Zhou Peng | |
| Name: Zhou Peng | ||
| Title: Assistant Director | ||
| INTESA SANPAOLA S.P.A., NEW YORK BRANCH, | ||
| By: |
/s/ Javier Richard Cook | |
| Name: Javier Richard Cook | ||
| Title: Managing Director | ||
| By: |
/s/ Jennifer Feldman Facciola | |
| Name: Jennifer Feldman Facciola | ||
| Title: Business Director | ||
| SUMITOMO MITUSI BANKING | ||
| By: |
/s/ Raphael Dumas | |
| Name: Raphael Dumas | ||
| Title: Co-Head of Latam Corporate Finance | ||
| HSBC MÉXICO S.A. INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO
HSBC, | ||
| By: |
/s/ Inés Vargas Barrera | |
| Name: Inés Vargas Barrera | ||
| Title: Attorney-in-Fact | ||
| By: |
/s/ Cordelia González Flores | |
| Name: Cordelia González Flores | ||
| Title: Attorney-in-Fact | ||
| CITIZENS BANK, N.A., | ||
| By: |
/s/ A. Paul Dawley | |
| Name: A. Paul Dawley | ||
| Title: Senior Vice President | ||
| SOCIÉTÉ GÉNÉRALE, | ||
| By: |
/s/ Richard Bernal | |
| Name: Richard Bernal | ||
| Title: Managing Director | ||
| BANCO SANTANDER MÉXICO S.A. INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO
FINANCIERO SANTANDER MÉXICO, | ||
| By: |
/s/ Emiliano Jose Zas | |
| Name: Emiliano Jose Zas | ||
| Title: Legal Representative | ||
| By: |
/s/ Hector Manuel Arizpe Salazar | |
| Name: Hector Manuel Arizpe Salazar | ||
| Title: Legal Representative | ||
| STANDARD CHARTERED BANK, NEW YORK, | ||
| By: |
/s/ Kristopher Tracy | |
| Name: Kristopher Tracy | ||
| Title: Director, Financing Solutions | ||
| CRÉDIT INDUSTRIEL ET COMMERCIAL, LONDON BRANCH, | ||
| By: |
/s/ Geoff Murison | |
| Name: Geoff Murison | ||
| Title: Director, Corporate Finance | ||
| By: |
/s/ Ben Travers | |
| Name: Ben Travers | ||
| Title: Corporate Finance Manager | ||
| CITY NATIONAL BANK, | ||
| By: |
/s/ Brian Myers | |
| Name: Brian Myers | ||
| Title: Managing Director | ||
| BANCO MERCANTIL DEL NORTE S.A. INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO
FINANCIERO BANORTE, | ||
| By: |
/s/ Manuel Ramirez Garcia | |
| Name: Manuel Ramirez Garcia | ||
| Title: Attorney-in-Fact | ||
| By: |
/s/ Fidel Gaiza Chapa | |
| Name: Fidel Gaiza Chapa | ||
| Title: Attorney-in-fact | ||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA MÉXICO S.A. INSTITUCIÓN
FINANCIERA DE BANCA MÚLTIPLE, | ||
| By: |
/s/ Qian Gong | |
| Name: Qian Gong | ||
| Title: Legal Representative | ||
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA LTD. (PANAMA BRANCH), | ||
| By: |
/s/ Zhu Liang | |
| Name: Zhu Liang | ||
| Title: Assistant General Manager | ||
EXHIBIT A
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF OCTOBER 30, 2023,
among
Cemex, S.A.B. de C.V.,
as the Borrower,
Citibank, N.A.,
as Administrative Agent,
ING Capital LLC,
as Sustainability Structuring Agent,
Citigroup Global Markets Inc.,
as Global Coordinator,
BBVA Mexico S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Mexico,
BofA Securities Inc.,
BNP Paribas,
Citigroup Global Markets Inc.,
Credit Agricole Corporate and Investment Bank,
ING Bank N.V., Dublin Branch,
JPMorgan Chase Bank, N.A., and
Mizuho Bank, Ltd.
as Joint Lead Arrangers and Joint Bookrunners
and
The Other Lenders Party Hereto
TABLE OF CONTENTS
| Section | Page | |||||
| ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
43 | |||||
| Section 1.1 |
Defined Terms |
43 | ||||
| Section 1.2 |
Other Interpretive Provisions |
72 | ||||
| Section 1.3 |
Accounting Terms |
73 | ||||
| Section 1.4 |
Rounding |
73 | ||||
| Section 1.5 |
Times of Day |
74 | ||||
| Section 1.6 |
Interest Rates |
74 | ||||
| ARTICLE II THE COMMITMENTS AND LOANS |
74 | |||||
| Section 2.1 |
Loans |
74 | ||||
| Section 2.2 |
Borrowings, Conversions and Continuations of Loans |
74 | ||||
| Section 2.3 |
Prepayments |
75 | ||||
| Section 2.4 |
Termination or Reduction of Commitments |
76 | ||||
| Section 2.5 |
Repayment of Loans |
77 | ||||
| Section 2.6 |
Interest |
78 | ||||
| Section 2.7 |
Fees |
78 | ||||
| Section 2.8 |
Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin |
79 | ||||
| Section 2.9 |
Evidence of Debt |
79 | ||||
| Section 2.10 |
Payments Generally; Administrative Agent’s Clawback |
80 | ||||
| Section 2.11 |
Sharing of Payments by Lenders |
81 | ||||
| Section 2.12 |
Defaulting Lenders |
82 | ||||
| Section 2.13 |
Sustainability Adjustments |
83 | ||||
| ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY |
86 | |||||
| Section 3.1 |
Taxes |
86 | ||||
| Section 3.2 |
Illegality |
88 | ||||
| Section 3.3 |
Benchmark Replacement |
89 | ||||
| Section 3.4 |
Increased Costs; Reserves on SOFR Loans |
91 | ||||
| Section 3.5 |
Compensation for Losses |
93 | ||||
| Section 3.6 |
Mitigation Obligations; Replacement of Lenders |
93 | ||||
| Section 3.7 |
Survival |
94 | ||||
| Section 3.8 |
Inability to Determine Rates |
94 | ||||
| ARTICLE IV CONDITIONS PRECEDENT TO LOANS |
94 | |||||
| Section 4.1 |
Conditions to Restatement Date |
94 | ||||
| Section 4.2 |
Conditions to all Loans |
94 | ||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES |
95 | |||||
| Section 5.1 |
Existence, Qualification and Power |
95 | ||||
| Section 5.2 |
Authorization; No Contravention |
95 | ||||
| Section 5.3 |
Governmental Authorization; Other Consents |
95 | ||||
| Section 5.4 |
Binding Effect |
96 | ||||
| Section 5.5 |
Financial Statements; No Material Adverse Effect |
96 | ||||
| Section 5.6 |
Litigation |
96 | ||||
| Section 5.7 |
No Default |
97 | ||||
| Section 5.8 |
Ownership of Property |
97 | ||||
| Section 5.9 |
Environmental Compliance |
97 | ||||
| Section 5.10 |
Insurance |
97 | ||||
| Section 5.11 |
Taxes |
97 | ||||
| Section 5.12 |
ERISA Compliance |
97 | ||||
| Section 5.13 |
Subsidiaries; Equity Interests |
98 | ||||
| Section 5.14 |
Margin Regulations; Investment Company Act |
99 | ||||
| Section 5.15 |
Disclosure |
99 | ||||
| Section 5.16 |
Compliance with Laws |
99 | ||||
| Section 5.17 |
Intellectual Property; Licenses, Etc |
99 | ||||
| Section 5.18 |
Sanctions |
100 | ||||
| Section 5.19 |
Anti-Corruption Laws |
100 | ||||
| Section 5.20 |
Affected Financial Institutions |
101 | ||||
| Section 5.21 |
Covered Entities |
101 | ||||
| Section 5.22 |
Solvency |
101 | ||||
| Section 5.23 |
Immunity |
101 | ||||
| Section 5.24 |
Pari Passu Status |
101 | ||||
| ARTICLE VI AFFIRMATIVE COVENANTS |
101 | |||||
| Section 6.1 |
Financial Statements |
101 | ||||
| Section 6.2 |
Certificates; Other Information |
102 | ||||
| Section 6.3 |
Notices |
104 | ||||
| Section 6.4 |
Pari Passu Obligations |
104 | ||||
| Section 6.5 |
Payment of Obligations |
104 | ||||
| Section 6.6 |
Preservation of Existence, Etc |
104 | ||||
| Section 6.7 |
Maintenance of Properties |
105 | ||||
| Section 6.8 |
Maintenance of Insurance |
105 | ||||
| Section 6.9 |
Compliance with Laws |
105 | ||||
| Section 6.10 |
Books and Records |
105 | ||||
| Section 6.11 |
Use of Proceeds |
105 | ||||
| Section 6.12 |
Anti-Corruption Laws; Sanctions |
105 | ||||
| Section 6.13 |
Delivery of Notes and Appointment of Custodian |
106 | ||||
| Section 6.14 |
Sustainability Reporting |
106 | ||||
| ARTICLE VII NEGATIVE COVENANTS |
106 | |||||
| Section 7.1 |
Liens |
106 | ||||
| Section 7.2 |
Subsidiary Debt. |
108 | ||||
| Section 7.3 |
Fundamental Changes and Asset Dispositions |
109 | ||||
| Section 7.4 |
Restricted Payments |
110 | ||||
| Section 7.5 |
Financial Covenants |
110 | ||||
| ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES |
111 | |||||
| Section 8.1 |
Events of Default |
111 | ||||
| Section 8.2 |
Remedies Upon Event of Default |
113 | ||||
| Section 8.3 |
Application of Funds |
114 | ||||
| ARTICLE IX ADMINISTRATIVE AGENT |
114 | |||||
| Section 9.1 |
Appointment and Authority |
114 | ||||
| Section 9.2 |
Rights as a Lender |
115 | ||||
| Section 9.3 |
Exculpatory Provisions |
115 | ||||
| Section 9.4 |
Reliance by Administrative Agent. |
117 | ||||
| Section 9.5 |
Erroneous Payments |
117 | ||||
| Section 9.6 |
Delegation of Duties |
120 | ||||
| Section 9.7 |
Resignation of Administrative Agent |
120 | ||||
| Section 9.8 |
Non-Reliance on the Administrative Agent, the Bookrunners and the Other Lenders |
121 | ||||
| Section 9.9 |
No Other Duties, Etc |
122 | ||||
| Section 9.10 |
Guaranty Matters. |
122 | ||||
| Section 9.11 |
Certain ERISA Matters |
122 | ||||
| Section 9.12 |
Administrative Agent May File Proofs of Claim. |
124 | ||||
| ARTICLE X MISCELLANEOUS |
124 | |||||
| Section 10.1 |
Amendments, Etc |
124 | ||||
| Section 10.2 |
Notices; Effectiveness; Electronic Communication |
125 | ||||
| Section 10.3 |
Reliance by Administrative Agent and Lenders |
128 | ||||
| Section 10.4 |
No Waiver; Cumulative Remedies; Enforcement |
128 | ||||
| Section 10.5 |
Expenses; Indemnity; Damage Waiver |
129 | ||||
| Section 10.6 |
Payments Set Aside |
131 | ||||
| Section 10.7 |
Successors and Assigns |
131 | ||||
| Section 10.8 |
Treatment of Certain Information; Confidentiality |
133 | ||||
| Section 10.9 |
Right of Setoff |
134 | ||||
| Section 10.10 |
Interest Rate Limitation |
135 | ||||
| Section 10.11 |
Counterparts; Integration; Effectiveness |
135 | ||||
| Section 10.12 |
Survival of Representations and Warranties |
135 | ||||
| Section 10.13 |
Severability |
136 | ||||
| Section 10.14 |
Replacement of Lenders |
136 | ||||
| Section 10.15 |
Governing Law; Jurisdiction; Etc |
137 | ||||
| Section 10.16 |
WAIVER OF JURY TRIAL |
138 | ||||
| Section 10.17 |
Waiver of Immunities. |
139 | ||||
| Section 10.18 |
Judgment Currency |
139 | ||||
| Section 10.19 |
No Advisory or Fiduciary Responsibility |
139 | ||||
| Section 10.20 |
Electronic Execution of Assignments and Certain Other Documents |
140 | ||||
| Section 10.21 |
USA PATRIOT Act |
140 | ||||
| Section 10.22 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
140 | ||||
| Section 10.23 |
Acknowledgement Regarding Any Supported QFCs. |
141 | ||||
| Section 10.24 |
Use of English Language. |
142 | ||||
| Section 10.25 |
Swiss Guarantee Limitation. |
142 | ||||
| SCHEDULES | ||
| 1.1 |
Applicable Margin and KPI Targets | |
| 2.1 |
Commitments and Applicable Percentages | |
| 5.6 |
Litigation and Environmental Matters | |
| 5.13 |
Subsidiaries and Other Equity Investments | |
| 5.17 |
Intellectual Property Matters | |
| 7.1 |
Existing Liens | |
| 7.2 |
Existing Indebtedness | |
| 10.2 |
Administrative Agent’s Office; Certain Addresses for Notices | |
| EXHIBITS |
||
| A |
Form of Committed Loan Notice | |
| B |
Form of Note | |
| C |
Form of Compliance Certificate | |
| D |
Form of Pricing Certificate | |
| E-1 |
Form of Assignment and Assumption | |
| E-2 |
Administrative Questionnaire | |
| F |
Form of Guaranty | |
| G |
Form of Notice of Loan Prepayment | |
| H |
Form of Acceptable Assumption Agreement | |
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is dated as of October 30, 2023, among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable (the “Borrower”), Citibank, N.A., a national banking association organized and existing under the laws of the United States and acting through its Agency & Trust Division, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (the “Administrative Agent”), ING Capital LLC, solely in its capacity as sustainability structuring agent (the “Sustainability Structuring Agent”), Citigroup Global Markets Inc., as global coordinator, joint lead arranger and joint bookrunner (the “Global Coordinator”), BBVA Mexico S.A. Institución de Banca Múltiple, Grupo Financiero BBVA Mexico, BofA Securities Inc., BNP Paribas, Credit Agricole Corporate and Investment Bank, ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A. and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners (in such capacity and together with the Global Coordinator, collectively, the “Bookrunners” and individually, a “Bookrunner”), and each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”).
WHEREAS, reference is hereby made to the Credit Agreement dated as of October 29, 2021 (as amended from time to time and in effect immediately prior to the effectiveness of this Agreement, including by the first amendment dated as of June 5, 2023, the “Original Credit Agreement”), among the Borrower, the Administrative Agent, the Sustainability Structuring Agent and the lenders party thereto; and
WHEREAS, on October 30, 2023, the Borrower, the Administrative Agent, Sustainability Structuring Agent, the Bookrunners and the financial institutions party thereto, entered into the Second Amendment, which amended the terms of the Original Credit Agreement as of the Restatement Date.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“Acceptable Assumption Agreement” means an Assumption Agreement with respect to the Obligations of the Borrower or a Guarantor, as applicable, in substantially the form of Exhibit H.
“Additional Guarantor” means any Person that, with the written acknowledgment of the Borrower, executes a guaranty in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F, and who shall, promptly following any request from the Administrative Agent or any Lender, provide information and documentation reasonably requested by the Administrative Agent or such Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
43
“Adjusted Term SOFR” means, for purposes of any calculation, the rate per annum equal to (a) Term SOFR for such calculation plus (b) the Term SOFR Adjustment; provided that if Adjusted Term SOFR as so determined shall ever be less than the Floor, then Adjusted Term SOFR shall be deemed to be the Floor.
“Administrative Agent” has the meaning set forth in the preamble of this Agreement.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.2, or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Aggregate Commitments” means the Revolving Commitments of all the Lenders.
“Agreement” means this Credit Agreement.
“Alternative Fuels” are defined following the Global Cement and Concrete Association Sustainability Guidelines, as in effect on the Restatement Date, for co-processing fuels and raw materials in cement manufacturing and include, but are not limited to, industrial waste, municipal solid waste, biomass residues and tires.
“Annual Period” means each calendar year.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person or to which such a Person is subject.
“Applicable Margin” means the percentage per annum, based on the Consolidated Leverage Ratio, applicable to each Loan as set forth in Schedule 1.1 hereto, and after giving effect to any Sustainability Margin Adjustment.
“Applicable Percentage” means, (a) with respect to any Lender in respect of the Revolving Facility, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Revolving Commitment at such time; provided, however, that if the Revolving Commitments have terminated pursuant to Section 8.2 or expired, the Applicable Percentage of each Lender shall be determined based upon the Revolving Commitments of each Lender most recently in effect, giving effect to any subsequent assignments and to any Revolving Lender’s status as a Defaulting Lender at the time of determination and (b) with respect to any Lender in respect of the Term Facility, the percentage of the aggregate outstanding Term Loans under the Term Facility of all Term Lenders represented by the aggregate outstanding Term Loans
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under the Term Facility of such Lender at such time. The Applicable Percentage of each Lender with respect to the Revolving Facility and the Term Facility, as applicable, as of the Restatement Date, is set forth opposite the name of such Lender on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.7), and acknowledged by the Administrative Agent, in substantially the form of Exhibit E-1.
“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2022, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate (or component thereof), any tenor for such Benchmark that is or may be used for determining the length of an Interest Period or (y) otherwise, any payment period for interest calculated with reference to such Benchmark, as applicable, pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is removed pursuant to Section 3.3(f).
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time that is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliate (other than through liquidation, administration or other insolvency proceedings).
“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1⁄2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate,” and (c) Adjusted Term SOFR for a one-month tenor in effect on such day plus 1.00%. The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is
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being used as an alternate rate of interest pursuant to Section 3.3 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate.
“Base Rate Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.
“Benchmark” means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.3. Any reference to “Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, for any Available Tenor, the sum of (a) the alternate benchmark rate that has been selected by the Administrative Agent (acting at the written direction of the Required Lenders) and the Borrower giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (b) the related Benchmark Replacement Adjustment; provided that, if such Benchmark Replacement as so determined would be less than the Floor, such Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent (acting at the written direction of the Required Lenders) and the Borrower giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Required Lenders decide may be appropriate to reflect the adoption
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and implementation of such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice as determined by the Required Lenders (or, if the Required Lenders decide that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such Benchmark Replacement exists, in such other manner of administration as the Required Lenders decide is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent (acting at the direction of the Required Lenders), which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
| (a) | in the case of clause (a) or (b) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof); or |
| (b) | in the case of clause (c) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. |
For the avoidance of doubt, if such Benchmark is a term rate, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark, in each case as notified to the Administrative Agent by the Borrower or any Lender:
| (a) | a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); |
| (b) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a |
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| resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or |
| (c) | a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative. |
For the avoidance of doubt, if such Benchmark is a term rate, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.3 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.3.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Borrower” has the meaning specified in the preamble hereto.
“Borrower Materials” has the meaning specified in Section 6.2.
“Borrowing” means a borrowing of Term Loans or Revolving Loans under this Agreement.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, Mexico or New York, New York.
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“Capital Stock” means:
| (a) | with respect to any Person that is a corporation, any and all shares, equity quotas (partes sociales), interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person; and |
| (b) | with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person. |
(c) “Cash” means the amount of “Cash and cash equivalents” as set out in the relevant line in the relevant financial statements as determined in accordance with IFRS.
“Cementitious Product” means all clinker volumes produced by a company for cement making or direct clinker sale, plus gypsum, limestone, cement kiln dust and all mineral components for blending of cements, plus blending, plus all cement substitutes produced. Clinker bought from third parties for the production of cement shall not constitute Cementitious Product.
“Change in Law” means the occurrence, after the Restatement Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means the beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Securities and Exchange Act of 1934, as amended) of twenty percent (20%) or more in voting power of the outstanding Voting Stock of the Borrower is acquired by any Person. Notwithstanding the foregoing, a transaction will not be deemed to constitute a Change of Control if (1) the Borrower becomes a direct or indirect Wholly Owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Borrower’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no Person (other than a holding company satisfying the requirements of this sentence) has beneficial ownership of twenty percent (20%) or more in voting power of the Voting Stock of such holding company.
“Code” means the Internal Revenue Code of 1986.
“Commitment” means a Term Loan Commitment or a Revolving Commitment, as the context may require.
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“Commitment Fee” has the meaning specified in Section 2.7.
“Committed Loan Notice” means a request for a Borrowing or a conversion or continuation of any Loan, which shall be substantially in the form of Exhibit A, duly completed and signed by a Responsible Officer of the Borrower.
“Common Stock” of any Person means any and all shares, equity quotas (partes sociales), interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common equity interests, whether outstanding on the Restatement Date or issued after the Restatement Date, and includes, without limitation, all series and classes of such common equity interests. For the avoidance of doubt, “Common Stock” of the Borrower will be deemed to include the Borrower’s American Depositary Receipts and Ordinary Participation Certificates (Certificados de Participación Ordinarios).
“Compliance Certificate” means a certificate substantially in the form of Exhibit C.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Coverage Ratio” means, on any date of determination, the ratio of (a) ratio Consolidated EBITDA for the one (1) year period ending on such date to (b) Consolidated Interest Expense for the one (1) year period ending on such date.
“Consolidated Debt” means, at any date, the sum (without duplication) of (a) the aggregate amount of all Financial Debt of the Borrower and its Subsidiaries on a consolidated basis at such date, plus or minus, as applicable, (b) to the extent not included in Financial Debt, the aggregate net mark-to-market amount, which may be positive or negative, of all Swap Contracts (except to the extent such exposure is cash collateralized to the extent permitted under, or not restricted by, the Loan Documents). Notwithstanding the foregoing, Consolidated Debt shall exclude any existing or future obligations under any Securitization, any subordinated notes with no fixed maturity (which shall include, for the avoidance of doubt, the Borrower’s U.S.$1.0 billion 5.125% subordinated notes with no fixed maturity and U.S.$1.0 billion 9.125% subordinated notes with no fixed maturity), and any Indebtedness (whether in the form of perpetual, convertible, hybrid or similar securities or financial instruments) that is subordinated to the Obligations.
“Consolidated EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, operating earnings before other (expenses) income, plus net depreciation and amortization expense, in each case determined in accordance with IFRS, as adjusted for any Discontinued EBITDA, and solely for the purpose of calculating the Consolidated Leverage Ratio on a Pro Forma Basis for any Material Disposition and/or Material Acquisition.
“Consolidated Interest Expense” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of: (a) consolidated interest expense, to the extent such expense was deducted (and not added back) in computing consolidated net income (or loss), including (i) amortization of original issue discount resulting from the issuance of indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances, (iii) non-cash interest payments (but excluding any non-cash
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interest expense attributable to the movement in the mark-to-market valuation of obligations under any hedge agreements or other derivative instruments pursuant to IFRS), (iv) net payments, if any, made (less net payments, if any, received) pursuant to interest rate obligations under any hedge agreements with respect to indebtedness, (v) penalties and interest relating to taxes, and (vi) any expensing of bridge, commitment or other financing fees, and excluding amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses; plus (b) consolidated capitalized interest and the interest component of Leases that constitute Indebtedness of such person for such period, whether paid or accrued.
“Consolidated Leverage Ratio” means, on any date of determination, the ratio of (a) Consolidated Net Debt on such date to (b) Consolidated EBITDA for the one (1) year period ending on such date.
“Consolidated Net Debt” means, at any date, for the Borrower and its Subsidiaries on a consolidated basis, the Consolidated Debt net of Cash of the Borrower and its Subsidiaries that would not appear as “restricted” on a balance sheet in accordance with IFRS on such date.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Convertible Indebtedness” means any (a) Indebtedness the terms of which provide for conversion into, or exchange for, Common Stock of the Borrower, cash in lieu thereof and/or a combination of Common Stock of the Borrower and cash in lieu thereof or (b) contingent convertible units and related note purchase contracts.
“Corporate Office” means the Borrower’s corporate office located at Avenida Ricardo Margain Zozaya 325, Colonia Valle del Campestre, San Pedro Garza Garcia, Nuevo Leon, Mexico 66265, or any other office that might be notified from time to time to the Administrative Agent.
“Covenant Modification Date” means the date on which Covenant Modification Event has occurred, as notified to the Administrative Agent by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower, provided that such notice is delivered no later than five (5) Business Days after such Covenant Modification Event has occurred.
“Covenant Modification Event” means the occurrence of all of the following events, concurrently: (i) no Default or Event of Default has occurred and is continuing and (ii) a “Suspension Period” (as such term is defined in the Indenture as of the date hereof without any waiver or amendment thereto) is continuing under the Indenture; provided that if the Notes (as defined in the Indenture) are repaid or otherwise no longer outstanding, the immediately preceding clause (ii) shall be replaced in its entirety by the requirement that the Borrower has Investment Grade Ratings from two Rating Agencies.
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“Covenant Modification Period” means the period of time between the Covenant Modification Date and the Covenant Reversion Date.
“Covenant Reversion Date” means the date on which any of the following has occurred, as notified to the Administrative Agent by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower: (i) the Borrower ceases to have Investment Grade Ratings from two Rating Agencies, (ii) a Default or an Event of Default occurs and is continuing or (iii) the applicable “Suspension Period” (as such term is defined in the Indenture as of the date hereof without any waiver or amendment thereto) under the Indenture is terminated or is otherwise no longer applicable.
“Custodian” means any custodian of the Notes acting as agent for and on behalf of the Lenders for the time being appointed on behalf of the Lenders by the Administrative Agent (acting at the direction of the Required Lenders) with the Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed) provided that such Custodian must maintain an office in the metropolitan area of Monterrey, Nuevo León, Mexico.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, the Mexican Bankruptcy Law (Ley de Concursos Mercantiles), and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, concurso mercantil, quiebra or similar debtor relief Laws of the United States, Mexico or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means (a) with respect to any principal payable under or in respect of the Facilities not paid when due, the applicable interest rate plus 2.00% per annum and (b) with respect to other overdue amounts (including overdue interest), the interest rate applicable to Base Rate Loans plus 2.00% per annum.
“Defaulting Lender” means, subject to Section 2.12(b), any Lender that has failed to (a) fund all or any portion of its Loans on the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing prior to such date that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (b) pay to the Administrative Agent, or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, or has notified the Borrower or the Administrative Agent, in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided
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that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, visitador, conciliador, síndico, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of (i) an Undisclosed Administration and (ii) the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent (in each case, acting at the written direction of the Required Lenders) that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.12(b)) upon written notice of such determination to the Borrower and each other Lender.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any comprehensive Sanction (at the time of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic regions of Ukraine).
“Discontinued EBITDA” means, for any period, the sum for Discontinued Operations of the operating income for such period plus, without duplication and to the extent deducted in determining such discontinued operating income, depreciation, amortization expense and impairment of assets of the Discontinued Operations. For the avoidance of doubt, the Discontinued EBITDA will be added to the Consolidated EBITDA for any period for which the Disposition of the Discontinued Operations has not yet occurred.
“Discontinued Operations” means operations that are accounted for as discontinued operations for which the Disposition of such assets has not yet occurred.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Lender” means (a) certain financial institutions and other institutional lenders that have been specified to the Administrative Agent by the Borrower in writing at any time prior to the Restatement Date, (b) any of the Borrower’s competitors that have been specified to the Administrative Agent by the Borrower in writing at any time and from time to time, and (c) in the case of each of clauses (a) and (b), any of their respective Affiliates that are either (x)
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identified in writing by the Borrower from time to time, or (y) clearly identifiable on the basis of such Affiliate’s name.
“Dividing Person” has the meaning assigned to it in the definition of “Division.”
“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
“Dollar” and “$” mean lawful money of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.7 (subject to such consents, if any, as may be required under Section 10.7).
“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws (including common law), official standards (normas técnicas), regulations, ordinances, rules, applicable judgments, applicable orders, applicable decrees, permits and licenses relating to pollution and the protection of human health and safety with respect to exposure to Hazardous Materials, protection of the environment and natural resources or the release of Hazardous Materials into the environment, including any of the foregoing related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, pursuant to or arising from (a) any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of such Person and any warrants, rights or options to purchase any of the foregoing (but excluding
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any Convertible Indebtedness), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan (if any resulting liability has not been satisfied or payments of such liability are delinquent) or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 9.5(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 9.5(d).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Event of Default” has the meaning specified in Section 8.1.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes,
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(b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) any Mexican withholding Taxes imposed on amounts payable under any Loan Document to or for the account of any Lender, in excess of the withholding Taxes that would have been imposed had such recipient been a Qualified Entity at the time of payment, and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Executive Compensation Plan” means any stock option plan, restricted stock plan or retirement plan which the Borrower or any of its Subsidiaries, any other obligor customarily provides to its employees, consultants and directors.
“Facilities” means the Term Facility and the Revolving Facility, together.
“FATCA” means Sections 1471 through 1474 of the Code, as of the Restatement Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.
“Federal Funds Rate” means, for any day, the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if the Federal Funds Rate as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Fee Letters” means, collectively, (a) the letter agreement, dated October 30, 2023, between the Borrower and the Bookrunners and (b) the letter agreement, dated September 24, 2021, between the Borrower and the Administrative Agent.
“Financial Debt” means, at any date with respect to any Person, the sum (without duplication) of the following, in each case, as determined in accordance with IFRS:
(a) Indebtedness of such Person pursuant to clause (a) of the definition thereof;
(b) Indebtedness of such Person pursuant to clause (b) of the definition thereof;
(c) Indebtedness of such Person pursuant to clause (c) of the definition thereof;
(d) Indebtedness of such Person pursuant to clause (e) of the definition thereof;
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(e) Indebtedness of such Person pursuant to clause (f) of the definition thereof; and
(f) all Guarantees of such Person in respect of any of the foregoing.
“Floor” means a rate of interest equal to 0%.
“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“Governmental Authority” means the government of the United States, Mexico or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guarantors” means (a) as of the Restatement Date, the Initial Guarantors, and (b) after the Restatement Date, the Initial Guarantors together with any Additional Guarantor.
“Guaranty” means the Amended and Restated Guaranty, dated as of the Restatement Date, made by the Guarantors in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F.
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“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“IFRS” means international accounting standards within the meaning of International Accounting Standards Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with IFRS (except as expressly set forth below):
| (a) | all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; |
| (b) | all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments which, for the avoidance of doubt, shall not deemed Indebtedness until they are required to be funded; |
| (c) | net obligations of such Person under any Swap Contract (as determined in accordance with IFRS); |
| (d) | all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) if (i) one of the primary reasons behind entering into such obligation is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply; |
| (e) | Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) but only to the extent of the fair market value of the property secured thereby, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; |
| (f) | the aggregate amount of all financial obligations arising under any Leases of such Person recognized in the consolidated statement of financial position of such Person in accordance with IFRS less the sum (without duplication) of (i) all obligations of such Person to pay the deferred purchase price of property or services and (ii) all obligations of such Person with respect to product invoices incurred in connection with export financing; |
| (g) | all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment before the Maturity Date (other than at the option of such Person) in respect of any Equity Interest in such Person or any other Person, valued, in the case |
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| of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and |
| (h) | all Guarantees of such Person in respect of any of the foregoing. |
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person, and in any case only to the extent of the recourse to such Person.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitees” has the meaning specified in Section 10.5(b).
“Indenture” means the Indenture dated as of January 12, 2021 (as it may be amended or supplemented from time to time in accordance with the terms thereof), among the Borrower, The Bank of New York Mellon, as trustee, and the guarantors party thereto.
“Information” has the meaning specified in Section 10.8.
“Initial Guarantors” means, collectively, Cemex Concretos, S.A. de C.V., Cemex Operaciones México, S.A. de C.V., Cemex Corp. and Cemex Innovation Holding Ltd. (formerly known as CEMEX TRADEMARKS HOLDING Ltd.).
“Interest Payment Date” means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December of a fiscal year and the Maturity Date.
“Interest Period” means as to each SOFR Loan, the period commencing on the date such SOFR Loan is disbursed or converted to or continued as a SOFR Loan and ending on the date one, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:
| (a) | any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a SOFR Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; |
| (b) | any Interest Period pertaining to a SOFR Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and |
| (c) | no Interest Period shall extend beyond the Maturity Date. |
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“Inventory Financing” means any arrangement pursuant to which the Borrower or any of its Subsidiaries sells or otherwise disposes of inventory to a counterparty (including a bank or other institution or a special purpose vehicle or partnership incorporated or established by or on behalf of such bank or other institution or an Affiliate of such bank or other institution) and has an obligation to repurchase such inventory to the extent that it is not sold to a third party within a specified period.
“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“IP Rights” has the meaning specified in Section 5.17.
“IRS” means the United States Internal Revenue Service.
“KPI Metrics” means:
| (a) | (i) direct CO2 emissions related to the production of cement and clinker (excluding on site electricity production) and (ii) indirect CO2 emissions from purchased electricity, in each case, measured in kg of CO2 per ton of Cementitious Product, minus emissions from biomass fuel sources and Alternative Fuels; |
| (b) | the amount of clinker consumed to produce clinker content in Cementitious Products; and |
| (c) | the percentage of fuel consumption from Alternative Fuels compared to the total fuel consumption for cement plant operations in a given period. |
“KPI Metrics Reviewer” means, with respect to any KPI Metric, KPMG Cárdenas Dosal, S.C.; or any replacement KPI Metrics Reviewer thereof as designated from time to time by the Borrower; provided that any such replacement KPI Metrics Reviewer (a) shall be (i) a qualified external reviewer (other than an Affiliate of the Borrower), with relevant expertise, such as an auditor, environmental consultant and/or independent ratings agency of recognized national standing (for the avoidance of doubt, any “big four” auditing firm or other auditing firm of recognized national standing shall be an acceptable replacement KPI Metrics Reviewer) or (ii) another firm designated by the Borrower and approved by the Sustainability Structuring Agent and the Required Lenders, and (b) shall apply standards and methodology of review that are the same as or substantially consistent with the standards and methodology of review used in the Borrower’s KPI Metrics Report delivered by the Borrower for the immediately preceding Annual Period, except for any changes to such standards and/or methodology that (x) are consistent with the generally accepted industry standards or (y) if not so consistent, are proposed by the Borrower and approved by the Sustainability Structuring Agent and the Required Lenders; provided, however, that, to the extent their approval is required, the Sustainability Structuring Agent and the Required Lenders shall be deemed to have approved any replacement KPI Metrics Reviewer proposed in writing by the Borrower to the Administrative Agent, unless the Borrower shall have received a written objection from the Administrative Agent (acting at the direction of the Required Lenders) within thirty (30) days of the Borrower’s proposal.
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“KPI Metrics Report” means a report that may take the form of any nonfinancial disclosure of the Borrower’s performance of one or more KPI Metrics, prepared by or on behalf of the Borrower for one or more KPI Metrics for a specific Annual Period, and published on an Internet or intranet website to which each Lender and the Administrative Agent have been granted access free of charge (or at the expense of the Borrower). Such KPI Metrics Report shall be reviewed by the KPI Metrics Reviewer.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, official standards (normas técnicas), regulations, ordinances, codes, and all applicable administrative orders, directed duties, licenses, authorizations and permits issued by any Governmental Authority.
“Lease” means, as to any Person, the obligations of such Person under a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. For the avoidance of doubt, for purposes of this definition and its application to the Borrower, short-term and low-value leases as defined by the Borrower’s policy under IFRS are excluded.
“Lender” means a Term Lender or a Revolving Lender, as the context may require.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, easement, right-of-way or other encumbrance on title to real property, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing); provided, however, that the following shall only constitute a Lien in circumstances where the arrangement or transaction is entered into primarily as a method of raising Indebtedness or of financing the acquisition of an asset:
(i) the sale, transfer or other Disposition of any of the assets of the Borrower or its Subsidiaries on terms whereby they are or may be leased to or re-acquired the Borrower or its Subsidiaries;
(ii) the sale, transfer or other Disposition of any of the Borrower’s or its Subsidiaries’ receivables on recourse terms;
(iii) the entering into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
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(iv) the entering into any other preferential arrangement having a similar effect as those described in (i) to (iii) above.
“Loan” means an extension of credit by a Lender to the Borrower under Article II.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, each Note, the Guaranty, the Fee Letter (other than for purposes of Section 10.1), each Committed Loan Notice, and any amendments, modifications or supplements hereto or to any other Loan Document or waivers hereof or to any other Loan Document.
“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Material Acquisition” means any (a) acquisition of property or series of related acquisitions of property that constitutes assets comprising all or substantially all of an operating unit, division or line of business or (b) acquisition of or other investment in the Equity Interests of any Subsidiary or any person which becomes a Subsidiary or is merged or consolidated with the Borrower or any of its Subsidiaries, in each case, which involves the payment of consideration by the Borrower and its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Material Adverse Effect” means (a) a material adverse change in the business, financial condition, operations, performance or properties of the Borrower and its Subsidiaries taken as a whole; or (b) a material adverse effect on (i) the ability of any Loan Party to perform its payment Obligations under any Loan Document or (ii) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or (iii) the rights, remedies and benefits available to, or conferred upon, the Administrative Agent or any Lender under any Loan Documents.
“Material Disposition” means any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Maturity Date” means the date that is five years from the Restatement Date; provided, however, that if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.
“Mexico” means the United Mexican States (Estados Unidos Mexicanos).
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
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“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.1 and (b) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.
“Note” means a non-negotiable promissory note (pagaré no negociable) made by the Borrower as issuer (suscriptor), and by each Guarantor organized under the laws of Mexico as guarantor (avalista), in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B or any other form reasonably satisfactory to the Required Lenders in the case of a Benchmark Replacement, delivered pursuant to Section 2.9, Section 4.2, Section 6.13 or the Second Amendment.
“Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit G, duly completed and signed by a Responsible Officer.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, indemnities, reimbursements and other amounts (including all fees, charges, expenses and disbursements of counsel to the Administrative Agent or any Lender) payable by any Loan Party under any Loan Document to the Administrative Agent or any Lender and (b) the obligation of the Loan Parties to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Loan Parties in accordance with the terms and conditions of the Loan Documents.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Organization Documents” means, as applicable (a) with respect to any corporation, the charter or certificate or articles of incorporation (including acta constitutiva) and the bylaws (estatutos sociales or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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“Original Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6).
“Outstanding Amount” means, with respect to Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Revolving Loans occurring on such date.
“Participant” has the meaning specified in Section 10.7(d).
“Participant Register” has the meaning specified in Section 10.7(d).
“PATRIOT Act” has the meaning specified in Section 10.21.
“Payment Recipient” has the meaning assigned to it in Section 9.5(a).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum funding standards with respect to Pension Plans and set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan and other than a Multiemployer Plan) that is maintained by the Borrower and any ERISA Affiliate or with respect to which the Borrower or any ERISA Affiliate has any liability and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
“Periodic Term SOFR Determination Day” has the meaning specified in the definition of “Term SOFR”.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
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“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained by the Borrower and any Pension Plan maintained by an ERISA Affiliate.
“Platform” has the meaning specified in Section 6.2.
“Preferred Stock” of any Person means any Equity Interests of such Person that has preferential rights over any other Equity Interests of such Person with respect to dividends, distributions or mandatory redemptions or upon liquidation.
“Pricing Certificate” means a certificate substantially in the form of Exhibit D signed by a Responsible Officer of the Borrower attaching (a) true and correct copies of each KPI Metrics Report for the immediately preceding Annual Period and setting forth the Sustainability Margin Adjustment for the period covered thereby and for the KPI Metrics disclosed therein, and computations in reasonable detail in respect thereof and (b) if any KPI Metrics Report was reviewed by the KPI Metrics Reviewer, a report of the KPI Metrics Reviewer containing its customary limited assurances (or such other assurances as may be reasonably acceptable to the Required Lenders) with respect to the computations in such KPI Metrics Report.
“Process Agent” means (a) as of the Restatement Date, Cemex NY Corporation, and (b) after the Restatement Date, such other Person as the Borrower may appoint from time to time pursuant to provisions substantially similar to Section 10.15(d) and designated in writing to the Administrative Agent.
“Pro Forma Basis” means, with respect to compliance with any test or covenant hereunder in respect of a specified measurement period, compliance with such covenant or test after giving effect to any Material Acquisition or Material Disposition, using, for purposes of determining such compliance, the historical financial statements of all entities or assets so acquired or disposed of and the consolidated financial statements of the Borrower and its Subsidiaries which shall be reformulated as if such Material Acquisition or Material Disposition which has been consummated during such period had been consummated on the first day of such period.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.2.
“Qualified Entity” means any Lender (or, if such Lender acts through a branch, agency, the principal office of such Lender) that (a) is the effective beneficiary of the payments made by any Loan Party organized under the laws of Mexico hereunder, (b) meets the requirements imposed by article 166-I, paragraph (a), Section (2) (or any other successor provision) of the Mexican Income Tax Law (Ley del Impuesto Sobre la Renta) and delivers to the Borrower the information described in Sections 3.18.18. and/or 3.18.19, as applicable, of the Resolución Miscelánea Fiscal para 2023 (Tax Resolution for 2023) (or any substitute or successor provisions), and (c) is a resident for tax purposes of a country with which Mexico has entered into a treaty for the avoidance of double taxation that is in effect.
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“Rating Agencies” mean Fitch, Moody’s and S&P. In the event that Fitch, Moody’s or S&P is no longer in existence or issuing ratings, such organization may be replaced by a nationally recognized statistical rating organization (as defined in Rule 15c3-1(c)(2)(vi)(F) of the Exchange Act or any successor provision) designated by the Borrower with notice to the Administrative Agent.
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Register” has the meaning specified in Section 10.7(c).
“Regulation U” means Regulation U of the FRB, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents, and advisors of such Person and of such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor thereto.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.
“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chairman of the board, the chief executive officer, president, chief financial officer, any vice president, treasurer, assistant treasurer, controller, secretary, assistant secretary or attorney-in-fact of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.1 or Section 4.2 and notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restatement Date” means the date on which all of the conditions contained in Section 4 of the Second Amendment have been satisfied (or waived).
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“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“Revolving Availability Period” means the period from and including the Restatement Date to the earliest of (a) the Maturity Date and (b) the date of termination of the commitment of each Revolving Lender to make Revolving Loans.
“Revolving Commitment” means, as to each Revolving Lender, its obligation to make Revolving Loans to the Borrower pursuant to Section 2.1(b), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Lender’s name on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Revolving Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans.
“Revolving Facility” means the senior unsecured revolving credit facility in an aggregate principal amount of U.S.$2.00 billion provided under this Agreement.
“Revolving Lender” means the Persons listed on Schedule 2.1 holding a Revolving Loan under the Revolving Facility and any other Person that shall have become party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption.
“Sanctioned Lender” means any Person reasonably believed by the Borrower to be either a Sanctions Target or any Person an assignment to which could put the Borrower and/or any of its Affiliates in a position of actual or potential non-compliance with Applicable Law (including, but not limited to, Sanctions).
“Sanctions” means any economic or financial sanction administered or enforced by the United States Government (including without limitation, OFAC and the U.S. Department of State), the United Nations Security Council, the European Union, or His Majesty’s Treasury.
“Sanctions Target” means any Person that is (a) listed on, or 50% or more owned or Controlled by a Person listed on, a Sanctions list, (b) the government of a Designated Jurisdiction or a member of the government of a Designated Jurisdiction, or (c) located in or incorporated under the laws of any Designated Jurisdiction.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
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“Second Amendment” means that certain Second Amendment to the Credit Agreement dated as of October 30, 2023, by and among the Borrower, the Administrative Agent, the Sustainability Structuring Agent and the Lenders party thereto.
“Securitization” means a transaction or series of related transactions providing for the securitization of receivables and related assets by the Borrower or its Subsidiaries, including a sale at a discount; provided that (i) such receivables have been transferred, directly or indirectly, by the originator thereof to a person that is not the Borrower or any of its Subsidiaries in a manner that satisfies the requirements for an absolute conveyance (or, where the originator is organized under the laws of Mexico, a true sale), and not merely a pledge, under the laws and regulations of the jurisdiction in which such originator is organized; and (ii) except for customary representations, warranties, covenants and indemnities, such sale, transfer or other securitization is carried out on a non-recourse basis or on a basis where recovery is limited solely to the collection of the relevant receivables (other than where such recourse or recovery is required pursuant to the Applicable Laws or regulations in any jurisdiction).
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Borrowing” means, as to any Borrowing, the SOFR Loans comprising such Borrowing.
“SOFR Loan” means a Loan that bears interest at a rate based on Adjusted Term SOFR, other than pursuant to clause (c) of the definition of “Base Rate.”
“Solvent” means, with respect to the Borrower, that as of the date of determination, (a) the sum of the debt (including contingent liabilities) of the Borrower and its Subsidiaries on a consolidated basis does not exceed the present fair saleable value of the present assets of the Borrower and its Subsidiaries on a consolidated basis; (b) the capital of the Borrower and its Subsidiaries on a consolidated basis is not unreasonably small in relation to its business as contemplated on the date of determination; or (c) the Borrower and its Subsidiaries on a consolidated basis do not intend to incur, or believe that they will incur, debts beyond their ability to pay such debts as they become due in the ordinary course of business. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under FASB Accounting Standards Codification Topic 450-20).
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or
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indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
“Sustainability Margin Adjustment” means an adjustment to the Applicable Margin for any KPI Metric as provided by this Agreement.
“Sustainability Recalculation Event” has the meaning specified in Section 2.13(d).
“Sustainability-Related Information” has the meaning specified in Section 5.25.
“Sustainability Structuring Agent” has the meaning set forth in the preamble of this Agreement.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swiss Federal Tax Administration” means the tax authorities referred to in article 34 of the Swiss Federal Act on Withholding Tax of 13 October 1965, as from time to time amended (Bundesgesetz über die Verrechnungssteuer).
“Swiss Guarantor” means a Guarantor which is incorporated in Switzerland.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Term Loans.
“Term Facility” means the senior unsecured term loan facility in an aggregate principal amount of U.S. $1.0 billion provided under this Agreement.
“Term Lender” means the Persons listed on Schedule 2.1 holding a Term Loan Commitment or Term Loans under the Term Facility and any other Person that shall have become party hereto holding Term Loans under the Term Facility pursuant to an Assignment and
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Assumption, other than any such Person that ceases to be a party hereto holding Term Loans under the Term Facility pursuant to an Assignment and Assumption.
“Term Loan” has the meaning specified in Section 2.1(a).
“Term Loan Commitment” means, as to each Term Lender, its obligation to make a Term Loan on the Restatement Date pursuant to the terms set forth in the Second Amendment.
“Term SOFR” means,
(a) for any calculation with respect to a SOFR Loan, the Term SOFR Reference Rate for a tenor comparable to the applicable Interest Period on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Periodic Term SOFR Determination Day, and
(b) for any calculation with respect to a Base Rate Loan on any day, the Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days prior to such day, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Base Rate Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than three (3) U.S. Government Securities Business Days prior to such Base Rate Term SOFR Determination Day.
“Term SOFR Adjustment” means, for any calculation with respect to a Base Rate Loan or a SOFR Loan, a percentage equal to 0.10% per annum.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent, acting at the written direction of the Required Lenders).
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
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“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments, Term Credit Exposure and Revolving Credit Exposure of such Lender at such time.
“Transfer and Inconvertibility Event” means any action by Mexico, Banco de México or any other Governmental Authority of Mexico asserting or exercising de jure governmental, legislative, regulatory, administrative, judicial or police powers which (a) renders any Loan Party unable legally to convert Pesos to make any payment in Dollars to the Administrative Agent or any Lender in respect of any Obligation in accordance with the Loan Documents, or (b) restricts the availability of Dollars through the Mexican banking system or authorized exchange bureaus (“casas de cambio” as defined by Banco de México) to enable each Loan Party to lawfully perform its payment Obligations under the Loan Documents.
“Type” means, with respect to a Term Loan or a Revolving Loan, its character as a Base Rate Loan or a SOFR Loan.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain Affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Undisclosed Administration” means, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.
“United States” and “U.S.” mean the United States of America.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday, (b) a Sunday or (c) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Voting Stock” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether pursuant to contract or otherwise, or at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.
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“Wholly Owned Subsidiary” means, for any Person, any Subsidiary of which at least 99.5% of the outstanding Equity Interests (other than, in the case of a Subsidiary not organized in the United States, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to Applicable Law) is owned by such Person or any other Person that satisfies this definition in respect of such Person.
“Withholding Agent” means the Borrower, the Guarantors organized under the laws of Mexico and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.2 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law, rule or regulation shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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(b) Unless the context otherwise requires, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a statutory division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any statutory division of a limited liability company shall constitute a separate Person hereunder (and each such division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
Section 1.3 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, IFRS applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Changes in IFRS. If at any time any change in IFRS or the application thereof would affect the computation or interpretation of any financial ratio, basket, requirement or other provision set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Lenders and the Borrower shall negotiate in good faith to amend such ratio, basket, requirement or other provision to preserve the original intent thereof in light of such change in IFRS (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio, basket, requirement or other provision shall continue to be computed or interpreted in accordance with IFRS or the application thereof prior to such change therein and (B) the Borrower shall provide to the Administrative Agent (for distribution to the Lenders) financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio, basket, requirement or other provision made before and after giving effect to such change in IFRS.
Section 1.4 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
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Section 1.5 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
Section 1.6 Interest Rates. The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Base Rate,” “Term SOFR Reference Rate,” “Adjusted Term SOFR,” “Term SOFR,” “SOFR” or with respect to any rate that is an alternative or replacement for or successor to any of such rate (including, without limitation, any Benchmark Replacement) or the effect of any of the foregoing, or of any Benchmark Replacement Conforming Changes.
ARTICLE II THE COMMITMENTS AND LOANS
Section 2.1 Loans.
(a) Subject to the terms and conditions set forth herein and in the Second Amendment, each Term Lender as of the Restatement Date has made a loan (each, a “Term Loan” and, collectively, the “Term Loans”) to the Borrower, on the Restatement Date, in an aggregate amount equal to such Term Lender’s Term Loan Commitment. Any amount borrowed under this Section 2.1(a) and repaid or prepaid may not be reborrowed. The Term Loans may take the form of a Base Rate Loan or a SOFR Loan, as further provided herein.
(b) Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make revolving loans (each such loan, a “Revolving Loan”) to the Borrower from time to time, on any Business Day during the Revolving Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Revolving Lender’s Revolving Commitment; provided, however, that after giving effect to any Borrowing, (i) the Outstanding Amount shall not exceed the Aggregate Commitments, and (ii) the Revolving Credit Exposure of any Revolving Lender shall not exceed such Revolving Lender’s Revolving Commitment. Within the limits of each Revolving Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1, prepay under Section 2.3, and reborrow under this Section 2.1. Revolving Loans may be Base Rate Loans or SOFR Loans, as further provided herein.
Section 2.2 Borrowings, Conversions and Continuations of Loans.
(a) Each Borrowing, each conversion of Loans from one Type to the other, and each continuation of SOFR Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which shall be given by a Committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 11:00 a.m. New York City time (i) three (3) Business Days prior to the requested date of any Borrowing of, conversion to or continuation of SOFR Loans or of any conversion of Base Rate Loans to SOFR Loans and (ii) one (1) Business Day prior to the requested date of any Borrowing of or conversion to Base Rate Loans. Each Borrowing of, conversion to or continuation of SOFR Loans shall be in a principal amount of U.S.$5.0 million or a whole multiple of U.S.$1.0 million in excess thereof. Except as provided in Section 2.3(b), each Borrowing of or conversion to Base Rate Loans shall be in a principal amount of U.S.$500,000 or a whole multiple of U.S.$100,000 in excess thereof.
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Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Borrowing, a conversion of Loans from one Type to the other, or a continuation of SOFR Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to which existing Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the Borrower fails to specify a Type of Loan in a Committed Loan Notice or if the Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Loans shall be made as, or converted to, SOFR Loans with an Interest Period of one month. Any such automatic conversion to SOFR Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Base Rate Loans. If the Borrower requests a Borrowing of, conversion to, or continuation of SOFR Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of three months.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans, and if no timely notice of a conversion or continuation is provided by the Borrower, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 11:00 a.m. New York City time on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.2 (or waiver thereof by the Lenders), the Administrative Agent shall make all funds so received available to the Borrower by crediting the account of the Borrower designated by the Borrower in the Committed Loan Notice.
(c) Except as otherwise provided herein, a SOFR Loan may be continued or converted only on the last day of an Interest Period for such SOFR Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as SOFR Loans without the consent of the Required Lenders.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the interest rate applicable to any Interest Period for SOFR Loans upon determination of such interest rate.
(e) After giving effect to all Borrowings, all conversions of Loans from one Type to the other, and all continuations of Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to Loans.
(f) Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
Section 2.3 Prepayments.
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(a) The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. New York City time (A) three (3) Business Days prior to any date of prepayment of SOFR Loans and (B) one (1) Business Day prior to any date of prepayment of Base Rate Loans; (ii) any prepayment of SOFR Loans shall be in a principal amount of U.S.$5.0 million or a whole multiple of U.S.$1.0 million in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a principal amount of U.S.$500,000 or a whole multiple of U.S.$100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided, further, that such notice may be conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 5:00 p.m. New York City time one (1) Business Day prior to the specified effective date) if such condition is not satisfied. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if SOFR Loans are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a SOFR Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.5. Subject to Section 2.13, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages in the order selected by the Borrower.
(b) If for any reason the Outstanding Amount at any time exceeds the Aggregate Commitments then in effect, the Borrower shall prepay Revolving Loans in an aggregate amount equal to such excess within one (1) Business Day.
(c) SOFR Loans may be prepaid at any time without premium or penalty, other than the payment of breakage costs reasonably determined by the Lenders and notified in writing to the Administrative Agent in the case of such a prepayment before the last day of an Interest Period. Base Rate Loans may be prepaid at any time without premium or penalty.
(d) Upon the occurrence of a Change of Control, (i) the Facilities will be immediately payable in full, (ii) any outstanding Commitments will be immediately terminated and (iii) any prepayment of SOFR Loans and Base Rate Loans shall be accompanied by all accrued interest on the amount prepaid, together with, in the case of a SOFR Loan, any additional amounts required pursuant to Section 3.5. Subject to Section 2.13, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.
Section 2.4 Termination or Reduction of Commitments.
(a) Termination of Term Loan Commitments. The Term Loan Commitments shall automatically and permanently terminate on the Restatement Date upon the funding of the Term Loans under the Term Facility.
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(b) Optional Termination or Reduction of Revolving Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Commitments, or from time to time permanently reduce the Revolving Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. New York City time, three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of U.S.$5.0 million or any whole multiple of U.S.$1.0 million in excess thereof, and (iii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount would exceed the aggregate Revolving Commitments; provided, further, that such notice may be conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 5:00 p.m. New York City time one (1) Business Day prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Revolving Commitments. Any reduction of the Revolving Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the date of any termination of the Revolving Commitments shall be paid on the date of such termination.
Section 2.5 Repayment of Loans.
(a) Term Facility. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Lenders the aggregate principal amount of all Term Loans outstanding under the Term Facility on the following dates in the respective amounts set forth opposite such dates (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.3):
| Date | Amount | |
| 36 months after the Restatement Date |
20% | |
| 42 months after the Restatement Date |
20% | |
| 48 months after the Restatement Date |
20% | |
| 54 months after the Restatement Date |
20% | |
| Maturity Date | The aggregate principal amount of all Term Loans outstanding under the Term Facility on the Maturity Date |
(b) Revolving Facility. Any outstanding Revolving Loans will be due and payable on the Maturity Date.
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Section 2.6 Interest.
(a) Subject to the provisions of subsection (i) below, (i) each SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to Adjusted Term SOFR for such Interest Period plus the Applicable Margin; and (ii) each Base Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Margin.
(i) If any amount of principal of any Loan is not paid when due, whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(b) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.7 Fees.
(a) Commitment Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender (other than Defaulting Lenders), in accordance with its Applicable Percentage with respect to Revolving Commitments, a fee equal to 35% of the Applicable Margin times the actual daily amount (commencing with the Restatement Date) by which the Aggregate Commitments exceed the Outstanding Amount (the “Commitment Fee”). The Commitment Fee shall accrue at all times during the period commencing with the Restatement Date and ending upon the expiration of the Revolving Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Restatement Date, and on the last day of the Revolving Availability Period. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For the avoidance of doubt, (i) the Commitment Fee will always be calculated utilizing the Applicable Margin for SOFR Loans, regardless of the amount of SOFR Loans outstanding at such time, and (ii) the calculation of the Commitment Fee payable for the account of any Lender shall not include any day on which such Lender is or was a Defaulting Lender.
(b) Other Fees. The Borrower shall pay to the Administrative Agent and the Bookrunners the fees and expenses payable in the amounts and at the times separately agreed upon in the Fee Letter between the Borrower and such Person, together with the expenses of the Administrative Agent and the Bookrunners as specified in Section 10.5.
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(c) Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds, for distribution, in the case of the fees set forth in Section 2.7(a), to the Lenders. Fees paid shall not be refundable under any circumstances.
Section 2.8 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin.
(a) All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to Adjusted Term SOFR) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear interest for one day. The computation of interest rate shall be determined by the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error.
(b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent or any Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This clause (b) shall not limit the rights of the Administrative Agent or any Lender, as the case may be, under Section 2.6(a)(i) or under Article VIII; provided that any inaccuracy described in this clause (b) shall not constitute a Default or Event of Default with respect to Section 8.1(a) or Section 8.1(c) so long as (x) the Borrower complies with the terms of this clause (b) and (y) the Borrower was in compliance with the covenants in Section 7.5 at the date the Consolidated Leverage Ratio was inaccurately calculated (as evidenced by a proper calculation of the Consolidated Leverage Ratio as of such date). The Borrower’s obligations under this clause (b) shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
Section 2.9 Evidence of Debt.
(a) The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of business. The Administrative Agent shall maintain the Register in accordance with Section 10.7(c). The accounts, records and Register maintained pursuant to this clause (a) shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of
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the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the Register, the Register shall control in the absence of manifest error. Upon the request of any Lender, including due to an assignment or transfer of Loans, made through the Administrative Agent, the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista), shall execute and deliver to such Lender a Note (pagaré), which shall evidence such Lender’s Loans in addition to such accounts or records. It is the intent of the Loan Parties and the Lenders that the Notes qualify as pagarés under Mexican law.
(b) In the event that the Applicable Margin increases or a Benchmark Replacement occurs in accordance with the provisions herein with respect to a Loan held by such Lender, the Borrower shall, within ten (10) Business Days of the request of such Lender and only upon the receipt by the Borrower at the Corporate Office or through the Custodian at the Lender’s election, of any then-existing Notes evidencing such Loan, execute and deliver to such Lender one or more replacement Notes with respect to each such existing Note, reflecting the new Applicable Margin or Benchmark Replacement as of the date of such increase or replacement, as applicable. Any such replacement Notes shall, at the Lender’s election, be made available at the Corporate Office or delivered to the Custodian on behalf of such Lender, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such replacement Note by courier or other nationally recognized delivery service.
Section 2.10 Payments Generally; Administrative Agent’s Clawback.
(a) Payments by Borrower. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office (or to such other account as the Administrative Agent may from time to time specify in writing) in Dollars and in immediately available funds not later than 12:00 noon New York City time on the date specified herein. The Administrative Agent will, to the extent funds are received from the Borrower as provided herein, promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 12:00 noon New York City time shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be. All payments hereunder shall be made in Dollars.
(b) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing of SOFR Loans (or, in the case of any Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may (but shall not be obligated to) assume that such Lender has made such share available on such date in accordance
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with Section 2.2 (or, in the case of a Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.2) and may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the interest rate applicable to Base Rate Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(c) Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may (but shall not be obligated to) assume that the Borrower has made such payment on such date in accordance herewith and may (but shall not be obligated to), in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.5(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 10.5(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 10.5(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
Section 2.11 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or
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interest on any of the Loans made by it, resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall notify the Administrative Agent of such fact and make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:
(a) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(b) the provisions of this Section 2.11 shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.11 shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
Section 2.12 Defaulting Lenders.
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.1.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.9 shall be applied at such time or times as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; third, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, so long as no Default or Event of Default exists, to the
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payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans and (y) such Loans were made at a time when the applicable conditions set forth in Section 4.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(b) Defaulting Lender Cure. If the Borrower determines that a Lender is no longer a Defaulting Lender, the Borrower will instruct the Administrative Agent to notify the parties hereto, whereupon as of the date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.13 Sustainability Adjustments.
(a) Following the date on which the Borrower provides a Pricing Certificate pursuant to Section 6.14(a) in respect of its most recently ended Annual Period, the Applicable Margin (including for purposes of determining the Commitment Fee) shall be increased or decreased (or neither increased nor decreased), as applicable, pursuant to the Sustainability Margin Adjustment as set forth in such Pricing Certificate. For purposes of the foregoing, (A) the Sustainability Margin Adjustment shall be determined as of the fifth (5th) Business Day following receipt by the Administrative Agent of a Pricing Certificate based upon the KPI Metrics set forth in such Pricing Certificate and the calculation of the Sustainability Margin Adjustment therein (such day, the “Sustainability Pricing Adjustment Date”) and (B) each change in the Applicable Margin (including for purposes of determining the Commitment Fee) resulting from a Pricing Certificate shall be effective during the period commencing on and including the applicable Sustainability Pricing Adjustment Date and ending on the date immediately preceding the next such Sustainability Pricing Adjustment Date (or, in the case of non-delivery of a Pricing Certificate, the last day such Pricing Certificate could have been delivered pursuant to Section 6.14(a)); provided that if any Sustainability Pricing Adjustment Date shall occur before the last day of an Interest Period, no change to the Applicable Margin as a result of the Sustainability Margin Adjustment shall be effective for purposes of Section 2.6 until the first day of the immediately succeeding Interest Period.
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(b) For the avoidance of doubt, it is understood and agreed that (i) only one Pricing Certificate may be delivered in respect of any Annual Period, (ii) any Sustainability Margin Adjustment shall be iterative and shall not be cumulative year-over-year (each applicable Sustainability Margin Adjustment shall only apply until the date on which the next Sustainability Margin Adjustment is due to take place) and (iii) Sustainalytics delivered a second party opinion to the Borrower on August 29, 2023.
(c) It is hereby understood and agreed that if no Pricing Certificate is delivered by the Borrower within the period set forth in Section 6.14(a), the Sustainability Margin Adjustment will be positive five (5) basis points, commencing on the last day such Pricing Certificate could have been delivered pursuant to the terms of Section 6.14(a) and continuing until the Borrower delivers a Pricing Certificate to the Administrative Agent and a new Applicable Margin is determined pursuant to Section 2.13(a) above and, pending delivery of a Pricing Certificate no Default or Event of Default shall occur in relation to the failure to deliver such Pricing Certificate.
(d) If (i)(A) any of the Borrower or any Lender becomes aware of any material inaccuracy in the Sustainability Margin Adjustment or the KPI Metrics as reported on the applicable Pricing Certificate (a “Pricing Certificate Inaccuracy”) and, not later than thirty (30) Business Days after obtaining knowledge thereof delivers a written notice to the Administrative Agent describing such Pricing Certificate Inaccuracy in reasonable detail (who shall furnish a copy to each of the Lenders and the Borrower) or (B) the Borrower and the Lenders agree that there was a Pricing Certificate Inaccuracy at the time of delivery of the relevant Pricing Certificate and (ii) a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in an increase in the Applicable Margin and the Commitment Fee for such period, then the Borrower shall be obligated to pay to the Administrative Agent for the account of the Lenders, promptly on demand by the Administrative Agent (acting at the direction of the Required Lenders) (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, automatically and without further action by the Administrative Agent or any Lender), but in no event less than ten (10) Business Days after the Borrower has received written notice of, or has agreed in writing that there was, a Pricing Certificate Inaccuracy, an amount equal to: (x) the excess of the amount of interest and fees that should have been paid for such period over (y) the amount of interest and fees actually paid for such period (the “True-Up Amount”). If the Borrower becomes aware of any Pricing Certificate Inaccuracy and, in connection therewith, if a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in a decrease in the Applicable Margin and the Commitment Fee for such period, then, upon receipt by the Administrative Agent of notice from the Borrower of such Pricing Certificate Inaccuracy (which notice shall include corrections to the calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable), commencing on the Business Day following receipt by the Administrative Agent of such notice, the Applicable Margin and the Commitment Fee shall be adjusted to reflect the corrected calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable.
As used below, “Sustainability Recalculation Event” means (i) any material acquisition, disposition, merger or similar transaction or series of related transactions consummated by the Borrower and its Subsidiaries whereby, as a result of the consummation of such transaction or series of related transactions any of the KPI Metrics would reasonably be expected to be (as determined in good faith by the Borrower), or shall be, increased or decreased by 10% or more (on
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a consolidated basis) as compared to the KPI Metrics in effect immediately prior to the consummation of such transaction, (ii) a material change to the KPI Metrics calculation methodologies (as determined in good faith by the Borrower) or (iii) any Change in Law applicable to any party hereto the result of which shall (A) prohibit or modify any sustainability calculation hereunder or cause any other violation of any sustainability provision hereunder, or impose or modify any reporting obligation in respect thereof, (B) cause the Borrower to fail to attain or maintain any KPI Metric or target or threshold with respect thereto or (C) prohibit or otherwise limit such party’s ability to make or maintain the Loans hereunder after applying the sustainability provisions hereunder. If, after the date hereof, there occurs any Sustainability Recalculation Event (it being understood and agreed that such Sustainability Recalculation Event shall follow the Sustainability Linked Loan Principles as most recently published by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading Association, as may be amended from time to time), and either (i) the Borrower notifies the Administrative Agent in writing that the Borrower requests an amendment to any provision hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event, or (ii) the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision or provisions hereof for such purpose (it being understood and agreed that any such notice may be given before or after such Sustainability Recalculation Event has occurred), then (A) the Borrower and the Administrative Agent (acting at the direction of the Required Lenders) shall negotiate in good faith to amend the provisions hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event for the period from and after the occurrence of such Sustainability Recalculation Event, and (B) the provisions of this Agreement shall be interpreted on the basis of the provisions in effect and applied immediately prior to such Sustainability Recalculation Event for a period of not more than 30 days (unless the provisions hereof shall have been amended in accordance herewith or such notice shall have been withdrawn). If, after 30 days following any such notice, the consent of the Borrower, the Administrative Agent (acting at the direction of the Required Lenders) and the Required Lenders under Section 10.1 has not been obtained, there will cease to be any Sustainability Margin Adjustment (including for purposes of determining the Commitment Fee) until such time as the parties hereto can agree upon any such adjustments in accordance with the terms hereof.
(e) To the extent the Sustainability Structuring Agent ceases to be a Lender, the Borrower undertakes to use reasonable endeavors to seek to appoint another entity that is a Lender to fulfill the role of Sustainability Structuring Agent.
(f) It is understood and agreed that any Pricing Certificate Inaccuracy shall not constitute a Default or Event of Default under this Agreement, provided that the Borrower complies with the terms of this Section 2.13 with respect to such Pricing Certificate Inaccuracy. Notwithstanding anything to the contrary herein, unless such amounts shall be due upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, (i) any additional amounts required to be paid pursuant to clause (d) above shall not be due and payable until a written demand is made for such payment by the Administrative Agent in accordance with clause (d) above, (ii) any nonpayment of such additional amounts prior to such demand for payment by Administrative Agent shall not constitute a Default (whether retroactively or otherwise), and (iii) none of such additional amounts shall be deemed overdue prior to such a demand or shall accrue interest at the Default Rate prior to such a demand.
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(g) The Administrative Agent and Sustainability Structuring Agent shall not have any responsibility for (or liability in respect of) reviewing, auditing or otherwise evaluating any calculation by the Borrower of any Sustainability Margin Adjustment (or for the KPI Metrics or any of the other data or computations that are part of or related to any such calculation) set forth in any Pricing Certificate, or for evaluating or determining any Pricing Certificate Inaccuracy (and the Administrative Agent may rely conclusively, and shall not incur any liability in so relying, on any such certificate or related notice, without further inquiry).
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
Section 3.1 Taxes.
(a) Defined Terms. For purposes of this Section 3.1, the term “Applicable Law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 3.1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the relevant Governmental Authority any Other Taxes in accordance with Applicable Law.
(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.1) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. A payment shall not be increased under this clause (d) by reason of a tax deduction on account of Tax imposed by Switzerland if so required under Applicable Law (including double tax treaties), to the extent that on the date on which payment falls due, increasing such payment in such way would breach any Swiss law; provided that the Borrower or a Swiss Guarantor, as applicable, shall use commercially reasonable efforts to avoid such tax deduction on account of Tax imposed by Switzerland or to prevent such increase in payment from breaching any Swiss law, including,
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without limitation, by causing such payment to a Recipient to be made by or through an entity which is not a tax resident in Switzerland.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.7(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority as provided in this Section 3.1, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent (acting at the direction of the Required Lenders).
(g) Status of Lenders; Tax Documentation.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation and information reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding, including the information set forth in Sections 3.18.18 and/or 3.19.19 of the Resolución Miscelánea Fiscal para 2023 (or any substitute or successor provisions). In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
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(ii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.1 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. Unless required by Applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or have any obligation to pay to any Lender any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.1, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Recipient, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the applicable Recipient be required to pay any amount to the Borrower pursuant to this clause (h) the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.
(i) Survival. Each party’s obligations under this Section 3.1 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
Section 3.2 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, or to determine or charge interest rates based upon SOFR, the Term SOFR Reference Rate, Adjusted Term SOFR or Term SOFR, then, upon notice thereof by such Lender to the Borrower and the Administrative Agent, (a) any obligation of such Lender to make or continue SOFR Loans or to convert Base Rate Loans to SOFR Loans shall be suspended, and (b) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Adjusted Term SOFR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice,
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(i) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all SOFR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Adjusted Term SOFR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such SOFR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such SOFR Loans and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon Adjusted Term SOFR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Adjusted Term SOFR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon Adjusted Term SOFR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted., together with any additional amounts required pursuant to Section 3.5.
Section 3.3 Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document:
(a) [Reserved.]
(b) Upon the occurrence of a Benchmark Transition Event, the Benchmark Replacement will replace the then-current Benchmark for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided by the Administrative Agent (acting at the direction of the Required Lenders) to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders (and any such objection shall be conclusive and binding absent manifest error).
(c) At any time that the administrator of the then-current Benchmark has permanently or indefinitely ceased to provide such Benchmark or such Benchmark has been announced by the regulatory supervisor for the administrator of such Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Benchmark is intended to measure and that representativeness will not be restored, the Borrower may revoke any request for a borrowing of, conversion to or continuation of Loans to be made, converted or continued that would bear interest by reference to such Benchmark until the Borrower’s receipt of notice from the Administrative Agent (acting at the direction of the Required Lenders) that a Benchmark Replacement has replaced such Benchmark, and, failing that, the Borrower will be deemed to have converted any such request into a request for a borrowing of or conversion to Base Rate Loans. During the period referenced in the foregoing sentence, the component of Base Rate based upon the Benchmark will not be used in any determination of Base Rate.
(d) In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent (acting at the direction of the Required Lenders) will have the right to make Benchmark Replacement Conforming Changes from time to time and, subject to
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Section 3.3(j) and the proviso in Section 10.1 but otherwise notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(e) The Administrative Agent (acting at the direction of the Required Lenders) will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement and (B) the effectiveness of any Benchmark Replacement Conforming Changes. The Administrative Agent (acting at the direction of the Required Lenders) will notify the Borrower of the removal or reinstatement of any tenor of a Benchmark pursuant to Section 3.3(f). Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.3, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, (x) in the case of any determination, decision or election by the Administrative Agent pursuant to this Section 3.3 will be made at the written direction of the Required Lenders, and (y) in the case of any determination, decision or election by any Lender (or group of Lenders), if applicable, pursuant to this Section 3.3, may be made in its or their sole discretion, and, in each case will be conclusive and binding absent manifest error and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.3.
(f) At any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate (including Term SOFR), then the Administrative Agent (acting at the direction of the Required Lenders) may remove any tenor of such Benchmark that is unavailable or non-representative for Benchmark (including Benchmark Replacement) settings and (B) the Administrative Agent (acting at the direction of the Required Lenders) may reinstate any such previously removed tenor for Benchmark (including Benchmark Replacement) settings.
(g) Notwithstanding anything herein or in any other Loan Document to the contrary, the Administrative Agent shall not be under any obligation (i) to monitor, determine or verify the unavailability or cessation of any rate hereunder (including, without limitation, any applicable Benchmark), or whether or when there has occurred, or to give notice to any other party to this Agreement or any other Loan Document of, the occurrence of, any Benchmark Transition Event, or matter related to any of the foregoing, (ii) to select, determine or designate any Benchmark Replacement or Benchmark Replacement Conforming Changes, or any other successor or replacement benchmark index, or whether any conditions to the designation of such a rate have been satisfied, or (iii) to select, determine or designate any modifier to any replacement or successor index.
(h) The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, (i) the administration, submission or any other matter related to any rate hereunder (including, without limitation, the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR, or any other Benchmark), or any component definition thereof or rates referred to in the definition thereof, or any alternative or successor rate thereto, or replacement rate thereof (including, without limitation any Benchmark Replacement implemented hereunder), (ii) the composition or characteristics of any Benchmark
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Replacement, including whether it is similar to, or produces the same value or economic equivalence to or have the same volume or liquidity as any other rate hereunder (including the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR (or any other Benchmark)), (iii) any actions or use of its discretion or other decisions or determinations made with respect to any matters covered by this Section 3.3, including, without limitation, whether or not a Benchmark Transition Event has occurred, the removal or lack thereof of unavailable or non-representative tenors, the implementation or lack thereof of any Benchmark Replacement Conforming Changes, the delivery or non-delivery of any notices required by clause (e) above or otherwise in accordance herewith, and (iv) the effect of any of the foregoing provisions of this Section 3.3.
(i) The Administrative Agent shall not be liable for any inability, failure or delay on its part to perform any of its duties set forth in this Agreement or any other Loan Document as a result of the unavailability of any rate hereunder (including, without limitation, the Base Rate, the Term SOFR Reference Rate, Adjusted Term SOFR, Term SOFR, SOFR (or other applicable Benchmark)) and absence of a designated replacement Benchmark, including as a result of any inability, delay, error or inaccuracy on the part of any other party to this Agreement or any other Loan Document, including, without limitation, the Borrower or the Lenders, in providing any direction, instruction, notice or information required or contemplated by the terms of this Agreement or any other Loan Document and reasonably required for the performance of such duties.
(j) The Administrative Agent shall not be bound to follow or agree to any amendment or supplement to this Agreement (including any Benchmark Replacement Conforming Changes) that would increase or materially change or affect the duties, obligations or liabilities of the Administrative Agent (including the opposition or expansion of discretionary authority), or reduce, eliminate, limit or otherwise change any right, privilege or protection of the Administrative Agent, or would otherwise materially and adversely affect the Administrative Agent, in each case in its sole judgment, without the Administrative Agent’s express written consent.
Section 3.4 Increased Costs; Reserves on SOFR Loans.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.4(e));
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender any other condition, cost or expense affecting this Agreement or SOFR Loans made by such Lender;
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and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 3.4(a) for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in clauses (a) or (b) of this Section 3.4 and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.4 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.4 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Reserves on SOFR Loans. The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits, additional interest on the unpaid principal amount of each SOFR Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 10 days prior to the relevant
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Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.
Section 3.5 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Borrower; or
(c) any assignment of a SOFR Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.14; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.5, each Lender shall be deemed to have funded each SOFR Loan made by it at Adjusted Term SOFR for such Loan by a matching deposit or other borrowing for a comparable amount and for a comparable tenor, whether or not such SOFR Loan was in fact so funded.
Section 3.6 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. Each Lender may make any Loan to the Borrower through any Lending Office; provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Loan in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.4, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, or if any Lender gives a notice pursuant to Section 3.2, then at the request of the Borrower such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.1 or 3.4, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.2, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 3.4, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1 and, in each
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case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.6(a), the Borrower may replace such Lender in accordance with Section 10.14.
Section 3.7 Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
Section 3.8 Inability to Determine Rates. Notwithstanding anything to the contrary herein or in any other Loan Document, but subject to Section 3.3, if in connection with any request for a SOFR Loan or a conversion to or continuation thereof, (a) the Required Lenders reasonably determine that adequate and reasonable means do not exist for determining Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan or (b) the Required Lenders reasonably determine that for any reason in connection with any request for a SOFR Loan or a conversion thereto or a continuation thereof that Adjusted Term SOFR for any requested Interest Period with respect to a proposed SOFR Loan does not adequately and fairly reflect the cost to such Lenders of making and maintaining such Loan, and the Required Lenders have provided notice of such determination to the Administrative Agent, then, in each case, the Required Lenders will instruct the Administrative Agent to promptly so notify the Borrower and each Lender. Thereafter, the obligation of the Lenders to make or maintain SOFR Loans shall be suspended (to the extent of the affected SOFR Loans or Interest Periods), and in the event of a determination described in the preceding sentence with respect to the Adjusted Term SOFR component of the Base Rate, the utilization of the Adjusted Term SOFR component in determining the Base Rate shall be suspended, in each case, until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of SOFR Loans (to the extent of the affected SOFR Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.
ARTICLE IV CONDITIONS PRECEDENT TO LOANS
Section 4.1 Conditions to Restatement Date. This Agreement became effective on the Restatement Date upon satisfaction or waiver of the conditions set forth in Section 4 of the Second Amendment.
Section 4.2 Conditions to all Loans. The obligation of each Lender to honor any Committed Loan Notice after the Restatement Date (other than a Committed Loan Notice requesting only a conversion of Loans to the other Type, or a continuation of SOFR Loans) is subject to satisfaction of the following conditions precedent (unless waived in accordance with Section 10.1):
(a) The representations and warranties of the Borrower contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of the proposed Borrowing, conversion or continuation, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date, and except that for purposes of this Section 4.2 the representations and warranties
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contained in subsections (a) and (b) of Section 5.5 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.1.
(b) No Default shall exist, or would result from the proposed Borrowing, conversion or continuation or from the application of the proceeds thereof.
(c) The Administrative Agent shall have received a Committed Loan Notice in accordance with the requirements hereof. Such notice shall include a certification by a Responsible Officer of the Borrower (upon which the Administrative Agent may conclusively rely) that the conditions specified in Sections 4.2(a), 4.2(b) and 4.2(d) will be fulfilled on the date of the proposed Borrowing.
(d) Upon the request of any Lender at least one (1) Business Day prior to the date of the proposed Borrowing, conversion or continuation, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the Loan to be disbursed by that Lender and the relevant Applicable Margin, on the date of the relevant Loan.
ARTICLE V REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders on the Restatement Date (other than with respect to Sections 5.13 and 5.22) and on each other occasion to the extent required by the Loan Documents, that:
Section 5.1 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a) is (i) duly organized or formed, validly existing and (ii) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, if any, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (a)(ii), (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 5.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Applicable Law in any material respect.
Section 5.3 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental
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Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
Section 5.4 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
Section 5.5 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(b) The unaudited consolidated balance sheet of the Borrower and its Subsidiaries dated September 30, 2023, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
Section 5.6 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or (b) would reasonably be
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expected to have a Material Adverse Effect if determined adversely, except as specifically disclosed in Schedule 5.6.
Section 5.7 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to any Contractual Obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 5.8 Ownership of Property. Each of the Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in or other rights to use, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.9 Environmental Compliance. The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties. Except as specifically disclosed in Schedule 5.6 or as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Borrower: (a) the Borrower and its Subsidiaries have been and are in compliance with such Environmental Laws; (b) there are no claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, or threatened claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, pursuant to such Environmental Laws; and (c) there are no facts and circumstances relating to the business or operations of the Borrower and its Subsidiaries that are reasonably likely to cause the Borrower or its Subsidiaries to incur Environmental Liabilities.
Section 5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured by financially sound companies (which may be Affiliates of the Borrower), in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
Section 5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other tax returns and reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided to the extent required by IFRS, or (b) to the extent that the failure to do so would not have a Material Adverse Effect.
Section 5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is sponsored by the Borrower or an ERISA Affiliate and that is intended to be a qualified plan under Section 401(a) of
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the Code has received a favorable determination letter from the IRS to the effect that the form of such Pension Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that would reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except where any events set forth in clauses (i)-(v) would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that would reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date.
(d) The Borrower represents and warrants as of the Restatement Date that the Borrower’s assets are not and will not be deemed to constitute “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA).
Section 5.13 Subsidiaries; Equity Interests. As of the Restatement Date: (a) the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and except as indicated in Part (a) of Schedule 5.13 all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower and/or one or more Subsidiaries of the Borrower free and clear of all Liens (other than non-consensual Liens which may arise by operation of law), (b) the Borrower has no direct equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13, and (c) all of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.
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Section 5.14 Margin Regulations; Investment Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower or any Subsidiary is required to be registered as an “investment company” under the Investment Company Act of 1940.
Section 5.15 Disclosure.
(a) No written report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party as of the Restatement Date to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement (in each case, as modified or supplemented by other information furnished by or on behalf of any Loan Party) contains any material misstatement of material fact or omits to state any material fact necessary to make the statements therein, when furnished and after giving effect to all supplements thereto, in the light of the circumstances under which they were made, not misleading in any material respect; provided that, with respect to projected financial information and other projections, the Borrower represents only that such projections were prepared in good faith based upon assumptions believed to be reasonable at the time such projections were furnished (it being understood by the Administrative Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may significantly differ from the projected results and such differences may be material).
(b) As of the Restatement Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
Section 5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 5.17 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, license or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, trade secrets, know-how and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses as currently conducted, without, to the knowledge of the Borrower, infringement, misappropriation or other violation of the IP Rights of any other Person, except for any such failure to own, license or possess, or such infringement, that would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, no product, service, process, method, substance, part or other material now used by the Borrower or any Subsidiary in the conduct of their business as currently conducted infringes, misappropriates or otherwise violates upon any IP
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Rights held by any other Person, except for any such infringement, misappropriation or violation which would not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, in the two (2) year period preceding the Restatement Date, there has been no unauthorized use, access, interruption, modification, or corruption of any information technology systems (or any sensitive or personal information stored or contained therein or transmitted thereby) owned or controlled by the Borrower or any of its Subsidiaries, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.18 Sanctions. None of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any director, officer, agent, employee, or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries is, or is controlled or 50% or more owned in the aggregate by or is acting on behalf of, one or more individuals or entities that are currently the subject or the target of any Sanctions (including the designation as a “specially designated national” or “blocked person”), nor is the Borrower, any of its Subsidiaries located, organized or resident in a Designated Jurisdiction; and the Borrower will not directly or knowingly indirectly use the proceeds of the Agreement hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Designated Jurisdiction or (iii) in any other manner that will result in a violation by any person participating in the transaction, whether as an initial purchaser, advisor, investor or otherwise, of Sanctions. The Borrower and its Subsidiaries are not now knowingly engaged in any dealings or transactions with any person that is the subject or the target of Sanctions or with any Designated Jurisdiction.
Section 5.19 Anti-Corruption Laws. During the five (5) years prior to the Restatement Date, none of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or -controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) except for any violation of Applicable Law resulting from matters under investigation on the Restatement Date as disclosed in the Borrower’s annual report on Form 20-F for 2022, violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, the Mexican Ley General del Sistema Nacional Anticorrupción, the Mexican Federal Criminal Code (Código Penal Federal), the Mexican Ley General de Responsabilidades Administrativas, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful
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benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit; except, in each case, for matters under investigation by the U.S. Department of Justice and the staff of the SEC. During the five (5) years prior to the Restatement Date, the Borrower and its Subsidiaries have instituted, and maintain and enforce, policies and procedures reasonably designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
Section 5.20 Affected Financial Institutions. No Loan Party is an Affected Financial Institution.
Section 5.21 Covered Entities. No Loan Party is a Covered Entity.
Section 5.22 Solvency. As of the Restatement Date, immediately after the consummation of the transactions contemplated by the Second Amendment to occur on such date, the Borrower is Solvent.
Section 5.23 Immunity. Each Loan Party is subject to civil and commercial law with respect to its obligations under the Loan Documents to which it is a party, and the execution, delivery and performance by it of such Loan Documents constitute private and commercial acts rather than public or governmental acts. None of the Loan Parties nor any of their respective properties is entitled to any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from any action, suit, set-off or proceeding, or service of process in connection therewith, arising under the Loan Documents.
Section 5.24 Pari Passu Status. The obligations of the Borrower and each Guarantor under the Loan Documents to which such Person is a party constitute direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor, as applicable, and, under current law, rank at least pari passu in right of payment with all other direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor resulting from any Indebtedness of the Borrower or such Guarantor (other than Indebtedness having priority by operation of law).
ARTICLE VI AFFIRMATIVE COVENANTS
Commencing on the Restatement Date and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.1, 6.2, and 6.3) cause each Subsidiary to:
Section 6.1 Financial Statements. Deliver to the Administrative Agent:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2023), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with IFRS, such consolidated
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statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception as to the scope of such audit (except for any such qualification pertaining to the maturity of the Facilities occurring within twelve (12) months of the relevant audit or any breach or anticipated breach of any financial covenant); and
(b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and the related consolidated statements of changes in shareholders’ equity, and cash flows for the portion of the Borrower’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with IFRS, subject only to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section 6.2(c), the Borrower shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in subsection (a) or (b) above at the times specified therein.
Section 6.2 Certificates; Other Information. Deliver to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in Sections 6.1(a) and (b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery may be by electronic communication including email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(b) promptly after any request by the Administrative Agent (acting at the direction of the Required Lenders), copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;
(c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(d) promptly after the furnishing thereof, copies of any financial statements, compliance certificate, and notice of default furnished to any holder of debt securities of any Loan
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Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement relating to debt for borrowed money and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.2; provided that this clause (d) shall not apply to any such indenture, loan or credit or similar agreement with an outstanding principal amount or unused commitments less than U.S.$50.0 million; and
(e) promptly following any request therefor, provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
Documents required to be delivered pursuant to Section 6.1 or Section 6.2 (whether or not any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.2; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Borrower shall notify the Administrative Agent (by electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Bookrunners may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Bookrunners and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.7); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Bookrunners shall be entitled to treat any Borrower Materials
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that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
Section 6.3 Notices. Promptly notify the Administrative Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect; and
(c) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein in reasonable particularity and stating what action, if any, the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.3(a) shall describe with reasonable particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
Section 6.4 Pari Passu Obligations. Ensure that its Obligations hereunder and under the Notes at all times constitute direct, senior, unsecured and unsubordinated obligations of the Borrower ranking at least pari passu in right of payment with all other present or future direct, senior, unsecured and unsubordinated obligations of the Borrower resulting from any Indebtedness of the Borrower (other than Indebtedness having priority by operation of law).
Section 6.5 Payment of Obligations. Generally pay and discharge as the same shall become due and payable (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being maintained by the Borrower or such Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except in each case to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 6.6 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except (i) in a transaction not prohibited by Section 7.3 or (ii) to the extent that failure of any Subsidiary that is not a Loan Party to do so would not reasonably be expected to have a Material Adverse Effect; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (c) to the extent reasonably able to do so under Applicable Law, preserve or renew all of its issued patents and registered trademarks and service marks, the non-preservation or non-renewal of which would reasonably be expected to have a Material Adverse Effect.
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Section 6.7 Maintenance of Properties. (a) Maintain, preserve and protect all of its material tangible properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except, in the case of (a) and (b) where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 6.8 Maintenance of Insurance. Maintain with financially sound companies (which may be Affiliates of the Borrower), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.
Section 6.9 Compliance with Laws. Comply in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.
Section 6.10 Books and Records. Maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with IFRS consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.
Section 6.11 Use of Proceeds. Use the proceeds of the Facilities as contemplated by the Second Amendment and for general corporate purposes (including refinancing other financial obligations of the Borrower and its Affiliates). The Borrower (a) shall procure that no payments received under the Facilities will be directly or indirectly used in Switzerland or be, directly or indirectly, remitted to any Swiss tax resident company or Swiss tax resident permanent establishment unless a written confirmation or countersigned tax ruling application from the Swiss Federal Tax Administration has been obtained confirming that such use does not result in interest payments under the Agreement being subject to Swiss withholding tax, (b) shall not permit or authorize any Person to use, directly or knowingly indirectly, all or any part of the Loans to finance any transaction, business or activity (i) involving any Sanctions Target or Designated Jurisdiction, in each case, in violation of Sanctions or (ii) that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target and (c) shall not finance, directly or knowingly indirectly, any payments in respect of this Agreement to any of the Administrative Agent or the Lenders with income from or involving (i) a Sanctions Target or a Designated Jurisdiction, in each case, in violation of Sanctions or (ii) any activity that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target.
Section 6.12 Anti-Corruption Laws; Sanctions. Conduct its businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and other applicable anti-corruption legislation and with all applicable Sanctions, and maintain policies and procedures reasonably designed to promote and achieve compliance with such laws and Sanctions (it being understood that any violation of Applicable
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Law resulting from matters under investigation on the Restatement Date as disclosed in the Borrower’s annual report on Form 20-F for 2022 shall not constitute a violation of this Section 6.12).
Section 6.13 Delivery of Notes and Appointment of Custodian. Subject to the terms of Section 2.9, the Borrower shall deliver a Note executed by the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista) in favor of each Lender that requests a Note within ten (10) Business Days of such request. Any such Note shall be made available at the Corporate Office or delivered to the Custodian on behalf of the applicable Lender, at such Lender’s election, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such Note by courier or other nationally recognized delivery service.
Section 6.14 Sustainability Reporting. The Borrower shall:
(a) promptly after becoming available and in any event within 150 days following the end of each fiscal year of the Borrower (commencing with the fiscal year ending December 31, 2023), a Pricing Certificate for the most recently ended Annual Period for each KPI Metric; provided that, in any fiscal year the Borrower may elect not to deliver a Pricing Certificate, and such election shall not constitute a Default or Event of Default or otherwise result in the failure of any condition precedent to any advance (but such failure to so deliver a Pricing Certificate by the end of such 150-day period shall result in the Sustainability Margin Adjustment being applied as set forth in Section 2.13(c)). In the event the Borrower’s fiscal year is changed to a non-calendar year fiscal year, the Borrower will be permitted to adjust the timing delivery of the Pricing Certificate at its election in a manner intended to maintain consistency with the foregoing, provided that the Borrower shall be permitted to make such adjustment only once until the Maturity Date.
(b) The Borrower shall provide the KPI Metrics Reviewer with all information the KPI Metrics Reviewer may reasonably request in order to perform the tasks contemplated to be performed by it under the Loan Documents.
ARTICLE VII NEGATIVE COVENANTS
Commencing on the Restatement Date, and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied:
Section 7.1 Liens. The Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly create, incur, assume or suffer to exist any Liens upon any of its owned property, assets or revenues, whether now owned or hereafter acquired, other than the following Liens:
(a) Liens for taxes, assessments and other governmental charges the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
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(b) Liens granted pursuant to or in connection with (i) any netting or set-off arrangements entered into in the ordinary course of trading (including, for the avoidance of doubt, any cash pooling or cash management arrangements with a bank or financial institution) or (ii) any intragroup loans granted or any intragroup Indebtedness incurred or entered into or any cash pooling or cash management arrangements entered into by and between the Borrower and its Subsidiaries or between Subsidiaries (for so long as such Persons continue to be Subsidiaries);
(c) statutory liens of landlords and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
(d) Liens incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security, or (ii) other insurance maintained by the Borrower or any of its Subsidiaries in accordance with Section 6.8;
(e) any attachment or judgment lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;
(f) Liens existing as of the Restatement Date and set forth on Schedule 7.1 and Liens in relation to any Indebtedness that is refinancing or replacing any Indebtedness over which Liens are in place; provided that the principal amount secured thereby is not increased, save that principal amounts secured by Liens in respect of (i) Swap Contracts where there are fluctuations in the mark-to-market exposures of those Swap Contracts and (ii) Indebtedness where principal may increase by virtue of capitalization of interest, may be increased by the amount of such fluctuations or capitalizations, as the case may be;
(g) any Liens permitted by the Administrative Agent, acting on the instructions of the Required Lenders;
(h) licenses of, or other grants of rights to use, IP Rights granted by Borrower or any Subsidiary (i) in the ordinary course of business and not materially interfering with the business of Borrower and its Subsidiaries, taken as a whole, (ii) existing as of the Restatement Date, or (iii) between or among Borrower and any of its Subsidiaries or between or among any of its Subsidiaries;
(i) any Liens created or deemed created pursuant to a Securitization;
(j) any Liens granted in connection with any Swap Contract; provided that the aggregate value of the assets that are the subject of such Liens does not exceed U.S.$200.0 million (or its equivalent in other currencies) at any time;
(k) Liens granted or arising over receivables, inventory, plant or equipment that fall within Section 7.2(d);
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(l) (i) any Liens over bank accounts arising under clause 24 or clause 25 of the general terms and conditions (algemene bankvoorwaarden) of any member of the Dutch Bankers’ Association (Nederlandse Vereniging van Banken) and (ii) other Liens granted to any financial institution with whom it maintains accounts to the extent required by the relevant institution’s (or custodian’s or trustee’s, as applicable) standard terms and conditions, in each case, which are within the general parameters customary in the banking industry;
(m) any Liens that are created or deemed created on shares of the Borrower or any of its Subsidiaries, pursuant to an obligation in respect of an Executive Compensation Plan by virtue of such shares being held on trust for the holders of the convertible securities pending exercise of any conversion option, where such Lien is customary for such transaction;
(n) any Liens granted in connection with any Indebtedness referred to Section 7.2(f);
(o) other Liens securing obligations of the Borrower and its Subsidiaries at any one time outstanding equal to the greater of (x) 10% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$1.5 billion; and
(p) Liens granted in connection with or arising out of a Lease; provided that such Liens are over the right to use the asset or equipment that is the subject of the Lease pursuant to the terms of the Lease, or the rights of the Borrower or any of its Subsidiaries over the asset or equipment which is the subject of the Lease.
Section 7.2 Subsidiary Debt. The Borrower will not permit any of its Subsidiaries that is not a Loan Party to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, except:
(a) Indebtedness outstanding on the Restatement Date and set forth on Schedule 7.2 and any renewals, extensions, replacements or refinancings thereof; provided that Indebtedness of any Loan Party shall not be refinanced with Indebtedness of a Subsidiary that is not a Loan Party and that the aggregate principal amount of such Indebtedness is not increased except by the amount of any capitalized interest under any facility or instrument that provided for capitalization of interest on those terms as at the Restatement Date or by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with any renewal, extension or refinancing thereof and by an amount equal to any existing commitments unutilized thereunder;
(b) Indebtedness owed by any Subsidiary to the Borrower or to any other Subsidiary (which shall include, without limitation, liabilities arising from cash management obligations, tax and accounting operations); provided that such Indebtedness shall not have been transferred or assigned to any Person other than the Borrower or any Subsidiary;
(c) Indebtedness constituting a Securitization;
(d) Indebtedness arising under factoring arrangements, Inventory Financing arrangements or export credit facilities or any similar arrangements (including Leases) for the purchase of equipment (provided that any Lien granted in relation to any such facility relates solely
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to equipment, the purchase of which was financed under such facility) or pursuant to sale and lease-back transactions provided that the maximum aggregate Indebtedness of members of the Borrower and its Subsidiaries, which are not Loan Parties under such transactions does not exceed U.S.$500.0 million at any time (disregarding, for the purpose of such limit, any amount of Indebtedness of the Borrower and its Subsidiaries arising under such arrangements permitted under this paragraph (d) and in place as at the Restatement Date including any amounts under such Indebtedness which has been repaid and reborrowed whether pursuant to the terms of the arrangement constituting such Indebtedness when originally advanced or otherwise);
(e) Indebtedness of the Borrower and its Subsidiaries pursuant to any acquisition provided that: (i) such Indebtedness existed prior to the date of the acquisition and was not incurred, increased or extended in contemplation of, or since, the acquisition; and (ii) the aggregate amount of any such Indebtedness of the Borrower and its Subsidiaries which are not Loan Parties does not exceed U.S.$200.0 million at any time;
(f) Indebtedness incurred pursuant to or in connection with any cash pooling or other cash management agreements with a bank or financial institution, but only to the extent of offsetting credit balances of the Borrower and its Subsidiaries which are not Loan Parties pursuant to such cash pooling or other cash management arrangement;
(g) Indebtedness for taxes levied, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of trading; and
(h) additional Indebtedness, if, after giving effect to the incurrence of any such Indebtedness, the aggregate outstanding amount of Indebtedness of all non-guarantor Subsidiaries would not exceed the greater of (x) 15% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$2.0 billion; provided that the percentage set forth in clause (x) shall automatically increase to 25% during any Covenant Modification Period. No Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the 15% threshold during the Covenant Modification Period (or upon termination of the Covenant Modification Period or after that time based solely on events that occurred during the Covenant Modification Period and did not constitute a Default or Event of Default during such period).
For the avoidance of doubt, the aggregate amount of any Indebtedness will be calculated for purposes of this Section 7.2 solely by reference to such Indebtedness of each of the Borrower’s Subsidiaries that is not a Loan Party.
Section 7.3 Fundamental Changes and Asset Dispositions.
(a) The Borrower will not, nor will it permit any of its Subsidiaries, whether in a single transaction or in a series of related transactions to enter into any consolidation or merger with any other Person, unless no Default would exist and such transaction would not be prohibited by clause (b) below; provided that (i) in the case of a merger or consolidation involving the Borrower, the surviving entity thereof (1) is the Borrower or (2) (A) assumes the Obligations of the Borrower pursuant to an Acceptable Assumption Agreement and (B) is a Person organized and validly existing under the laws of Mexico, the United States, any State thereof or the District of Columbia,
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Canada, France, Belgium, Germany, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland or the United Kingdom, or any political subdivision thereof or any other jurisdiction reasonably acceptable to the Required Lenders and (ii) in the case of a merger or consolidation involving a Guarantor, (1) the surviving entity thereof is the Borrower, is (or will concurrently become) a Guarantor or otherwise assumes the Obligations of a Guarantor pursuant to an Acceptable Assumption Agreement or (2) such transaction (A) results in the Guarantor no longer being a direct or indirect Subsidiary of the Borrower and (B) is not prohibited by Section 7.3(b).
(b) The Borrower will not, nor will it permit any of its Subsidiaries to, whether in a single transaction or in a series or related transactions (including through liquidation, division, administration or other insolvency proceedings), Dispose all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, other than through a contribution of assets to a newly-formed Wholly Owned Subsidiary of the Borrower.
Section 7.4 Restricted Payments.
The Borrower will not, nor will it permit any of its Subsidiaries, to make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiary of the Borrower and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may make Restricted Payments payable solely in the Common Stock or other common Equity Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its Common Stock or other common Equity Interests;
(d) the Borrower may make Restricted Payments to comply with any obligation in respect of any Executive Compensation Plan of the Borrower; and
(e) the Borrower and each Subsidiary may make any Restricted Payment, so long as (i) no Default shall have occurred and be continuing at the time of such Restricted Payment, or would result therefrom and (ii) the Borrower shall be in compliance with the covenants in Section 7.5 after giving pro forma effect to such Restricted Payment.
Section 7.5 Financial Covenants.
(a) The Borrower will not permit the Consolidated Leverage Ratio to be greater than 3.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended after the Restatement Date.
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(b) The Borrower will not permit the Consolidated Coverage Ratio to be less than 2.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended after the Restatement Date.
Each of the ratios referred to above will be calculated for the Borrower and its Subsidiaries on a consolidated basis for each consecutive four fiscal quarter period.
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
Section 8.1 Events of Default. Any of the following shall constitute an event of default (each, an “Event of Default”):
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three (3) Business Days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) within three (3) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in Article VI (and such failure shall continue uncured for a period of 30 days after the Borrower becomes aware of such failure) or Article VII; or
(c) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading, in any material respect, when made or deemed made; provided that any such representation, warranty, certification or statement of fact that is curable by its nature may be cured within a period of 30 days after the Borrower becomes aware of such representation, warranty, certification or statement of fact being incorrect or misleading; or
(d) Cross Payment Default. The Borrower or any Subsidiary fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder), after giving effect to any applicable grace period, having an outstanding aggregate principal amount equal to or greater than U.S.$50.0 million (or the equivalent thereof in other currencies); provided that such failure is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2, provided, further, that the threshold referred to in this clause (d) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 6.2(a) that 75% or more of the Borrower’s Consolidated Debt has a corresponding threshold of U.S.$100.0 million or more; or
(e) Cross-Default. The Borrower or any of its Subsidiaries shall default in the observance or performance of any agreement, covenant or condition relating to any Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, or contained in any agreement or instrument evidencing, securing, governing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a
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trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity and such default shall continue unremedied beyond the applicable period of grace set forth in the documents evidencing such Indebtedness; or any such Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; provided that (x) such default is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2 and (y) this clause (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the Disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness, (ii) Guarantees of Indebtedness that are satisfied promptly on demand or (iii) with respect to Indebtedness incurred under any Swap Contract, termination events or equivalent events pursuant to the terms of the relevant Swap Contract which are not the result of any default thereunder by the Borrower or any of its Subsidiaries; provided, further, that the threshold referred to in this clause (e) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 6.2(a) that 75% or more of the Borrower’s Consolidated Debt has a corresponding threshold of U.S.$100.0 million or more; or
(f) Insolvency Proceedings, Etc. (i) Any Loan Party or any of its Subsidiaries institutes, or consents to the institution of any proceeding under any Debtor Relief Law, including, but not limited to, reorganization, concurso mercantil, quiebra or bankruptcy, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for it or for all or substantially all of its property; or
(ii)(1) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Loan Party in an involuntary case under any Debtor Relief Laws, which decree or order is not stayed; or any other similar relief shall be granted under any Applicable Law; or (2) an involuntary case shall be commenced against any Loan Party under any Debtor Relief Laws; or a decree or order of a court having jurisdiction for the appointment of a receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for any Loan Party or for all or substantially all of its property over any Loan Party, or over all or substantially all of its property, shall have been entered, and any such event described in clauses (1) and (2) above shall continue for 60 consecutive calendar days; or
(iii) any Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due or any Loan Party organized under the laws of Mexico becomes in a generalized default of its payment obligations (incumplimiento generalizado en el pago de sus obligaciones) within the meaning of Section I of Article 10 of the Mexican Bankruptcy Law (Ley de Concursos Mercantiles); or
(g) Judgments. There is entered against the Borrower or any Subsidiary one or more final non-appealable judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding U.S.$100.0 million (to the extent not (i) covered by
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independent third-party insurance as to which the insurer does not dispute coverage or (ii) paid, discharged or bonded within 60 days after the entry of such judgment); or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Borrower or any of its Subsidiaries under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount that would reasonably be expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount that would reasonably be expected to have a Material Adverse Effect; or
(i) Invalidity of Loan Documents. Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(j) Invalidity of Guarantees. Any guarantee issued under any Loan Document ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any guarantee issued under any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(k) Exchange Controls. There occurs any Transfer and Inconvertibility Event and shall continue for 60 or more consecutive days; or
(l) Condemnation; Nationalization. Any Governmental Authority asserting or exercising governmental or police powers or any Person acting or purporting to act under such Governmental Authority shall condemn, seize or appropriate, or shall assume custody or control of, all or a substantial portion of the property of the Loan Parties, taken as a whole, such that, based on the value of the asset attached, expropriated or seized, such action would reasonably be expected to have a Material Adverse Effect; or
(m) Moratorium. Any Governmental Authority shall, by moratorium laws or other similar laws (except for any such law relating to matters of public health or national emergency), cancel, suspend or defer any material payment Obligation when the same becomes due and payable and such cancellation, suspension or deferral shall continue for 60 or more consecutive days.
For the avoidance of doubt, no Default or Event of Default shall occur solely by reason of a failure by the Borrower to comply with its obligations under clause (a) of Section 6.14 (Sustainability Reporting).
Section 8.2 Remedies Upon Event of Default.
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If any Event of Default occurs and is continuing, the Administrative Agent upon the request of the Required Lenders, shall, by notice to the Borrower, (a) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable and (b) terminate the Revolving Commitments (and thereupon the Revolving Commitments shall terminate immediately), in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of an event described in Section 8.1(f), the obligation of each Lender to make Loans and any obligation shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable and exercise any other remedy available under the Loan Documents, in each case without further act of the Administrative Agent or any Lender.
Section 8.3 Application of Funds.
After the exercise of remedies provided for in Section 8.2 (or after the Loans have automatically become immediately due and payable), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.13, be applied by the Administrative Agent in the following order:
First. to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second. to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders and (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third. to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
Fourth. payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
ARTICLE IX ADMINISTRATIVE AGENT
Section 9.1 Appointment and Authority. Each of the Lenders hereby irrevocably appoints Citibank, N.A. to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party and authorizes the Administrative Agent to take such actions on its behalf and to exercise such rights, powers,
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authorities and privileges as are expressly delegated to the Administrative Agent by the terms hereof or thereof. For such purposes, each Lender hereby appoints and authorizes the Administrative Agent as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, and authorities specifically given to the Administrative Agent under or in connection with the Loan Documents. The provisions of this Article IX are solely for the benefit of the Administrative Agent, the Lenders and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 9.2 Rights as a Lender. If any Person serving as the Administrative Agent hereunder is or becomes a Lender, it shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 9.3 Exculpatory Provisions. The Administrative Agent and the Sustainability Structuring Agent, as applicable, shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents to which it is a party, and its duties hereunder shall be administrative in nature.
(a) Without limiting the generality of the foregoing, the Administrative Agent and the Sustainability Structuring Agent, as applicable:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers (including providing any request, consent, approval, waiver or authorization), except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law;
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(iii) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent, Bookrunners or any of their Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein;
(iv) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. In no event shall the Administrative Agent be liable under or in connection with this Agreement or any other Loan Document for indirect, special, incidental, punitive, or consequential losses or damages of any kind whatsoever, including, but not limited to, lost profits, whether or not foreseeable, even if the Administrative Agent has been advised of the possibility thereof and regardless of the form of action. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender; and
(v) shall not be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents or accuracy of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith (including recalculating or determining, confirming or verifying any calculation or information set forth therein), (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the legality, validity, enforceability, effectiveness, genuineness or sufficiency of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or (vi) the properties, books or records of the Borrower.
(b) The Administrative Agent shall not be required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties hereunder or under any Loan Document to which it is a party, or be required to take any action that is contrary to this Agreement or Applicable Law.
(c) The Administrative Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Administrative Agent (including but not limited to any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).
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(d) The authorizations, rights, privileges, protections and benefits given to the Administrative Agent are extended to, and shall be enforceable by, the Administrative Agent, under any Loan Document to which it is a party. In the event any claim of inconsistency between this Agreement and the terms of any Loan Document arises with respect to the duties, liabilities and rights of the Administrative Agent, the terms of this Agreement shall control.
(e) In no event shall the Administrative Agent be responsible or liable for the actions or omissions of the Sustainability Structuring Agent or the Custodian.
Section 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may (but shall not be obligated to) rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Whenever reference is made in this Agreement or any other Loan Document to any discretionary action by consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent, it is understood that in all cases that the Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such written instruction, advice or concurrence from the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party), in each case as it deems appropriate. Notwithstanding anything else to the contrary herein, the Administrative Agent may refrain from acting in accordance with any instructions or requests unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability, cost and expense that may be incurred by it by reason of taking or continuing to take any such action in compliance with the instruction or request. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future Lenders.
Section 9.5 Erroneous Payments.
(a) If the Administrative Agent (x) notifies a Lender or any Person who has received funds on behalf of a Lender (any such Lender or other recipient (and each of their respective
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successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 9.5 and held in trust for the benefit of the Administrative Agent, and such Lender shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or any Person who has received funds on behalf of a Lender (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender shall (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details
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thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.5(b).
For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 9.5(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 9.5(a) or on whether or not an Erroneous Payment has been made.
(c) Each Payment Recipient hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to the Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Custodian, at the Lender’s election, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees
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that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency.
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 9.5 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
Section 9.6 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article IX shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 9.7 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Date”), then the retiring Administrative Agent may (but shall not be obligated to) on
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behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Date.
(c) With effect from the Resignation Date or the Removal Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.1(f) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Date or the Removal Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 9.6). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.5 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent. Any corporation or entity into which the Administrative Agent may be merged or converted or with which it may be consolidated or any corporation or entity resulting from any merger, conversion or consolidation to which the Administrative Agent shall be a party, or any corporation or entity succeeding to the business of the Administrative Agent or its corporate trust operations shall be the successor of the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party without the execution or filing of any paper with any party hereto or thereto or any further act on the part of any of the parties hereto or thereto, anything herein or in any other Loan Document to the contrary notwithstanding.
Section 9.8 Non-Reliance on the Administrative Agent, the Bookrunners and the Other Lenders. Each Lender expressly acknowledges that none of the Administrative Agent nor the Bookrunners has made any representation or warranty to it, and that no act by the
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Administrative Agent or the Bookrunners hereafter taken, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent or the Bookrunners to any Lender as to any matter, including whether the Administrative Agent or the Bookrunners have disclosed material information in their (or their Related Parties’) possession. Each Lender represents to the Administrative Agent and the Bookrunners that it has, independently and without reliance upon the Administrative Agent, the Bookrunners, any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Bookrunners, any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
Section 9.9 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or the Sustainability Structuring Agent shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
Section 9.10 Guaranty Matters. The Administrative Agent shall, upon the written instructions of the Required Lenders, release any Guarantor from its obligations under the Guaranty. If any Guarantor ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents, then such Guarantor shall automatically be released from its obligations under the Guaranty. The Administrative Agent shall, promptly upon the written request of the Borrower and at the Borrower’s sole cost, execute all such documentation as may reasonably requested to evidence or confirm such release.
Section 9.11 Certain ERISA Matters.
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(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any
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rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
Section 9.12 Administrative Agent May File Proofs of Claim.
(a) In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Loan Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(1) (i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other obligations of the Loan Parties under any Loan Document that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 10.5) allowed in such judicial proceeding; and
(2) (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.
(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 10.5.
ARTICLE X MISCELLANEOUS
Section 10.1 Amendments, Etc. Subject to Section 3.3(c), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders (or by the Administrative Agent on behalf and at the written direction of the Required Lenders) and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.2 (other than clause (d) thereof) without the written consent of each Lender with a Revolving Commitment;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2) without the written consent of such Lender;
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(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Margin that would result in a reduction of any interest rate on any Loan or any fee payable hereunder without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to (i) amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) amend the definition of “KPI Metrics” or any related provision of this Agreement;
(e) change Section 8.3 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;
(f) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or
(g) release all or substantially all of the value of the Guaranty without the written consent of each Lender, except to the extent the release of any Guarantor is permitted pursuant to Section 9.9 (in which case such release may be made by the Administrative Agent acting alone);
provided, further, no amendment, waiver or consent (including any Benchmark Replacement Conforming Changes) shall, unless in writing and signed by the Administrative Agent, amend, modify or otherwise affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document (including any fees, expenses, indemnities or other amounts payable to, or any other provisions expressly for the benefit of Administrative Agent); and the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended or the maturity of any of its Loans may not be extended, the rate of interest on any of its Loans may not be reduced and the principal amount of any of its Loans may not be forgiven, in each case without the consent of such Defaulting Lender and (y) any waiver, amendment, consent or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Section 10.2 Notices; Effectiveness; Electronic Communication.
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(a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows:
(i) if to the Borrower or any other Loan Party, or the Administrative Agent, to the address or electronic mail address specified for such Person on Schedule 10.2; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in sub clause (b) below, shall be effective as provided in such clause (b). All notices from or to a Loan Party shall be sent through the Administrative Agent. The Borrower may make and/or deliver as agent of each Loan Party notices and/or requests on behalf of each Loan Party.
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications; provided, further, that any notice or other communication delivered by e-mail to the Administrative Agent shall include and contain a scanned or imaged attachment (such as .pdf or similar widely used format). Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available return e-mail or other written acknowledgment), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
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ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address or email address (and the department or officer, if any, for whose attention a communication is to be made) for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address or telecopy number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e) Guarantor Agent. Each Guarantor by its execution of any Loan Document (as the case may be) irrevocably appoints the Borrower to act on its behalf as its agent in relation to the Loan Documents and irrevocably authorizes:
(i) the Borrower on its behalf to supply all information concerning itself contemplated by any Loan Document to the Administrative Agent and the Lenders and to give all notices and instructions, to execute on its behalf any documents required hereunder and to make such agreements capable of being given or made by any Guarantor notwithstanding that they may affect such Guarantor, without further reference to or consent of such Guarantor;
(ii) the Borrower on its behalf as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Loan Documents; and
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(iii) each of the Administrative Agent and the Lenders to give any notice, demand or other communication to such Guarantor pursuant to the Loan Documents to the Borrower on its behalf,
and in each case such Guarantor shall be bound thereby as though such Guarantor itself had given such notices and instructions or executed or made such agreements or received any notice, demand or other communication.
Every act, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Borrower, or given to the Borrower, in its capacity as agent in accordance with paragraph this clause (e), in connection with any Loan Document shall be binding for all purposes on such Guarantor as if such Guarantor had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Borrower and any Guarantor, those of the Borrower shall prevail.
Section 10.3 Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including Committed Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.
Section 10.4 No Waiver; Cumulative Remedies; Enforcement. No failure by any party hereto to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.9 (subject to the terms of Section 2.12), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clause (b) of the preceding proviso and subject to Section 2.12, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
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Section 10.5 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. Each Loan Party agrees, jointly and severally, to pay (i) (1) all reasonable and documented out-of-pocket expenses of the Administrative Agent (including the reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of United Stated legal counsel) associated with the preparation, execution, delivery and administration of this Agreement and the other Loan Documents and any amendment, modification or waiver with respect thereto (whether or not the transactions contemplated hereby or thereby shall be consummated); provided that, except with respect to any fees, disbursements and other charges of one firm of United States legal counsel to the Administrative Agent, such expenses incurred prior to the Restatement Date will be limited to U.S.$25,000 plus VAT, as applicable, taken together with any such expenses incurred in the Administrative Agent’s (or its Affiliate’s) capacity as a Bookrunner for the Facilities, and (2) all reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of United States legal counsel and one firm of Mexican legal counsel to the Lenders, taken as a whole, as applicable, and (ii) all out-of-pocket costs and expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one firm of counsel to each of (1) the Lenders, taken as a whole, (2) the Administrative Agent, in each relevant jurisdiction) and (3) the Sustainability Structuring Agent in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Documents, including its rights under this Section 10.5, or in connection with the Loans hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) Indemnification by the Borrower. Each Loan Party shall jointly and severally indemnify the Administrative Agent (and any sub-agent thereof), the Sustainability Structuring Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee), of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.1), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim not involving an
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act or omission of the Borrower or any Subsidiary and that is solely among Indemnitees (other than against the Administrative Agent in its capacity as such). Without limiting the provisions of Section 3.1(c), this Section 10.5(a) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clauses (a) or (b) of this Section 10.5 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Sustainability Structuring Agent or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.10(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, no party hereto shall assert, and each party hereto hereby waives, and acknowledges that no other Person shall have, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof; provided, however, that this provision shall not apply to any damages in respect of any indemnity obligations to the Administrative Agent under the terms of this Agreement. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section 10.5 shall be payable not later than ten (10) Business Days after demand therefor. To the extent that any undertaking in paragraph (b) of this Section 10.5 may be unenforceable because it contravenes any Applicable Law or public policy, the Loan Parties shall contribute the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of such undertaking.
(f) Survival. The agreements in this Section 10.5 and the indemnity provisions of Section 10.5 shall survive the resignation or removal of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
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(g) No Personal Liability. If an individual signs a certificate on behalf of the Borrower or any of its Subsidiaries and the certificate proves to be incorrect, the individual will incur no personal liability as a result, unless the individual acted fraudulently in giving the certificate.
Section 10.6 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the resignation or removal of the Administrative Agent and the payment in full of the Obligations and the termination of this Agreement.
Section 10.7 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (except as otherwise permitted pursuant to Section 7.3) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section 10.7 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), subject to the consent of the Borrower (not to be unreasonably withheld or delayed; it being understood that withholding or delaying consent with respect to an assignment to any Disqualified Lender or any Sanctioned Lender shall not be deemed unreasonable) unless (a) an event of default has occurred and is continuing, in which case such assignment may be made to any Person other than a Disqualified Lender or a Sanctioned Lender, or (b) the assignment is to a Lender, an Affiliate of a Lender or an
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Approved Fund in each case that is not a Disqualified Lender. Each such assignment (other than an assignment to a Lender, Affiliate of a Lender or an Approved Fund) shall (i) not be less than U.S.$5.0 million in respect of loans and commitments under the Revolving Facility and (ii) U.S.$1.0 million in respect of loans and commitments under the Term Facility. For any assignments for which the Borrower’s consent is required, such consent shall be deemed to have been given if the Borrower shall not have responded within ten (10) Business Days of a written request for such consent.
Neither the Administrative Agent nor any Bookrunner shall be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Lenders or Sanctioned Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or prospective Lender is a Disqualified Lender or Sanctioned Lender or (y) have any liability with respect to or arising out of any assignment, or disclosure of confidential information, to any Disqualified Lender or Sanctioned Lender.
The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of U.S.$3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
No such assignment shall be made to (i) any Loan Party or any Loan Party’s Affiliates or Subsidiaries or (ii) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof.
No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for Tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of one or more natural Persons, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations shall remain unchanged, (ii)
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such Lender shall remain solely responsible to the other parties for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations. A participant shall have the same benefits as the Lender granting such participation with respect to (a) yield protection and increased cost (but not requiring payments in excess of those payable to such Lender in the absence of such participation), (b) with respect to pro rata treatment provisions and (c) Section 3.1, except such Participant shall not be entitled to receive any greater payment under Section 3.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Voting rights of participants shall be limited to those matters with respect to which the affirmative vote of each affected Lender or all Lenders are required as described in Section 10.1. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banks; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
Section 10.8 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties on a need-to-know basis (it being understood that (i) the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof and (ii) the Borrower’s prior written consent shall be required prior to providing any such Information to any controlling persons or equity holders of any Bookrunner or Lender), (b) to the extent required or requested by any regulatory authority having jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), in which case the disclosing Person agrees to inform the Borrower promptly thereof prior to such disclosure, unless such Person is prohibited by Applicable Law from so informing the Borrower, or except in connection with any request as part of any audit or regulatory examination, (c) to the extent
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required by Applicable Laws or regulations or by any subpoena or similar legal process, in which case the disclosing Person (except in connection with any order or request as part of any routine audit or examination conducted by bank accountants or any regulatory examination or audit) agrees to inform the Borrower promptly thereof prior to disclosure, (d) to any other party hereto, (e) to the extent necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.8, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) potential investors, insurers, reinsurers, re-insurance and insurance brokers, or other credit risk support providers of any Bookrunner or any Lender, or (iii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the application, issuance, publishing and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the prior written consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 10.8, (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates from a source other than the Borrower that is not to the recipient’s (or any of its Related Party’s) knowledge subject to confidentiality obligations to the Borrower or any of its Related Parties or (z) is independently discovered or developed by a party hereto without utilizing any Information received from the Borrower or violating the terms of this Section 10.8. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information limited solely to economic and structural terms of the Loans to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section 10.8, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the applicable disclosing party on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section 10.8 shall be principally liable on a several basis to the extent any confidentiality restrictions set forth herein are violated by one or more of its Related Parties.
Section 10.9 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or their respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such
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Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.13 and, pending such payment, shall be segregated on its books and records by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and their respective Affiliates under this Section 10.8 are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 10.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 10.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.12 Survival of Representations and Warranties. All covenants, agreements, representations and warranties of the Loan Parties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and the making of any Loans. Such representations and warranties have been or will be relied upon by the Administrative Agent
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and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. The provisions of Section 3.1, Section 10.5, Section 10.8, Section 10.15, Section 10.16, Section 10.17, Section 10.18 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of the Administrative Agent.
Section 10.13 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.13, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined by the Administrative Agent (acting at the direction of the Required Lenders, acting in good faith), then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 10.14 Replacement of Lenders. If the Borrower is entitled to replace a Lender pursuant to the provisions of Section 3.6, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.7), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.1 and 3.4) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(a) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in (b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.4 or payments required to be made pursuant to Section 3.1, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with Applicable Laws; and
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(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.13 may be effected pursuant to an Assignment and Assumption executed by the Borrower and the assignee, and acknowledged by the Administrative Agent and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided, further, that any such documents shall be without recourse to or warranty by the parties thereto.
Notwithstanding anything in this Section 10.14 to the contrary, the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.6.
Section 10.15 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents (except, as to any Note, as expressly set forth therein) and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.
(b) SUBMISSION TO JURISDICTION. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANOTHER PARTY TO THIS AGREEMENT IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT AND EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT TO ANY
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OTHER JURISDICTION TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(c) WAIVER OF VENUE. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (b) OF THIS SECTION 10.15. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER (I) IRREVOCABLY APPOINTS THE PROCESS AGENT FOR A PERIOD ENDING TWELVE (12) MONTHS AFTER THE MATURITY DATE, HAVING OFFICES ON THE RESTATEMENT DATE AT 590 MADISON AVENUE, 27TH FLOOR, NEW YORK, NY 10022 AS ITS AGENT TO RECEIVE ON BEHALF OF SUCH LOAN PARTY SERVICE OF PROCESS IN ANY PROCEEDINGS (WITH RESPECT TO THIS AGREEMENT AND THE LOAN DOCUMENTS GOVERNED BY NEW YORK LAW) IN NEW YORK, NEW YORK; AND (II) DESIGNATES AS ITS CONVENTIONAL ADDRESS THE ADDRESS OF THE PROCESS AGENT REFERRED TO ABOVE OR ANY OTHER ADDRESS NOTIFIED IN THE FUTURE BY THE PROCESS AGENT TO THE BORROWER. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER, IN CASE OF THE PROCESS AGENT AT THE ADDRESS SPECIFIED ABOVE, AND THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF.
Section 10.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
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OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.16.
Section 10.17 Waiver of Immunities. To the extent permitted by Applicable Law, if the Borrower has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, the Borrower hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement and the Notes. The Borrower agrees that the waivers set forth above shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States of America and are intended to be irrevocable and not subject to withdrawal for purposes of such Act.
Section 10.18 Judgment Currency. The obligation of the Borrower hereunder to make payments in Dollars shall not be discharged or satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than Dollars, except to the extent to which such tender or recovery shall result in the effective receipt by the Lenders or, as the case may be, the Administrative Agent of the full amount of Dollars expressed to be payable hereunder, and the Borrower agrees to indemnify the Administrative Agent and the Lenders (as an alternative or additional cause of action) for the amount (if any) by which such effective receipt shall fall short of the full amount of Dollars expressed to be payable hereunder and such obligation to indemnify shall not be affected by judgment being obtained for any other sums due hereunder.
Section 10.19 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Bookrunners, the Sustainability Structuring Agent and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Bookrunners and the Lenders, on the other hand, (B) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Bookrunners and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Bookrunners nor any Lender has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Bookrunners and the Lenders and their respective Affiliates may be engaged in a broad range of
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transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Bookrunners nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, the Bookrunners or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 10.20 Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Committed Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
Section 10.21 USA PATRIOT Act. Each Lender that is subject to the PATRIOT Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each other Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and each other Loan Party in accordance with the PATRIOT Act. The Borrower and each other Loan Party shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.
Section 10.22 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
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(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(c) a reduction in full or in part or cancellation of any such liability;
(d) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(e) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 10.23 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
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(b) As used in this Section 10.23, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
Section 10.24 Use of English Language. This Agreement has been negotiated and executed in the English language, which such English language version shall be the original instrument and shall govern among the parties hereto. Except for any Notes and such documents required to be delivered in connection with the Restatement Date in a different language, all certificates, reports, notices and other documents and communications given or delivered pursuant to this Agreement (including any modifications or supplements hereto) shall be in the English language, or accompanied by an English translation thereof. Except in the case of (i) laws or official communications of Mexico, (ii) documents filed with any Governmental Authority in Mexico or (iii) corporate documents of the Borrower or any Guarantor, and (iv) any other document originally issued in a language other than English, the English language version of any such document shall for purposes of this Agreement, and absent manifest error, control the meaning of the matters set out therein; provided that, the Administrative Agent’s sole obligation in respect of any documents delivered in a language other than English (without limiting its obligations under any corresponding document in the English language) shall be to make such documents available to the Lenders on the Platform, and the Administrative Agent shall have no duties or obligations in respect of such documents.
Section 10.25 Swiss Guarantee Limitation. Any guarantee, indemnity or other obligation provided under this Agreement or any other Loan Document by a Swiss Guarantor shall be deemed not to be provided by such Swiss Guarantor to the extent that the same would constitute a breach of the financial assistance prohibitions under Swiss law. Under Swiss law, the following restrictions shall be applicable to each Swiss Guarantor:
(a) Any guarantee, indemnity or other obligation and liability by a Swiss Guarantor under this Agreement or any Loan Documents in relation to the obligations, undertakings, indemnities or liabilities of a Guarantor other than that Swiss Guarantor or any of its fully owned or controlled subsidiaries (the “Restricted Obligations”) shall be limited to the amount of that Swiss Guarantor’s Free Reserves Available for Distribution at the time payment is requested or the maximum amount permitted by Swiss law applicable at such time. Such limitations shall only apply to the extent it is a requirement under Applicable Law (including any case law) at the point in time payment is requested. Such limitation (as may apply from time to time or not) shall not
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free such Swiss Guarantor from payment obligations under this Agreement or any other Loan Documents in excess thereof, but merely postpone the payment date therefor until such times as payment is again permitted notwithstanding such limitation.
(b) For the purpose of this Section 10.25, “Free Reserves Available for Distribution” means an amount equal to the maximum amount in which the relevant Swiss Guarantor can make a dividend payment to its shareholder(s) (being the year to date balance sheet profit and any freely disposable equity available for this purpose, in each case in accordance with applicable Swiss law). The freely disposable equity represents, inter alia, but not by way of limitation, the total shareholder equity less the total of: (i) the aggregate share capital, (ii) the statutory reserves (including reserves for own shares and revaluations), to the extent such reserves cannot be transferred into unrestricted, distributable reserves, and (iii) any freely disposable equity that has to be blocked for any loans granted by the Swiss Guarantor to a direct or indirect shareholder or a direct or indirect subsidiary of such shareholder.
(c) As soon as reasonably practicable after having been requested to discharge a Restricted Obligation, the respective Swiss Guarantor shall provide the Administrative Agent with an interim statutory balance sheet audited by the statutory auditors of such Swiss Guarantor setting out the Free Reserves Available for Distribution and, promptly thereafter, pay the lesser of (i) the Restricted Obligation and (ii) the amount corresponding to the Free Reserves Available for Distribution or the maximum amount permitted by Swiss law applicable at the time payment is requested to the Administrative Agent (acting at the written direction of the Required Lenders) (save to the extent provided below).
(d) In case a Swiss Guarantor who must make a payment in respect of the Restricted Obligations under this Agreement or any other Loan Document is obliged to withhold Swiss withholding tax in respect of such payment, such Swiss Guarantor shall:
(i) if and to the extent required by Applicable Law in force at the relevant time:
| (1) | procure that such payments can be made without deduction of Swiss withholding tax, or with deduction of Swiss withholding tax at a reduced rate, by discharging the liability to such tax by notification (Meldeverfahren) pursuant to Applicable Law (including double tax treaties) rather than payment of the Tax; |
| (2) | if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above does not apply, deduct Swiss withholding tax at the rate of 35% (or such other rate as in force from time to time), or if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above applies for a part of the Swiss withholding tax only, deduct Swiss withholding tax at the reduced rate resulting after the discharge of part of such Tax by notification under Applicable Law, from any payment made by it in respect of Restricted Obligations and promptly pay any such Taxes to the Swiss Federal Tax Administration; and |
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| (3) | notify the Administrative Agent that such notification or, as the case may be, deduction has been made and provide evidence to the Administrative Agent that such a notification of the Swiss Federal Tax Administration has been made, or, as the case may be, that such Swiss withholding tax has been paid to the Swiss Federal Tax Administration; |
(ii) to the extent such deduction is made, not be required to make a gross-up, indemnify or otherwise hold harmless the Lenders for the deduction of the Swiss withholding tax notwithstanding anything to the contrary contained in the Loan Documents, unless grossing-up is permitted under the laws of Switzerland then in force and provided that this should not in any way limit any obligations of any non-Swiss Guarantors under the Loan Documents to indemnify the Lenders in respect of the deduction of the Swiss withholding tax.
(e) The Swiss Guarantor shall use all reasonable efforts to procure that any person which is entitled to a full or partial refund of any Swiss withholding tax paid pursuant to paragraph (d) above will, as soon as possible after the deduction of the Swiss withholding tax: (i) request a refund of the Swiss withholding tax under any Applicable Law (including double taxation treaties) and (ii) pay to the Administrative Agent upon receipt any amount so refunded. The Administrative Agent (acting at the written direction of the Required Lenders) shall take all reasonable steps to cooperate with the Swiss Guarantor to secure such refund.
(f) In case the proceeds irrevocably received by the Administrative Agent and any Lender pursuant to paragraph (e)(ii) above have the effect that the proceeds received by the Administrative Agent and any Lender exceed the amount of obligations guaranteed by the relevant Swiss Guarantor, then the Administrative Agent (acting at the written direction of the Required Lenders) or the relevant Lender, as the case may be, shall promptly return such overcompensation to the relevant Swiss Guarantor.
(g) The Swiss Guarantor will take, and cause to be taken, as soon as reasonably practicable, all and any other action, including, without limitation, the passing of any shareholders’ resolutions to approve any payment or other performance under this Agreement or any other Loan Document and the receipt of any confirmations from the Swiss Guarantor’s auditors, whether following a request to discharge a Restricted Obligation or which may be required as a matter of mandatory Swiss law in force at the time it is required to make a payment or perform other obligations under this Agreement or any other Loan Document in order to allow a prompt payment of amounts owed by the Swiss Guarantor or the prompt performance of other obligations under this Agreement or any other Loan Document.
(h) If the enforcement of the Restricted Obligations would be limited due to the effects referred to in this Section 10.25 and if any asset of the Swiss Guarantor has a book value that is less than its market value (an “Undervalued Asset”), the Swiss Guarantor shall, to the extent permitted by Applicable Law and its accounting standards, (i) write up the book value of such Undervalued Asset such that its balance sheet reflects a book value that is equal to the market value of such Undervalued Asset, and (ii) make reasonable efforts to realize the Undervalued Asset for a sum which is at least equal to the market value of such asset. Without prejudice to the rights
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of the Administrative Agent under this Agreement or any other Loan Document, the Swiss Guarantor will only be required to realize an Undervalued Asset if such asset is not necessary for the Swiss Guarantor’s business (nicht betriebsnotwendig).
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Exhibit 4.10-1
[ENGLISH TRANSLATION FOR INFORMATION PURPOSES ONLY]
[TO BE RATIFIED BEFORE A NOTARY PUBLIC]
AMENDMENT AND RESTATEMENT AGREEMENT (THE “AGREEMENT”) DATED DECEMBER 6, 2023, TO THE CREDIT AGREEMENT DATED DECEMBER 20, 2021, ENTERED INTO BY (I) CEMEX, S.A.B. DE C.V., AS BORROWER (INDISTINCTIVELY, THE “BORROWER” OR “CEMEX”), HEREIN REPRESENTED BY ITS REPRESENTATIVE, MR. FERNANDO JOSÉ REITER LANDA; (II) CEMEX CONCRETOS, S.A. DE C.V., AS JOINT OBLIGOR OF THE BORROWER (THE “INITIAL JOINT OBLIGOR”) HEREIN REPRESENTED BY ITS REPRESENTATIVE, MR. FERNANDO JOSÉ REITER LANDA; (III) CEMEX OPERACIONES MÉXICO, S.A. DE C.V., AS INITIAL FIADORA OF THE BORROWER (THE “JOINT OBLIGOR (FIADORA)”) AND HEREIN REPRESENTED BY ITS REPRESENTATIVE, MR. FERNANDO JOSÉ REITER LANDA; AND (IV) BANCO MERCANTIL DEL NORTE, S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO BANORTE, AS LENDER, TOGETHER WITH ITS SUCCESSORS AND ASSIGNS (“BANORTE” OR THE “LENDER” AND TOGHETHER WITH THE BORROWER, THE INITIAL JOINT OBLIGOR, AND THE JOINT OBLIGOR (FIADORA), THE “PARTIES”), HEREIN REPRESENTED BY ITS REPRESENTATIVES, MESSRS. MANUEL RAMÍREZ GARCÍA AND CLAUDIA AILED DE LA ROSA REYES, PURSUANT TO THE FOLLOWING BACKGROUND, REPRESENTATIONS, AND CLAUSES:
BACKGROUND
FIRST. Loan Agreement. On December 20, 2021, the Parties entered into a Credit Agreement (the “Original Credit Agreement”), whereby, among other matters, the Lender made available to the Borrower, during the Availability Period (as such term is defined in the Original Credit Agreement) a loan (the “Original Loan”) up to a total principal amount that would not exceed the equivalent in Pesos of US$250,000,000.00 (two hundred and fifty million Dollars 00/100 legal tender in the United States of America), for general corporate purposes and the payment of the commissions, costs, and expenses related to the negotiation and execution of the Loan Documents (as such term is defined in the Original Credit Agreement).
SECOND. Guaranty. On December 22, 2021, Cemex Corp. (“Cemex Corp”), and Cemex Innovation Holding Ltd. (“Cemex Innovation” and together with Cemex Corp, the “Initial Foreign Guarantors”) granted a Guaranty for the benefit of the Lender, for purposes of securing the Borrower’s obligations under the Loan Documents.
THIRD. Borrowing of the Original Loan. Pursuant to certain borrowing notice under the Original Credit Agreement dated December 20, 2021, the Borrower borrowed the Loan for a total amount of MXN$5,230,950,000.00 Pesos (five billion two hundred thirty million nine hundred fifty thousand Pesos 00/100 National Currency) and paid the Lender on December 23, 2021, as the amount for the concept of Tranche A Structuring Fee, reference to which is made in Section 2.4, clause (e)(i)(a) of Annex A.
FOURTH. Additional Loan. The Borrower has requested an additional Loan to the Lender for an amount of up to MXN$769,050,000.00 (seven hundred sixty-nine million fifty thousand Pesos 00/100 National Currency), to be used for the refinancing of certain existing debt and the payment of commissions, costs, and expenses related to the negotiation and execution of the necessary amendments to the Loan Documents.
REPRESENTATIONS
I. Representations of the Loan Parties. Each of the Loan Parties, individually and through its attorney-in-fact, represents as of this date:
I.1. Existence and Authorities. Each Loan Party and each Subsidiary thereof is duly organized or formed and validly existing under the Laws of the jurisdiction of its incorporation or organization.
I.2. Authorization; No Contravention. The execution and performance by each Loan Party of this Agreement has been duly authorized by all necessary corporate action, and do not contravene the terms of any of the Organization Documents.
I.3. Attorneys-in-Fact. Its attorneys-in-fact have the legal powers necessary to bind each Loan Party in terms of this Agreement, powers that have not been modified, limited, or revoked in any way as of the date of this Agreement.
I.4. Binding Effect. This Agreement has been legally executed, and constitutes a legal, valid, and binding obligation of each Loan Party, and enforceable against each of them in accordance with their respective terms, subject to applicable concurso mercantil, bankruptcy, insolvency, reorganization or other similar laws or other laws affecting creditors’ rights generally and provisions of public order.
I.5. Representations under the Original Credit Agreement. Each Loan Party hereby ratifies each of the Representations made under the Original Credit Agreement, except for those referred to a certain date, which will be understood to have been made to such date.
II. Representations of the Lender. The Lender, through its attorney-in-fact, represents as of this date:
I.1. Existence. It is a sociedad anónima legally organized and existing under the laws of Mexico, authorized by the Ministry of Finance and Public Credit to operate as a multiple banking institution.
I.2. Powers. Its attorneys-in-fact have the legal powers necessary to bind it under the terms of this Agreement, powers that have not been amended, restricted, limited or revoked in any manner as of this date.
In testimony of the above, based on the Background and Representations contained in this Agreement, the Parties to this Agreement agree to the following:
CLAUSES
FIRST. Debt Acknowledgement. The Borrower acknowledges that, as of the date hereof, it owes the Lender, the principal amount of $5,230,950,000.00 M.N. (five billion, two hundred and thirty million, nine hundred and fifty thousand pesos 00/100 M.N.) (the “Amount Owed”), which amount does not include ordinary interest, default interest, fees, commissions, or other accessories of any other nature.
SECOND. Amendment and Restatement of the Original Credit Agreement. The Parties hereby agree to amend and restate the Original Credit Agreement in terms of the document attached hereto as Exhibit “A”.
THIRD. Legal Opinions. As of the date hereof, the Borrower agrees to deliver to the Lender:
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(a) a legal opinion by in house counsel in Mexico to the Borrower and the Initial Mexican Guarantors, substantially in the form of the document attached hereto as Exhibit “B-1”;
(b) a legal opinion by Galicia Abogados, S.C., counsel in Mexico to the Lender, substantially in the form of the document attached hereto as Exhibit “B-2”.
FOURTH. Promissory Notes. Not later than the next Interest Payment Date after the execution of this Agreement, the Borrower, the Initial Joint Obligor, and the Joint Obligor (Fiadora) will deliver to the Lender new promissory notes (the “New Promissory Notes”) that will evidence the Amount Owed, including the new repayment schedule pursuant to the Credit Agreement (as amended pursuant to Clause Second of this Agreement).
FIFTH. Ratification of Signatures before a Notary Public. The Parties agree to ratify their signatures to this Agreement before a Mexican notary public on the execution date of this Agreement.
The Borrower (i) shall deliver to the Lender, the first original testimony of the public deed containing the ratification of signatures before the notary public, and (ii) undertakes to take all necessary actions and payments, including fees and expenses of the notary public and legal counsel to the Lender, necessary to ratify the signatures under this Agreement.
SIXTH. Novation, Modification. The execution of this Agreement will in no way constitute novation, modification, payment or dación en pago of the obligations of the Loan Parties under the Original Credit Agreement.
SEVENTH. Miscellaneous.
(a) Costs and Expenses. Within five (5) Business Days immediately following the date of receipt thereof in writing, the Borrower shall pay the documented costs or expenses (including reasonable and documented expenses and costs of legal counsel of the Lender) incurred in the preparation and execution of this Agreement and the other Loan Documents.
(b) Notices. All notices and other communications related to this Agreement shall be made in accordance to Section 9.4 of Clause Nine of the Credit Agreement, as amended and restated by this Agreement.
(c) Exhibits; Schedules; Headings. The parties agree that the exhibits and schedules referred to in this Agreement form an integral part hereof. The headings of the Clauses of this Agreement have been inserted for the sole purpose of facilitating the reading of such Clauses; therefore, they do not define or limit their content. For the purposes of interpreting this Agreement, the content of its Representations and Clauses shall prevail, and in no way the headings of the latter.
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(d) Definitions. The capitalized terms used in this Agreement but not expressly defined herein, will have the meanings attributed to such terms in the Original Credit Agreement.
(e) Independence. In the event that any of the provisions of this Agreement are declared invalid, illegal, or unenforceable, said provision shall be considered independent of the rest of this Agreement, and the validity, legality, and enforceability of the rest of the provisions shall not be affected or nullified.
(f) Copies. This Agreement may be signed in any number of counterparts as may be agreed by the Parties hereto, all which will constitute the same Agreement.
(g) Applicable Law; Competent Courts. The parties agree that for the interpretation and performance of this Agreement, the laws of Mexico shall apply and the Parties expressly and irrevocably submit to the exclusive jurisdiction of the competent Federal courts sitting in Mexico City, Mexico, in any dispute that may arise due to the interpretation or enforcement of this Agreement, expressly and irrevocably waiving any other jurisdiction to which they may be entitled due to their present or future domicile, or for any other reason.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed thorough its attorneys-in-fact in December 6, 2023.
| Borrower |
| Cemex, S.A.B. de C.V. |
| /s/ Fernando José Reiter Landa |
| Name: Fernando José Reiter Landa |
| Title: Attorney-in-fact |
| Initial Joint Obligor |
| Cemex Concretos, S.A. de C.V. |
| /s/ Fernando José Reiter Landa |
| Name: Fernando José Reiter Landa |
| Title: Attorney-in-fact |
| Joint Obligor (Fiadora) |
| Cemex Operaciones México, S.A. de C.V. |
| /s/ Fernando José Reiter Landa |
| Name: Fernando José Reiter Landa |
| Title: Attorney-in-fact |
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| Lender |
| Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, |
| Grupo Financiero Banorte |
| /s/ Manuel Ramírez García |
| Nname: Manuel Ramírez García |
| Title: Attorney-in-fact |
| /s/ Claudia Ailed de la Rosa Reyes |
| Name: Claudia Ailed de la Rosa Reyes |
| Title: Attorney-in-fact |
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CREDIT AGREEMENT
among
Cemex, S.A.B. de C.V.,
as Borrower,
Cemex Concretos, S.A. de C.V.,
as Joint Obligor,
Cemex Operaciones México, S.A. de C.V.,
as Joint Obligor (Fiadora),
and
Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte,
as Lender
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| TABLE OF CONTENTS |
Page |
| List of Schedules | ||
| I.6 |
List of conflicts, litigations, and procedures as of the date of execution of the First Amendment to the Credit Agreement. | |
| I.12 |
Subsidiaries and investors in capital stock as of the dated of execution of the First Amendment to the Credit Agreement. | |
| I (a) |
Existing Debt as of the date of execution of the First Amendment to the Credit Agreement | |
| 5.2 |
Web Pages as of the date of execution of the First Amendment to the Credit Agreement. | |
| 6.1 (f) |
Existing Liens as of the date of execution of the First Amendment to the Credit Agreement. | |
List of Exhibits
| A |
Form of Compliance Certificate. | |
|
B |
Form of Pricing Certificate. | |
|
C |
Form of Guaranty. | |
| D-1 |
Form of Promissory Note Tranche A. | |
| D-2 |
Form of Promissory Note Tranche B. | |
|
E |
Form of Borrowing Notice | |
| F-1 |
Form of legal opinion of in house counsel in Mexico to the Borrower and the Guarantors for the date of execution of the Credit Agreement. | |
| F-2 |
Form of legal opinion of counsel in New York to the Borrower and the Guarantors for the date of execution of the Credit Agreement. | |
| F-3 |
Form of legal opinion of counsel in Switzerland to the Borrower and the Guarantors for the date of execution of the Credit Agreement. | |
| F-4 |
Form of legal opinion of counsel in Mexico to the Lender for the date of execution of the Credit Agreement. | |
| G-1 |
Form of Secretary’s Certificate. | |
| G-2 |
Form of Authorized Signatory | |
|
H |
Sustainability Margin Adjustment |
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This CREDIT AGREEMENT (the “Agreement”) is entered among:
(1) Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable, organized and existing under the laws of the United Mexican States (“Mexico”), as borrower (indistinctively, the “Borrower” or “Cemex”), herein represented by its representative, Mr. Fernando José Reiter Landa;
(2) Cemex Concretos, S.A. de C.V., a sociedad anónima de capital variable, organized and existing under the laws of Mexico and herein represented by its representative, Mr. Fernando José Reiter Landa, as joint obligor of the Borrower (the “Initial Joint Obligor”);
(3) Cemex Operaciones México, S.A. de C.V., a sociedad anónima de capital variable, organized and existing under the laws of México and herein represented by its representative, Mr. Fernando José Reiter Landa, as fiadora of the Borrower (the “Joint Obligor (Fiadora)”);
(4) Banco Mercantil del Norte, S.A., Institución de Banca Múltiple, Grupo Financiero Banorte, herein represented by its representatives, Messrs. Manuel Ramírez García and Claudia Ailed de la Rosa Reyes, as lender, together with its successors and assigns (“Banorte” or the “Lender”).
Pursuant to the following Representations and Clauses:
REPRESENTATIONS
I. Representations by the Loan Parties. Each of the Loan Parties, individually, through their representative, represents on this date (except for Representation I.18) and on any other date referenced in each specific Representation, that:
I.1 Existence and Powers Each Loan Party and each Subsidiary thereof (a) is duly organized or formed and validly existing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and conduct its business as currently conducted and (ii) execute the Loan Documents to which it is a party and comply with its respective obligations thereunder, and (c) has the capacity and licenses, necessary to conduct its business as currently conducted and, as applicable, in compliance under the Applicable Laws where its ownership, lease or operation of properties, except for defaults of clauses (b)(i) or (c) that could not reasonably be expected to have a Material Adverse Effect.
I.2 Authorization; No Contravention. The execution and performance by each Loan Party, of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate action, and do not (a) contravene the terms of any of the Organization Documents, (b) are not in conflict with or contravene, or will result in any breach, or the creation of Liens or early or accelerated payment to be made under (i) any Contractual Obligation of the Loan Parties, as appropriate, or any of their Subsidiaries or to which their respective property is subject, or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which the Loan Parties or any of their Subsidiaries, or their respective property is subject, and (c) violate any Applicable Law in any relevant respect.
I.3 Authorizations. The execution or performance by, or enforceability against, any of the Loan Parties hereof or any other Loan Document, does not require the approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Authority Government or any other Person, except for those that have already been obtained, approved, granted, taken, given or made, as the
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case may be.
I.4 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, shall have been, at the time of execution, legally executed, and constitute, or shall constitute at the time of execution, a legal, valid and binding obligation of such Loan Party, and enforceable against each of them in accordance with their respective terms, subject to applicable concurso mercantil, bankruptcy, insolvency, reorganization or other similar laws or other laws affecting creditors’ rights generally and provisions of public order.
I.5 Financial Statements; No Material Adverse Effect.
(a) The Borrower’s audited Financial Statements for the year ended December 31, 2022 (i) were prepared in accordance with International Financial Reporting Standards consistently applied during the relevant periods, except as otherwise expressly noted therein; (ii) reasonably present the financial and accounting condition of the Borrower and its Subsidiaries, in all its important aspects, in accordance with the International Financial Reporting Standards, as of the date thereof, as well as their funds for the periods covered thereby, except as otherwise expressly noted therein; and (iii) show all indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the year ended December 31, 2022, including, without limitation, liabilities for taxes, material commitments and Indebtedness.
(b) The internal consolidated Financial Statements of the Borrower and its Subsidiaries for the fiscal quarter ended September 30, 2023 (i) were prepared in accordance with International Financial Reporting Standards consistently applied during the relevant periods, except as otherwise expressly noted therein, and (ii) reasonably present the financial and accounting condition and results of operations of the Borrower and its Subsidiaries, in all its important aspects, as of the date thereof, subject to ordinary notes and adjustments derived from the year-end audit.
(c) Since December 31, 2022, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
I.6 Litigation. As of the execution date of the First Amendment to the Credit Agreement, there are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby or (b) would reasonably be expected to have a Material Adverse Effect if determined adversely, except as specifically disclosed in Schedule I.6.
I.7 No Default. No Loan Party is nor any Subsidiary thereof are in default under or with respect to any Contractual Obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
I.8 Ownership of Property; Liens. Each of the Borrower and each Subsidiary has good record and marketable title to, or rights to use, all real property necessary and/or used in the ordinary conduct of its business, except for such defects in title or use rights as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
I.9 Environmental. The Borrower and its Subsidiaries conduct in the ordinary course of business a review of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties. As of the execution date of the First Amendment to the Credit Agreement. except as specifically disclosed in
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Schedule I.6 or do not have or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Borrower: (a) the Borrower and its Subsidiaries have been and are in compliance with such Environmental Laws; (b) there are no claims, conflicts, litigations, or proceedings against the Borrower or its Subsidiaries, relating to an alleged violation of Environmental Laws or threatened claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, pursuant to such Environmental Laws; and (c) there are no events or circumstances relating to the business or operations of the Borrower and its Subsidiaries that are reasonably likely to cause the Borrower or its Subsidiaries to incur Environmental Liabilities.
I.10 Insurance. The properties of the Borrower and its Subsidiaries are insured by financially sound insurance companies (which may be Affiliates of the Borrower), in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the relevant Subsidiaries operate.
I.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other Tax returns and reports required to be filed, and have paid or withheld all Federal, state and other Taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided to the extent required by International Financial Reporting Standards, or (b) to the extent that the failure to do so would not have a Material Adverse Effect.
I.12 Subsidiaries. As of the execution date of the First Amendment to the Credit Agreement: (a) the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule I.12, and except as indicated in Part (a) of Schedule I.12 all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower and/or one or more Subsidiaries of the Borrower, free and clear of all Liens (other than non-consensual Liens which may arise by Applicable Law), (b) the Borrower has no direct equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule I.12, and (c) all of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.
I.13 Disclosure. No written report, Financial Statement, certificate or other written information furnished by or on behalf of any Loan Party to the Lender, as of the execution date hereof, in connection with the transactions contemplated hereby and the negotiation of this Agreement (in each case, as amended or supplemented by other information furnished by or on behalf of any Loan Party) contains any relevant misstatement of material fact or omits to state any relevant fact necessary to make the statements therein, when furnished and after giving effect to all supplements thereto, in the light of the circumstances pursuant to which they were made, not misleading in any relevant respect; provided that, with respect to projected financial information and other projections, the Borrower represents only that such projections were prepared in good faith based upon assumptions believed to be reasonable at the time they were furnished (it being understood by the Lender that such projections are as to future events and are not to be viewed as completed or existing facts, such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, that no assurance can be given that any particular projections shall be realized and that actual results during the period or periods covered by any such projections may significantly differ from the projected results and such differences may be material).
I.14 Compliance with Laws. Each Loan Party, and each Subsidiary thereof, is in compliance in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and
3
decrees applicable to it or to its properties, except in such instances in which (a) the Applicable Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
I.15 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, license or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, trade secrets, know-how and other intellectual property rights (collectively, “Intellectual Property Rights”) that are reasonably necessary for the operation of their respective businesses as currently conducted, without, to the knowledge of the Borrower, infringement, misappropriation or other violation of the Intellectual Property Rights of any other Person, except for any such failure to own, license or possess, or such infringement, that would not reasonably have a Material Adverse Effect. To the knowledge of the Borrower, no product, service, process, method, substance, part, or other material now used by the Borrower or any Subsidiary in the conduct of their business as currently conducted infringes, misappropriates, or otherwise violates upon any Intellectual Property Rights held by any other Person, except for any such infringement, misappropriation or violation which would not reasonably be have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary, which, either individually or in the aggregate, would reasonably have a Material Adverse Effect. To the knowledge of the Borrower, in the two (2) year period preceding the execution date hereof, there has been no unauthorized use, access, interruption, modification, or corruption of any information technology systems (or any sensitive or personal information stored or contained therein or transmitted thereby) owned or controlled by the Borrower or any of its Subsidiaries, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
I.16 Sanctions. None of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any adviser, officer, agent, employee, or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries is, or is Controlled or 50% or more owned in the aggregate by or is acting on behalf of, one or more individuals or entities that are currently the subject or the target of any Sanction (including the designation as a “specially designated national” or “blocked person”), nor is the Borrower, any of its Subsidiaries located, organized or resident in a Designated Jurisdiction; and the Borrower shall not directly or knowingly indirectly use the proceeds of the Loan, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any Person that, at the time of such funding or facilitation, is the subject or the target of Sanctions, (ii) to fund or facilitate any activities of or business in any Designated Jurisdiction or (iii) in any other manner that shall result in a violation of Sanctions by any Person participating in the transaction, whether as an initial purchaser, advisor, investor or otherwise. The Borrower and its Subsidiaries are not now knowingly engaged in any dealings or transactions with any Person that is the subject or the target of Sanctions or with any Designated Jurisdiction.
I.17 Anti-Corruption Laws. During the five (5) years prior to the execution date hereof, none of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any adviser, officer, agent, employee or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or -controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) (except for any violation of Applicable Law resulting from matters under
4
investigation as of the execution date hereof, as disclosed in the Borrower’s annual report on Form 20-F for 2022 filed with the SEC) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, the Mexican General Law of the National Anticorruption System (Ley General del Sistema Nacional Anticorrupción), the Mexican Federal Criminal Code (Código Penal Federal), the Mexican General Law of Administrative Responsibilities (Ley General de Responsabilidades Administrativas), or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit; except, in each case, for matters under investigation by the U.S. Department of Justice and the staff of the SEC. During the five (5) years prior to the execution date hereof, the Borrower and its Subsidiaries have instituted, and maintain and enforce, policies and procedures reasonably designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
I.18 Solvency. As of the execution date hereof, the Borrower is Solvent.
I.19 Immunity. Each Loan Party is subject to civil and commercial law with respect to its obligations under the Loan Documents to which it is a party, and the execution, delivery and performance by it of such Loan Documents constitute private and commercial acts rather than public or governmental acts. None of the Loan Parties nor any of their respective properties is entitled to any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from any action, suit, setoff or proceeding, (either by summons to court, attachment prior to judgment or any other proceeding) arising under the Loan Documents.
I.20 Pari Passu Status. The obligations of the Borrower and each Guarantor under the Loan Documents to which such Person is a party constitute direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor, as applicable, and, under current Applicable Law, rank at least pari passu in right of payment with all other direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor (other than Indebtedness having priority by operation of law).
II. Representations by Lender. The Lender, through its attorneys-in-fact, represents on this date that:
II.1 Existence. It is a sociedad anónima legally organized and existing under the laws of Mexico, authorized by the Ministry of Finance and Public Credit to operate as a multiple banking institution.
II.2 Powers. Its attorneys-in-fact have the legal powers necessary to bind it under the terms of this Agreement and the other Loan Documents to which it is a party, powers that have not been amended, restricted, limited or revoked in any manner as of this date.
II.3 Authorizations. It has all the legal and corporate authorizations necessary to enter into this Agreement, as well as to comply with its obligations hereunder.
II.4 No Contravention. The execution of this Agreement and the other Loan Documents to which it is a party, as well as the performance of the obligations herein and therein, do not constitute a violation of its Organization Documents, nor do they constitute a violation, breach or event of prepayment of, or pursuant to (i) any contract or agreement to which it is a party or by virtue of which they are bound,
5
or (ii) any Applicable Law.
II.5 Binding Effect. This Agreement and the other Loan Documents are and create a legal, valid and binding obligation of the Lender, and enforceable against it in accordance with their terms, subject to applicable concurso mercantil, bankruptcy, insolvency, reorganization or other similar laws or other laws affecting creditors’ rights generally and provisions of public order.
NOW, THEREFORE, the Parties hereto agree to the following:
ARTICLES
Article I. Defined Terms; Interpretation. (a) Defined Terms. Capitalized terms used herein and not otherwise defined in any other Article or Section hereof shall have the meanings assigned to them in this Article.
“2023 Credit Agreement” means the credit agreement dated October 29, 2021 (as amended from time to time, including by certain restatement agreement dated October 30, 2023), entered into between Cemex, S.A.B. de C.V., as borrower, Citibank, N.A., as administrative agent, ING Capital LLC, as sustainability structuring agent, Citigroup Global Markets, Inc., as global coordinator, joint lead arranger and joint bookrunner, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BofA Securities Inc., BNP Paribas, Credit Agricole Corporate and Investment Bank, ING Bank N.V., Dublin Branch, JPMorgan Chase Bank, N.A., and Mizuho Bank, Ltd, as joint lead arrangers and joint bookrunners, and the lenders from time to time party thereto.
“Additional Foreign Guarantors” means any Person organized and existing under the laws of a country other than Mexico, and who, with the written acknowledgment of the Borrower, executes a guarantee as a guarantor for the purposes of guaranteeing the Borrower’s obligations under the Loan Documents, substantially in the form of Exhibit C, and who, timely, but no later than within the following ten (10) Business Days fromany request from the Lender, delivers information and documentation reasonably requested by the Lender in order to comply with the applicable regulations and provisions regarding anti-money laundering and customer identification (“know your customer”).
“Additional Guarantors” means the Additional Mexican Guarantors and the Additional Foreign Guarantors.
“Additional Joint Obligors (Fiadoras)” means any Person organized and existing under the laws of Mexico, who adheres to this Agreement as fiadora for purposes of securing the Borrower’s obligations under the Loan Documents, through an agreement in terms reasonably satisfactory to the Lender, and who, timely, but no later than within the following ten (10) Business Days after any Lender’s written request, that provides information and documentation reasonably requested by the Lender in order to comply with the applicable regulations and provisions regarding anti-money laundering and customer identification (“know your customer”).
“Additional Joint Obligors” means any Person organized and existing under the laws of Mexico, and who adheres to this Agreement as joint obligor for purposes of guaranteeing the Borrower’s obligations under the Loan Documents, through an agreement in terms reasonably satisfactory to the Lender, and who, timely, but no later than within the following ten (10) Business Days after any Lender’s request, that provides information and documentation reasonably requested by the Lender in order to comply with the applicable regulations and provisions regarding anti-money laundering and customer identification (“know your customer”).
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“Additional Mexican Guarantors” means the Additional Joint Obligors and the Additional Joint Obligors (Fiadoras).
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control of the said Person.
“Agreement” means, this loan agreement, including its schedules and exhibits and any amendment or restatement thereof.
“Alternative Fuels” are defined following the Global Cement and Concrete Association Sustainability Guidelines, as in effect on the execution date hereof, for co-processing fuels and raw materials in cement manufacturing and include industrial waste, municipal solid waste, biomass residues and tires.
“Annual Period” means each calendar year.
“Applicable Law” means, with respect to any Person, (i) any law (including Environmental Laws), regulations, ordinances, rules, norms, judgments, orders, decrees, permits, official standards (normas técnicas), guidelines, international sanctions regime, judicial orders, concessions, or other governmental provisions or restrictions or any interpretation or administration of any of the foregoing by any Governmental Authority, any of the foregoing, local or foreign, by virtue of which said Person or all or any of its assets, are bound, and (ii) any directive, guideline, policy, requirement or any form of decision or similar determination by any Governmental Authority that is mandatory, in each case, currently or in the future.
“Applicable Margin” means, for each Interest Period, the relevant basis points according to the following table based on the Borrower’s Consolidated Leverage Ratio (calculated in accordance with Section 6.4), in force at the beginning of the Interest Period in question, provided that said basis points shall be subject to increases and decreases pursuant to the Sustainability Margin Adjustment applicable in terms of Exhibit H:
| Consolidated Leverage Ratio | Applicable Margin | |
| Greater than three point twenty-five times (3.25x) | ||
| Less than or equal to three point twenty-five times (3.25x) but greater than two point seventy-five times (2.75x) | ||
| Less than or equal to two point seventy-five times (2.75x) but greater than two point twenty-five times (2.25x) | ||
| Less than or equal to two point twenty-five times (2.25x) | ||
“Approved Fund” means any Person (except for an Individual) who is involved in the making, purchase, holding or in the investment or making of commercial credits and similar loans in the ordinary course of its activities; that is administered or managed by (a) the Lender, (b) an Affiliate of the Lender or (c) an entity or an Affiliate of an entity that administers or manages the Lender.
“Banorte” has the meaning assigned to it in the preamble hereof.
7
“Borrower Materials” has the meaning assigned to it in Section 5.2.
“Borrower’s Account” means, the account for deposits in Mexican currency number 0213505532, CLABE 072580002135055324, that the Borrower maintains with Banorte, or any other account that the Borrower opens and maintains with Banorte, for the purpose of receiving the proceeds of the Borrowing disbursed by Banorte, as indicated by the Borrower in the relevant Borrowing Notice.
“Borrower” has the meaning assigned to it in the preamble hereof.
“Borrowing Date” means, the date indicated in the Borrowing Notice, which is at least three (3) Business Days after the date on which the Lender receives said Borrowing Notice, on which the Borrower shall make the Borrowing of the Loan.
“Borrowing Notice” has the meaning assigned to it in Section 2.2(b) hereof.
“Borrowing” has the meaning assigned to it in Section 2.2(a) hereof.
“Business Day” means, any day other a Saturday or Sunday, or a day on which credit institutions are authorized or required to close in Mexico City, Mexico, in accordance with the applicable provisions issued by the National Banking and Securities Commission.
“CCP Rate” means the Costo de Captación a Plazo de Pasivos denominated in Mexican Pesos published by Banco de Mexico on its official website (www.banxico.org.mx or any other that replaces it).
“Cementitious Product” means all clinker volumes produced by a company for cement making or direct clinker sale, plus gypsum, limestone, cement kiln dust and mineral components consumed for blending of cement, plus blending, plus all cement substitutes produced. Clinker bought from third parties for the production of cement shall not constitute Cementitious Product.
“Cemex” has the meaning assigned to it in the preamble hereof.
“CETE Rate” means the rate of the Certificados de la Tesorería de la Federación published by Banco de Mexico on its official website (www.banxico.org.mx or any other that replaces it) and for a similar period to the Interest Period notified by the Lender.
“Change in Law” means the occurrence, after the First Amendment to the Credit Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means the beneficial ownership of twenty percent (20%) or more in voting power of the outstanding Voting Stock of the Borrower is acquired by any Person. Notwithstanding the foregoing, a transaction shall not be deemed to constitute a Change of Control if (1) the Borrower
8
becomes a direct or indirect Wholly Owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction, are substantially the same as the holders of the Borrower’s Voting Stock immediately prior to that transaction, or (B) immediately following that transaction no Person (other than a holding company satisfying the requirements of this sentence) has beneficial ownership of twenty percent (20%) or more in voting power of the Voting Stock of such holding company.
“Commitment” has the meaning assigned to it in Section 201(a) of this Agreement. .
“Common Stock” means, with respect to any Person, any and all shares, equity interests (partes sociales), interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common equity interests, whether outstanding on the execution date of this Agreement or issued thereafter, and includes, without limitation, all series, and classes of such common equity interests. For the avoidance of doubt, “Common Stock” of the Borrower shall be deemed to include the Borrower’s American Depositary Receipts and ordinary participation certificates (certificados de participación ordinarios).
“Compliance Certificate” means, a certificate signed by a Responsible Officer of Cemex as appropriate, substantially in the form of Exhibit A.
“Consolidated Coverage Ratio” means, on any date of determination, the ratio of (a) the Consolidated Net Debt on such date between (b) the Consolidated EBITDA of said Person for the last one (1) year period ending on such date.
“Consolidated Debt” means, at any date, the sum (without duplication) of (a) the aggregate amount of all Financial Debt of the Borrower and its Subsidiaries on a consolidated basis at such date, plus or minus, as applicable, (b) to the extent not included in Financial Debt, the aggregate net mark-to-market amount, which may be positive or negative, of all Swap Contracts (except to the extent such exposure is cash collateralized to the extent permitted under, or not restricted by, the Loan Documents). Notwithstanding the foregoing, Consolidated Debt shall exclude any existing or future obligations under any Securitization, any subordinated notes with no fixed maturity (which shall include, for the avoidance of doubt, the Borrower’s US$1,000 million 5.125% subordinated notes with no fixed maturity and the Borrower’s US$1,000 million 9.125% subordinated notes with no fixed maturity subordinated notes), and any Indebtedness (whether in the form of perpetual, convertible, hybrid or similar securities or financial instruments) that is subordinated to the obligations under the Loan Documents.
“Consolidated EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, operating earnings before other (expenses) income, plus net depreciation and amortization expense, in each case determined in accordance with International Financial Reporting Standards, as adjusted for any Discontinued EBITDA, and solely for the purpose of calculating the Consolidated Leverage Ratio on a Pro Forma Basis for any Material Disposition and/or Material Acquisition.
“Consolidated Interest Expense” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of: (a) consolidated interest expense, to the extent such expense has been deducted (and not added back) in computing consolidated net income (or loss), including (i) amortization of original issue discount resulting from the issuance of indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances, (iii) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of obligations under any hedge agreements or other derivative instruments pursuant to International Financial Reporting Standards), (iv) net payments, if any, made (less net
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payments, if any, received) pursuant to interest rate obligations under any hedge agreements with respect to indebtedness, (v) penalties and interest relating to taxes, and (vi) any expensing of bridge, commitment or other financing fees, and excluding amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses; plus (b) consolidated capitalized interest and the interest component of Leases that constitute Indebtedness of such person for such period, whether paid or accrued.
“Consolidated Leverage Ratio” means, on any date of determination, the ratio of (a) Consolidated Net Debt on such date to (b) Consolidated EBITDA of such Person for the last one (1) year period prior to said date.
“Consolidated Net Debt” means, at any date, for the Borrower and its Subsidiaries on a consolidated basis, the Consolidated Debt net of Cash (as stated in the relevant line item of the Financial Statements in question, as determined in accordance with the International Financial Reporting Standards) of the Borrower and its Subsidiaries that would not appear as “restricted” on a balance sheet in accordance with International Financial Reporting Standards on such date.
“Contractual Obligation” means, as to any Person,) any provision included in (a) any security issued by such Person or (b) any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” the power to direct the management and policies of a Person, directly or indirectly, whether through the ability to exercise voting power, by contract or otherwise.
“Convertible Debt” means any (a) Indebtedness the terms of which provide for the conversion to or exchange for Common Stock of the Borrower, cash in exchange, and/or a combination of Common Stock of the Borrower and cash, or (b) contingent convertible units and related credit note purchase agreements.
“Covenant Modification Date” means the date on which Covenant Modification Event has occurred, as notified to the Lender by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower, provided that such notice is delivered no later than five (5) Business Days after such Covenant Modification Event has occurred.
“Covenant Modification Event” means the occurrence of all of the following events, concurrently: (i) no Default or Event of Default has occurred and is continuing and (ii) a “Suspension Period” (as such term is defined in the Indenture as of the date hereof without any waiver or amendment thereto) is continuing under the Indenture; provided that if the Notes (as defined in the Indenture) are repaid or otherwise no longer outstanding, the immediately preceding clause (ii) shall be replaced in its entirety by the requirement that the Borrower has Investment Grade Ratings from two Rating Agencies.
“Covenant Reversion Date” means the date on which any of the following has occurred, as notified to the Lender by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower: (i) the Borrower ceases to have Investment Grade Ratings from two Rating Agencies, (ii) a Default or an Event of Default occurs and is continuing or (iii) the applicable “Suspension Period” (as such term is defined in the Indenture as of the date hereof without any waiver or amendment thereto) under the Indenture is terminated or is otherwise no longer applicable.
“Default Interest Rate” has the meaning assigned to it in Section 2.6 hereof.
“Default” means any event, act, or condition that, by the mere expiration of the applicable cure period, if any, by giving of any notice, or both, would be an Event of Default.
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“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any comprehensive Sanction (at the time of the First Amendment to the Credit Agreement,, Cuba, Iran, North Korea, Syria, and the Crimea, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic regions of Ukraine).
“Discontinued EBITDA” means, for any period, the sum for Discontinued Operations of the operating income for such period plus, without duplication and to the extent deducted in determining such discontinued operating income, depreciation, amortization expense and impairment of assets of the Discontinued Operations. For the avoidance of doubt, the Discontinued EBITDA shall be added to the Consolidated EBITDA for any period for which the Disposition of the Discontinued Operations has not yet occurred.
“Discontinued Operations” means operations that are accounted for as discontinued operations for which the Disposition of the corresponding assets has not yet occurred.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Lender” means (a) certain financial institutions and other institutional lenders that have been specified to the Lender by the Borrower in writing at any time prior to the execution date of the First Amendment to the Credit Agreement, (b) any of the Borrower’s competitors that have been specified to the Lender by the Borrower in writing at any time and periodically, and (c) in the case of each of clauses (a) and (b), any of their respective Affiliates that are either (i) identified in writing by the Borrower periodically, or (ii) clearly identifiable based on such Affiliate’s name.
“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar agreement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
“Dollars” or “US$” means, dollars, lawful currency in the United States of America.
“Environmental Law” means, the General Law of Ecological Balance and Environmental Protection, the General Law of Wildlife, the Regulations of the General Law of Ecological Balance and Environmental Protection in Matters of Environmental Impact Assessment, and any law, treaty, regulation, rule, ordinance, statute, decree, order or judicial resolution, , issued by a Governmental Authority, in matters of, or that refers to, the protection and conservation of the environment or the use and exploitation of natural resources, as well as those that regulate the use, disposal, storage, final disposal and in general the management or release into the environment of pollutants or hazardous materials, in each case, that are applicable to the Loan Parties and the real estate owned or in possession of said parties.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), whether based in contract, implied or express warranty, criminal or civil statute, pursuant to or arising from (a) any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is
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assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares or equity interest of Capital Stock of such Person and any rights or options to purchase any of the foregoing (but excluding any Convertible Debt), whether voting or nonvoting, and whether or not such shares, equity interests, warrants, options, rights or other interests are outstanding on any date of determination.
“Event of Default” means each of the events described in Article VII.
“Excluded Taxes” means any Taxes imposed on or with respect to the Lender (or any successor or assignees) (the “Recipient”) required to be withheld or deducted from a payment to a Recipient, as or as a result of (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, the lending office that grants any loan pursuant to this Agreement located in, the jurisdiction imposing such Tax, or (ii) that are imposed as a result of a present or past connection between the Recipient and the jurisdiction imposing such Tax, or (b) any withholding Taxes in excess of the withholding Taxes that would have been imposed had such Recipient been a Qualified Entity at the time of payment.
“Existing Debt” means the Indebtedness described Schedule 1(a) hereof.
“Final Repayment Date” means the fifth anniversary of the execution date of the First Amendment to the Credit Agreement and, if it is not a Business Day, the immediately preceding Business Day.
“Financial Debt” means, at any date with respect to any Person, the sum (without duplication) of the following, in each case, as determined in accordance with International Financial Reporting Standards:
| (a) | Indebtedness of such Person pursuant to clause (a) of the definition thereof; |
| (b) | Indebtedness of such Person pursuant to clause (b) of the definition thereof; |
| (c) | Indebtedness of such Person pursuant to clause (c) of the definition thereof; |
| (d) | Indebtedness of such Person pursuant to clause (e) of the definition thereof; |
| (e) | Indebtedness of such Person pursuant to clause (f) of the definition thereof; and |
| (f) | all Guarantees of such Person in respect of any of the foregoing. |
“International Financial Reporting Standards” means, the International Financial Reporting Standards (IFRS), as they are in force from time to time.
“First Amendment to the Credit Agreement” means the amendment and restated agreement dated December 6, 2023, entered by the Borrower, as borrower, the Initial Joint Obligor, as joint obligor, the Initial Joint Obligor (Fiadora), as joint obligot (fiadora), and the Lender, as lender.
“Financial Statements” means, with respect to any Person, the statement of financial position, the statement of income and the statement of cash flows, seen as a whole, which may or may not be audited, as indicated in this Agreement.
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“Financial Statements as of Closing” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2022, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“Foreign Guarantors” means the Additional Foreign Guarantors and the Initial Foreign Guarantors.
“Governmental Authority” means any of the executive, legislative or judicial branches, regardless of the manner in which they act, either Federal, state or municipal, as well as any municipal government body, any government agency, instrumentality, ministry, stock or futures exchange, administrative department, administrative or regulatory authority, registry, entity or court (including, without limitation, banking and tax authorities), decentralized body or equivalent entity or any state, department or other political subdivision thereof, or any governmental body, authority (including any central bank or tax authority) or any entity that exercises government, executive, legislative or judicial functions, whether of Mexico, United States of America or other nations.
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “Primary Obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the Primary Obligor to allow the Primary Obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of any Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guarantor” or “Guarantors” means, jointly or individually, as the context may require, the Initial Guarantors and the Additional Guarantors.
“Guaranty” means the Guaranty made by the Initial Foreign Guarantors in favor of the Lender, substantially in the form of Exhibit C.1
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes, or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
1 To be discussed with the USA and Swiss legal advisors if the existing Guarany needs to be amended or if any other action is required.
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“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with the International Financial Reporting Standards (except as expressly set forth below):
(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments which, for the avoidance of doubt, shall not deemed Indebtedness until they are required to be funded;
(c) net obligations of such Person under any Swap Contract (as determined in accordance with the International Financial Reporting Standards);
(d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) if (i) one of the primary reasons behind entering into such obligation is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply;
(e) Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) but only to the extent of the fair market value of the property secured thereby, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f) the aggregate amount of all financial obligations arising under any Leases of such Person recognized in the consolidated statement of financial position of such Person in accordance with the International Financial Reporting Standards less the sum (without duplication) of (i) all obligations to pay the deferred purchase price of properties or services and (ii) all obligations of such Person with respect to product invoices incurred in connection with export financing;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment before the Final Repayment Date (other than at the option of such Person) in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h) all Guarantees of such Person in respect of any of the foregoing.
For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person, and in any case only to the extent of the recourse to such Person.
“Indemnitee” has the meaning assigned to it in Article VIII hereof.
“Indenture” means the Indenture dated as of January 12, 2021 (as it may be amended or supplemented from time to time in accordance with the terms thereof), among the Borrower, The Bank of New York Mellon, as trustee, and the guarantors party thereto.
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“Initial Foreign Guarantors” means Cemex Corp., a company organized and existing under the laws of the United States of America, and Cemex Innovation Holding Ltd., a company organized and existing under the laws of the Swiss Confederation.
“Initial Guarantors” means the Initial Mexican Guarantors and the Initial Foreign Guarantors.
“Initial Joint Obligor” has the meaning assigned to it in the preamble hereof.
“Initial Joint Obligor (Fiadora)” has the meaning assigned to it in the preamble hereof.
“Initial Mexican Guarantors” means the Initial Joint Obligor and the Joint Obligor (Fiadora).
“Intellectual Property Rights” has the meaning assigned to it in Representation I(15) hereof.
“Interest Payment Date” means, with respect to the Loan, the last day of each Interest Period of the Loan.
“Interest Period” means (i) initially the period that begins on (and includes) the Borrowing Date and that ends on (but excludes for purposes of calculating interest) the twenty-third calendar day of the month that occurs one (1), three (3), or six (6) months after the Drawdown Date, as notified by the Borrower to the Lender in the Borrowing Notice, and ( (ii) subsequently, for each of the subsequent periods, the period that begins on (and includes) the last day of the immediately preceding Interest Period and that ends on (but excludes for the purposes of calculating interest) the twenty-third calendar day of the month that occurs one (1), three (3), or six (6) months after the applicable Interest Period, as notified in writing by the Borrower to the Lender with at least five (5) Business Days before the start of the Interest Period to which the period in question will be applicable, provided that:
| (a) | no Interest Period shall extend beyond the Final Repayment Date; |
| (b) | any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, such Business Day falls in another calendar month, in which case such Interest Period shall end on the preceding Business Day; |
In the event that the Borrower fails to notify the duration of an Interest Period, it will be understood that the period in question will have a term equal to the term of the Interest Period immediately preceding the Interest Period in question.
“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“Joint Obligor (Fiadora)” or “Joint Obligors (Fiadoras)” means jointly or individually, as the context may require, the Initial Joint Obligor (Fiadora) and the Additional Joint Obligors (Fiadoras).
“Joint Obligor” or “Joint Obligors” means, jointly or collectively, as the context may require, the Initial Joint Obligor and the Additional Joint Obligors.
“KPI Metrics Reviewer”
means, with respect to any KPI Metric, KPMG Cárdenas Dosal, S.C.; or any replacement KPI Metrics Reviewer thereof as designated from time to time by the Borrower; provided that any such replacement KPI Metrics Reviewer (a) shall be (i) a qualified external reviewer (other than an Affiliate of the Borrower), with relevant expertise, such as an auditor, environmental consultant and/or independent
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ratings agency of recognized national standing (for the avoidance of doubt, any “big four” auditing firm or other auditing firm of recognized national standing shall be an acceptable replacement KPI Metrics Reviewer) or (ii) another firm designated by the Borrower and approved by the Lender, and (b) shall apply standards and methodology of review that are the same as or substantially consistent with the standards and methodology of review used in the Borrower’s KPI Metrics Report delivered by the Borrower for the immediately preceding Annual Period, except for any changes to such standards and/or methodology that (x) are consistent with the generally accepted industry standards or (y) if not so consistent, are proposed by the Borrower and approved by the Lender.
“KPI Metrics Report” means a report that may take the form of any nonfinancial disclosure of the Borrower’s performance of one or more KPI Metrics, prepared by or on behalf of the Borrower for one or more KPI Metrics for a specific Annual Period, and published on an Internet or intranet website to which each Lender has been granted access free of charge (or at the expense of the Borrower). Such KPI Metrics Report shall be reviewed by the KPI Metrics Reviewer.
“KPI Metrics” means:
means:
| (a) | (i) direct CO2 emissions related to the production of cement and clinker (excluding on site electricity production) and (ii) indirect CO2 emissions from purchased electricity, in each case, measured in kg of CO2 per ton of Cementitious Product, minus emissions from biomass fuel sources and Alternative Fuels; |
| (b) | the amount of clinker consumed to produce clinker content in Cementitious Products; and |
| (c) | the percentage of fuel consumption from Alternative Fuels compared to the total fuel consumption for cement plant operations in a given period. |
“Lease” means, regarding any Person, the obligations of such Person under a contract, or part of a contract, that conveys the right to the use of an asset (the underlying asset) for a period of time in exchange for consideration. For the avoidance of doubt, for purposes of this definition and its application to the Borrower, short-term and little-value leases as defined by the Borrower’s policy under International Financial Reporting Standards are excluded.
“Lender” has the meaning assigned to it in the preamble hereof.
“Lien” means any mortgage, pledge, non-possessory pledge, hypothecation, assignment, deposit arrangement, encumbrance, easement, right-of-way or other encumbrance on title of a real property, lien (statutory or otherwise), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing); provided, however, that the following shall only constitute a Lien in circumstances where the arrangement or transaction is entered into primarily as a method of raising Indebtedness or of financing the acquisition of an asset:
(i) the sale, transfer or other Disposition of any of the assets of the Borrower or its Subsidiaries on terms whereby they can be leased to or re-acquired the Borrower or its Subsidiaries;
(ii) the sale, transfer or other Disposition of any of the Borrower’s or its Subsidiaries’ receivables on recourse terms;
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(iii) the entering into any arrangement under which money or the benefit of a bank account or other account may be applied, set-off or made subject to a consolidation of accounts; or
(iv) the entering into any other preferential arrangement having a similar effect as those described in (i) to (iii) above.
“Loan Documents” means, the collective reference to this Agreement, the Fist Amendment to the Credit Agreement, each Promissory Note, the Guaranty, their respective schedules and exhibits, as well as any other document executed or granted thereunder, including, in each case, any amendments, supplements or additions thereto.
“Loan Party” or “Loan Parties” means the collective reference to the Borrower and the Guarantors, or any of them individually, as the context may require.
“Loan” has the meaning assigned to it in Section 2.1(a) hereof.
“Material Acquisition” means any (a) acquisition of property or series of related acquisitions of property that constitutes assets comprising all or a relevant part of the entire operating unit, division or line of business or (b) acquisition of or other investment in the Equity Interests of any Subsidiary or any person which becomes a Subsidiary or is merged or consolidated with the Borrower or any of its Subsidiaries, in each case, which involves the payment of consideration by the Borrower and its Subsidiaries in excess of US$250.0 million (or its equivalent in other currencies).
“Material Adverse Effect” means (a) a material adverse change in the business, financial condition, operations, performance or properties of the Borrower and its Subsidiaries taken as a whole; or (b) a material adverse effect on (i) the ability of any Loan Party to perform its payment Obligations under any Loan Document or (ii) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or (iii) the rights, remedies and benefits available to, or conferred upon, the Lender under any Loan Documents.
“Material Disposition” means any Disposition of assets or series of Dispositions of related assets that generate gross profit for the Borrower or any of its Subsidiaries in excess of US$250.0 million (or the equivalent in other currencies).
“Mexican Guarantors” means the Additional Mexican Guarantors and the Initial Mexican Guarantors.
“Mexico” has the meaning assigned to it in the preamble hereof.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Loan Parties resulting from any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the start of or against any of the Loan Parties or any Affiliate thereof, as a result of, any insolvency or bankruptcy proceeding naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, indemnities, reimbursements and other amounts (including all fees, charges, expenses and disbursements of counsel to the Lender) payable to the Lender by any of the Loan Parties under any Loan Document, and (b) the obligation of the Loan Parties, as the case may be, to reimburse any amount in respect of any of the foregoing that the Lender, in each case in its sole discretion, has the right to elect to pay or advance on behalf of the Borrower, precisely in
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accordance with the terms and conditions of the Loan Documents.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Ordinary Interest Rate” means, in connection with the Loan and for each Interest Period thereof, the TIIE Rate plus the Applicable Margin, provided that, if the TIIE Rate is not published on the first Business Day of any Interest Period, the Ordinary Interest Rate shall be the Successor Rate plus the Applicable Margin.
“Organization Documents” means, with respect to any Person, its articles of incorporation and current bylaws, or equivalent documents, however designated.
“Participant Register” has the meaning assigned to it in Section 9.2(d) hereof.
“Participant” has the meaning assigned to it in Section 9.2(d).
“Payment Account” means the account for deposits in national currency number 1129-82758-3, CLABE 072580011298275838, opened in Banorte, or any other account in Banorte that the Lender notifies in writing to the Borrower prior to the corresponding payment, in the which the sums corresponding to principal, interest, or any other amount owed to the Lender will be deposited in accordance with the Loan Documents.
“Person” means any individual, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority, or other entity.
“Pesos” or “$” means, pesos, lawful currency in Mexico.
“Pricing Certificate Inaccuracy” has the meaning assigned to it in Section 2.10(d) hereof.
“Pricing Certificate” means a certificate substantially in the form of Exhibit B signed by a Responsible Officer of the Borrower attaching (a) true and correct copies of each KPI Metrics Report for the immediately preceding Annual Period which must set forth the Sustainability Margin Adjustment for the period covered thereby and for the KPI Metrics disclosed therein, and computations in reasonable detail in respect thereof and (b) if any KPI Metrics Report was reviewed by the KPI Metrics Reviewer, a review report of the KPI Metrics Reviewer containing its customary limited assurances (or such other assurances as may be reasonably acceptable to the Lender) with respect to the computations in such KPI Metrics Report.
“Principal Repayment Date” means (i) the twenty-third calendar day of the calendar months indicated in the table contained in Section 2.4(a), provided that, if said day is not a Business Day, the Principal Repayment Date will be the following Business Day, unless said Business Day occurs in the following calendar month, in which case the Principal Repayment Date will be the previous Business Day, and (ii) the Final Payment Date..
“Pro Forma Basis” means, with respect to compliance with any test or covenant hereunder in respect of a specified measurement period, compliance with such covenant or test after giving effect to any Material Acquisition or Material Disposition, using, for purposes of determining such compliance, the historical financial statements of all entities or assets acquired or disposed of and the consolidated financial statements of the Borrower and its Subsidiaries which shall be reformulated as if such Material Acquisition or Material Disposition which has been consummated during such period had been
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consummated on the first day of such period.
“Process Agent” means CEMEX NY Corporation, or any other Person designated by the Foreign Guarantors periodically pursuant to the Guaranty.
“Promissory Note” or “Promissory Notes” means, collectively, the Tranche A Promissory Note and the Tranche B Promissory Note.
“Qualified Entity” means any Lender (or, if such Lender acts through a branch, agency, the principal office of such Lender) that (a) is the effective beneficiary of the payments made by any Loan Party organized under the laws of Mexico hereunder, (b) meets the requirements imposed by article 166-I, paragraph (a), Section (2) (or any other successor provision) of the Mexican Income Tax Law (Ley del Impuesto Sobre la Renta) and delivers to the Borrower the information described in Sections 3.18.18. and/or 3.18.19, as applicable, of the Resolución Miscelánea Fiscal para 2023 (Tax Resolution for 2023) (or any substitute or successor provisions), and (c) is a resident for tax purposes of a country with which Mexico has entered into a treaty for the avoidance of double taxation that is in effect.
“Rating Agencies” mean Fitch, Moody’s and S&P. In the event that Fitch, Moody’s or S&P is no longer in existence or issuing ratings, such organization may be replaced by a nationally recognized statistical rating organization (as defined in Rule 15c3-1(c)(2)(vi)(F) of the Exchange Act or any successor provision) designated by the Borrower with notice to the Administrative Agent.
“Register” has the meaning assigned to it in Section 9.2(c) hereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents, and advisors of such Person and of such Person’s Affiliates.
“Responsible Officer” means the chairman of the board, the chief executive officer, president, chief financial officer, any vice president, treasurer, assistant treasurer, comptroller, secretary, assistant secretary or representative of the Loan Parties, and solely for purposes of the delivery of incumbency certificates pursuant to Clauses 2 and 4, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Lender. Any document delivered pursuant to this Agreement that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate actions on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“Sanctioned Lender” means any Person reasonably believed by the Borrower to be either a sanctioned Person or any Person to which an assignment of right and/or obligations hereunder could put the Borrower and/or any of its Affiliates in a position of actual or potential non-compliance with Applicable Law (including, but not limited to, Sanctions).
“Sanctions” means any economic or financial sanction administered or enforced by the United
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States Government (including without limitation, OFAC and the U.S. Department of State), the United Nations Security Council, the European Union, or Her Majesty’s Treasury.
“Securitization” means a transaction or series of related transactions providing for the securitization of receivables and related assets by the Borrower or its Subsidiaries, including a sale at a discount; provided that (i) such receivables have been transferred, directly or indirectly, by the originator thereof to a person that is not the Borrower or any of its Subsidiaries in a manner that is considered an absolute conveyance (or, where the originator is organized under the laws of Mexico, a true sale), and not merely a pledge, under the laws and regulations of the jurisdiction in which such originator is organized; and (ii) except for customary representations, covenants and indemnities, such sale, transfer or other securitization is carried out on a non-recourse basis or on a basis where recovery is limited solely to the collection of the relevant receivables (other than where such recourse or recovery is required pursuant to the Applicable Laws or regulations in any jurisdiction).
“Solvent” means, with respect to the Borrower, that as of the date of determination, (a) the sum of the debt (including contingent liabilities) of the Borrower and its Subsidiaries on a consolidated basis does not exceed the present fair saleable value of the present assets of the Borrower and its Subsidiaries on a consolidated basis; (b) the capital of the Borrower and its Subsidiaries on a consolidated basis is not unreasonably small in relation to its business as contemplated on the date of determination; (c) the Borrower and its Subsidiaries on a consolidated basis do not intend to incur, or believe that they shall incur, debts beyond their ability to pay such debts as they become due in the ordinary course of business; or (d) the Borrower and its Subsidiaries do not fall in any of the events of Articles 9, 10 or 11 of the Bankruptcy Law or Article 2166 of the Civil Code. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under FASB Accounting Standards Codification Topic 450-20).
“Subsidiary” means, with respect to any Person and at any time, any corporation, partnership, joint venture, trust, estate or any other entity of which (or in which) more than fifty percent (50%) of its voting stock are, in that time, directly or indirectly, owned by, or Controlled by, said Person, directly or indirectly, or by a Person that is Controlled by said Person.
“Successor Rate” has the meaning assigned to it in Section 2.5(b) hereof.
“Sustainability Margin Adjustment” means an adjustment to the Applicable Margin for any KPI Metric as provided by this Agreement.
“Sustainability Pricing Adjustment Date” has the meaning assigned to it in Section 2.10(a) hereof.
“Sustainability Recalculation Event” has the meaning specified in Section 2.13(d).
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the
20
foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swiss Federal Tax Administration” means the tax authorities referred to in article 34 of the Swiss Federal Act on Withholding Tax of 13 October 1965, as from time to time amended (Bundesgesetz über die Verrechnungssteuer).
“Taxes” means, any tax, assessment, use, withholding, fee, deduction, charge or other fiscal obligation together with interests, penalties, fines or surcharges derived therefrom, payable to any Governmental Authority in accordance with Applicable Law, including social security fees, housing or retirement savings.
“TIIE Rate” means, for each Interest Period, the twenty-eight (28) day, ninety-one (91) day, or one hundred eighty-two (182) day, Interbank Equilibrium Interest Rate published by the Banco de México in the Official Gazette of the Federation, the first Business Day of said Interest Period, as appropriate to the interest period notified by the borrower to the lender.
“Tranche A Credit Availability Period” means, the period that begins on the execution date hereof and ends on January 20, 2022.
“Tranche A Promissory Note” means, with respect to the Tranche A Loan, non-negotiable promissory note (pagaré no negociable) made by the Borrower as issuer and the Mexican Guarantors, as guarantors (avalistas) in favor of a Lender, for the principal amount of the Loan borrowed by the Borrower, and substantially in the form of Exhibit D-1.
“Tranche A Structuring Fee” has the meaning assigned to it in Section 2.4, clause (e)(i) hereof.
“Tranche B Credit Availability Period” means, the period that begins on the execution date of the First Amendment of the Credit Agreement and ends thirty (30) calendar days from the execution of the First Amendment of the Credit Agreement.
“Tranche B Promissory Note” means, with respect to the Tranche B Loan, non-negotiable promissory note (pagaré no negociable) made by the Borrower as issuer and the Mexican Guarantors, as guarantors (avalistas) in favor of a Lender, for the principal amount of the Loan borrowed by the Borrower, and substantially in the form of Exhibit D-2.
“Tranche B Structuring Fee” has the meaning assigned to it in Section 2.4, clause (e)(ii) hereof.
“Use of Loan Proceeds” has the meaning assigned to it in Section 5.11 hereof.
“Voting Stock” means, any shares or equity interests representing the capital stock of a commercial company, and any interests, participations or other equivalents (however designated) in any Person (other than a commercial company), Mexican or foreign, that grant their holders in general voting rights (excluding any Convertible Debt) to appoint members of the board of directors (or equivalent officials).
“Wholly Owned Subsidiary” means, for any Person, any Subsidiary of which at least 99.5% of
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the outstanding Equity Interests (other than, in the case of a Subsidiary not organized in the United States, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to Applicable Law) is owned by such Person or any other Person that satisfies this definition in respect of such Person.
(b) Rules of Interpretation. In this Agreement:
(i) capitalized terms shall be equally applicable in the singular and plural forms according to their respective meanings;
(ii) when the context so requires, any pronoun must include the corresponding masculine or feminine or neutral form;
(iii) references to this Agreement or any other contract, agreement or document, or any specific provision thereof, should be construed as references to said instrument or provision as amended in accordance with their respective terms;
(iv) references to Article, Sections, clauses, paragraphs, schedules and exhibits, shall be understood to be made with respect to the Article, Sections, clauses, paragraphs, schedules and exhibits of this Agreement, unless otherwise inferred from the context;
(v) each of the schedules and exhibits attached to this Agreement form an integral part hereof;
(vi) the words “including,” “includes” and “include” shall be deemed to be followed by the phrase “without limitation,” unless otherwise expressly provided in this Agreement, and
(vii) any accounting terms that are not defined in clause (a) immediately above shall have the meaning that corresponds to said items in accordance with the Financial Reporting Standards.
Article II. The Loan.
Section 2.1. Commitment.
(a) Loan. Subject to the terms and conditions set forth herein, the Lender makes available to the Borrower, (i) during the Tranche A Availability Period, a loan (apertura de crédito simple) up to the principal aggregate amount not exceeding the equivalent in Pesos of US$250.0 million (the “Tranche A Loan”) calculated using the exchange rate to settle obligations denominated in foreign currency published in the Official Gazette of the Federation (Diario Oficial de la Federación) on the Business Day immediately preceding the date of the Borrowing Notice, and (ii) during the Tranche B Availability Period a loan (apertura de crédito simple) up to the principal aggregate amount not exceeding the equivalent in Pesos of MXN$769’050,000.00 (seven hundred sixty-nine million fifty Pesos 00/100 National Currency) (the “Tranche B Loan” and together with the Tranche A Loan, the “Commitment”).
(b) Acceptance; Items included in the Loan; Non-Revolving Loan. The Borrower accepts the Loan made available to it and agrees, once disbursed, and received, to repay it in accordance with the terms of this Agreement and each Promissory Note. Notwithstanding the Use of Loan Proceeds, the Loan does not include the interests, expenses and fees of any kind the Borrower is required pay and agreed upon in this Agreement. The Loan is made as a crédito simple, and so any amounts borrowed and repaid by the Borrower of said Loan may not be borrowed again.
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Section 2.2. Borrowing.
(a) Borrowing of the Loan. (i) Subject to the provisions of Clause Fourth, section (a), the Borrower shall use the Tranche A Loan in Pesos in a single borrowing (the “Borrowing”) within the Tranche A Availability Period, up to an amount equal to the Commitment corresponding to the Tranche A Loan, provided that the conditions precedent described in Clause Fourth, section (a) have been satisfied. The Borrowing of the Tranche A shall cease without any responsibility to the Lender once the Tranche A Availability Period has concluded. Therefore, the Lender will not have any obligation to disburse any balance (if any) of the Commitment corresponding to the Tranche A Loan, which the Borrower has not drawn down during the Tranche A Availability Period.
(ii) Subject to the provisions of Clause Fourth, section (b), the Borrower shall use the Tranche B Loan in Pesos in a single borrowing (the “Borrowing”) within the Tranche B Availability Period, up to an amount equal to the Commitment corresponding to the Tranche A Loan, provided that the conditions precedent described in Clause Fourth, section (b) have been satisfied. The Borrowing of the Tranche B shall cease without any responsibility to the Lender once the Tranche B Availability Period has concluded. Therefore, the Lender will not have any obligation to disburse any balance (if any) of the Commitment corresponding to the Tranche B Loan, which the Borrower has not drawn down during the Tranche B Availability Period
(b) Borrowing Notice. No later than at twenty (20:00) hours, Central Mexico time, at least three (3) Business Days prior to the proposed Borrowing Date, the Borrower shall provide to the Lender borrowing request substantially in the form of Exhibit E (the “Borrowing Notice”), which must include (i) the amount in Pesos of the Tranche A Loan or, if applicable, the amount of the Tranche B Loan, which, as a whole, may not exceed the amount of the Commitment, (ii) in the case of the Tranche A Loan, the exchange rate used to calculate the amount of the disbursement, which must correspond to the exchange rate to settle obligations denominated in foreign currency published in the Official Gazette of the Federation (Diario Oficial de la Federación) on the Business Day immediately preceding the date of the Borrowing Notice , (iii) the proposed Borrowing Date, and (iv) the duration of the initial Interest Period. Delivery to the Lender of the Borrowing Notice constitutes the irrevocable request by the Borrower requiring the Lender to disburse the amounts set forth therein in accordance with the terms hereof.
(c) Deposit of the Borrowing. If the Borrowing Notice has been delivered to the Lender as provided in this Section 2.2 and the conditions precedent described in Article IV, section (a) or (b), as applicable, have been satisfied (or the Lender has waived them in writing), no later than 1:00 pm, Central Mexico time of the Borrowing Date proposed in the Borrowing Notice, the Lender shall deposit to the Borrower, in the Borrower’s Account, in Pesos and in immediately available funds, the amount of the Loan, to be disbursed in accordance with clause (b) above.
(d) Reduction of the Loan. If the Borrower has not borrowed all or a portion of the Loan funds in a timely manner, the Borrower agrees that the full amount of the Loan shall be automatically reduced by an amount equal to the amount of the Loan that has not been borrowed by the Borrower.
Section 2.3. Use of Proceeds. The Borrower shall use the full amount of the Loan solely and exclusively for the purposes included in the Use of Loan Proceeds.
Section 2.4. Repayment of the Loan; Fees.
(a) Repayment of the Loan. The Borrower shall repay the Lender the unpaid principal amount of each Loan in five (5) consecutive semiannual installment on each Principal Repayment Date which occur in the months set forth in the table below. On each Principal Repayment Date, the Borrower
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shall pay an amount equal to that resulting from calculating the repayment percentage indicated in the following table to the amount borrowed in respect to the Loan as it has been reduced as a result of any previous prepayment (unscheduled), provided that no balance of, or amount payable on or under the Loan may remain unpaid beyond the Final Repayment Date.
| Number of Prepayments | Prepayment Percentage | |
|
Principal Repayment Date that occurs on the thirty-sixth month (36) following the execution date of the First Amendment to the Credit Agreement. |
20% | |
|
Principal Repayment Date that occurs on the forty-second month (42) following the execution date of the First Amendment to the Credit Agreement. |
20% | |
|
Principal Repayment Date that occurs on the forty-eighth month (48) following the execution date of the First Amendment to the Credit Agreement. |
20% | |
|
Principal Repayment Date that occurs on the fifty-fourth month (54) following the execution date of the First Amendment to the Credit Agreement. |
20% | |
| Final Repayment Date | The total principal amount of all Loans on the Final Repayment Date |
(b) Voluntary Loan Prepayments. The Borrower may prepay, without any penalties, at any time, in whole or in part, the unpaid balance of the Loan, pro rata between the Tranche A Loan and the Tranche B Loan, prior written notice delivered to the Lender no later than 01:00 pm, Central Mexico time, of the day that is three (3) Business Days before the date on which the prepayment is intended to be made, specifying the relevant amount. Any prepayment of the Loan shall be for a minimum amount of principal equal to $50,000,000.00 (fifty million Pesos 00/100) or a multiple of $1,000,000.00 (one million Pesos 00/100) in excess of said amount. All principal prepayments shall be paid together with (i) any interest accrued on said principal amount on the date of the relevant prepayment and (ii) any breakage costs in accordance with Section 2.8, clause (a), only if that said payment is made on a date other than an Interest Payment Date. The prepayment notice by the Borrower shall constitute an irrevocable obligation to pay, at its expense, the amount of the Loan indicated therein, due precisely on the date indicated therein, provided that the reference notification may be revoked by the Borrower by notifying the Lender no later than at seventeen (17:00) hours, Central Mexico time, one (1) Business Day before the date in which advance payment is intended to be made, without any cost or penalty of any nature. Said partial prepayments shall be applied to the payment of the unpaid principal amounts of the Loan, in the manner indicated by the Borrower to the Lender in the relevant prepayment notice.
(d) Mandatory Loan Prepayments. If a Change of Control occurs, the Borrower shall prepay the principal unpaid balance of the Loan in full on the date that said Change of Control is effective, provided that payment shall include (i) the interest accrued on said principal amount on the date of the relevant prepayment and (ii) any breakage costs in accordance with Section 2.8, clause (a), only if that said payment is made on a date other than an Interest Payment Date.
(e) Fees. (i) The Borrower will pay the Lender a structuring fee (the “Tranche A Loan Structuring Fee”) equivalent to (a) 65 bps (sixty-five basis points) with respect to the amount of the Commitment corresponding to the Tranche A Loan plus the applicable Value Added Tax, which shall be generated on the execution date of this Agreement and shall be payable no later than the earlier of (1) the date on which the Borrowing is made under the Tranche A Loan, or (2) the later Business Day of the Tranche A Availability Period, and (b) 25 bps (twenty-five basis points) with respect to the amount of the
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Commitment corresponding to the Tranche A Loan plus the applicable Value Added Tax, which will be generated on the execution date of the First Amendment to the Credit Agreement and will be payable no later than February 2, 2024.
(ii) The Borrower shall pay the Lender a structuring fee equal to 25 bps (twenty-five basis points) with respect to the amount of the Commitment corresponding to the Tranche B Loan plus the applicable Value Added Tax (the “Tranche B Structuring Fee”). Said fee shall be generated on the execution date of the First Amendment to the Credit Agreement and shall be payable no later than February 2, 2024.
The Lender shall notify the Borrower of the amount of each fee described above, and the Borrower shall notify the Lender of the payment made of such fee. The lack of such determination and notice by the Lender shall not exempt Borrower from the obligation to make the relevant payment as calculated in good faith by the Borrower. Once the relevant payment has been made, the Lender shall provide a copy to the Borrower of the applicable tax receipts.
Section 2.5. Ordinary Interest.
(a) Ordinary Interest Rate. The Borrower is hereby required to pay the Lender, without any prior request, on each Interest Payment Date, ordinary interest on the unpaid balance of the Loan, as of the Borrowing Date and until it is fully repaid, at an annual interest rate for each Interest Period equal to the Ordinary Interest Rate.
(b) Impossibility to Determine the TIIE Rate. If on the first day of any Interest Period it is impossible to determine the value of the TIIE Rate according to the definition provided for in this Agreement, either because the TIIE Rate ceases to exist or its publication is temporarily suspended, during said Interest Period, instead of the TIIE Rate, the following rates shall be used, precisely in the order indicated below (and the rate that results from applying the following rules shall be the “Successor Rate”):
| first, |
the rate published by Banco de México as the successor rate of the TIIE Rate or, if Banco de México does not publish any successor rate for the TIIE Rate, then; | |
| second, |
a rate equal to the sum of the CETE Rate (corresponding to the Interest Period notified by the Borrower) as published on the date closest to the first Business Day of the relevant Interest Period (or, if it is not published on that date, the most recent published price available on that date) plus the difference between the CETE Rate and the TIIE Rate according to the values of said rates published on the Business Day immediately prior to the date on which the TIIE Rate ceased to be published, or, if the CETE Rate is not published in accordance with this Agreement, then; | |
| third, |
the CCP Rate as published on the date closest to the first Business Day of the relevant Interest Period (or, if it is not published on that date, the most recently published price available on that date) plus the difference between the CCP Rate and the TIIE Rate in accordance with the values of said rates published on the Business Day immediately preceding the date on which the TIIE Rate ceased to be published, or, in the event that the TIIE Rate, the CETE Rate and the CCP Rate cease to exist, or at the time of making the interest calculation, its price is not known, then; | |
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| fourth, |
any rate the Lender agrees with the Borrower, in good faith and in writing, as the substitute interest rate for the TIIE Rate for the purposes hereof. |
provided that (i) from the date on which the TIIE Rate or the CETE Rate or the CCP Rate, as the case may be, ceases to exist and until the date on which the quote of the relevant successor rate is known, or the date on which the TIIE Rate is published again or the date on which the parties agree on the applicable successor interest rate, the Successor Rate shall be the interest rate applicable to the immediately preceding Interest Period, (ii) if the TIIE Rate ceases to be published for a period exceeding thirty (30) calendar days, and in said period the quote of a successor interest rate or the CETE Rate or the CCP Rate was not known, and the Lender and the Borrower could not agree on the applicable successor interest rate, then the applicable interest rate shall be the market rate determined by the Lender as the rate that has a financial cost substantially similar to the cost of the TIIE Rate, which shall immediately be notified to the Borrower, including in said notice the basis assumptions for its determination, and (iii) any interest rate determined in accordance with this Section 2.5, clause (b), shall cease to apply when, at the beginning of any subsequent Interest Period, Banco de México republishes the TIIE Rate, its successor rate, or the CETE Rate or CCP Rate is known.
(c) Computation of Interest. Ordinary interest shall be paid on each Interest Payment Date, in arrears, and shall be calculated by the number of days actually elapsed on the basis of a 360-day year. The Lender shall communicate to the Borrower, as soon as possible, but in any case, at least seven (7) Business Days prior to each Interest Payment Date, any determination of the interest rate that it makes based on the provisions of this Agreement. Said determinations shall be, absent manifest error, shall be conclusive and binding upon the Loan Parties, as appropriate. The lack of such determination by the Lender shall not exempt the Borrower from the obligation to make the relevant payment as calculated in good faith by the Borrower.
(d) Retroactive Applicable Margin Adjustments. If, as a result of any restatement of or other adjustment to the Financial Statements of the Borrower or for any other reason, the Borrower or the Lender determines that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate, and (ii) an accurate calculation of the Consolidated Leverage Ratio would have resulted in higher pricing of the Applicable Margin for such period, the Borrower shall immediately and retroactively be required to pay to the Lender, on demand by the Lender, no later than within ten (10) days from the date of the relevant demand, an amount equal to the excess of the amount of interest that should have been paid for such period if the Consolidated Leverage Ratio had been accurately calculated, minus the amount of interest and fees actually paid for such period. This clause (b) shall not limit the rights of the Lender under Section 2.6 or Article VII; provided that any inaccuracy described in this clause (b) shall not constitute a Default or Event of Default with respect to Article VII, clause (a) or (c) so long as (x) the Lender complies with the terms of this clause (b) and (y) the Borrower was in compliance with the covenants in Section 6.5 at the date the Consolidated Leverage Ratio was inaccurately calculated (as evidenced by a proper calculation of the Consolidated Leverage Ratio as of such date). The Borrower’s obligations under this clause (b) shall survive the termination of the Commitment and the repayment of all other Obligations hereunder.
Section 2.6. Default Interest. In case of delay in the payment of any amount (or portion thereof) payable under the Loan Documents (except for interest), said amount shall accrue default interest (instead of ordinary interest) on the amount due and unpaid since, the date said payment should have been made and up to, and including, the date of its full payment, excluding the payment date, at an annual rate equal to the applicable Ordinary Interest Rate multiplied by two (2) (the “Default Interest Rate”). Default
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interest shall be paid on demand by the Borrower and shall be calculated by the number of days of the default (as indicated in this paragraph) based on a 360-day year.
Section 2.7. Payments Generally.
(a) Payments Generally. (i) The Borrower’s obligations are absolute and all payments of principal, interest and other amounts payable by Borrower hereunder or under the other Loan Documents, shall be made in Pesos to the Lender’s address indicated in Section 9.4 or such other address as indicated in accordance with said Section 9.4, or in the Payment Account in accordance with clause (b) below, before 01:00 pm (Central Mexico time), in accordance with the terms of this Agreement, unconditionally, and without withholding or setoff. All payments and prepayments under this Agreement or the other Loan Documents shall be made by wire transfer of immediately available funds. Any payment received by the Lender after 01:00 pm (Central Mexico time) shall be deemed made the next Business Day and the applicable interest shall continue to accrue. The Borrower shall provide the Lender with the documentation and information that proves the respective payment within three (3) Business Days after the corresponding payment date.
The account statement issued by the Lender shall describe the amounts of interest, fees or expenses paid under this Agreement.
(ii) No amount payable on or under the Loan may remain unpaid beyond the Final Repayment Date.
(b) Charges to Account; Setoff. Notwithstanding the foregoing, each of the Loan Parties expressly authorizes and irrevocably instructs the Lender, who shall have the right but not the obligation, to:
(i) withdraw and charge from the Payment Account, all amounts payable under this Agreement and the other Loan Documents, on the applicable payment dates, with the Borrower required to maintain sufficient funds to make said payments on the applicable dates. The authorization contained in this paragraph does not release the Borrower from its payment obligation but until the Lender receives all the amounts owed to it, having this authorization is irrevocable as long as there are unpaid balances of the Loan, and.
(ii) in the event that an Event of Default occurs and any Loan Party is required to pay the Lender any amount under the Loan Documents and said Loan Party fails to comply with said payment obligation, offset any unpaid and payable debt under the Loan Documents the Lender may have in its favor and payable by any Loan Party for any reason, precisely up to an amount equal to the amount due and unpaid to the Lender, without the need for any requirement, notice or demand of any nature.; and
(iii) for such purposes, the Lender may charge to any account that the Borrower has with the Lender, that is liquid including deposit, demand, savings, term, provisional or definitive and/or investment accounts (if liquid), any overdue and unpaid debts payable by the Loan Party in question, as principal, interest, fees, documented expenses and accessories exclusively under the Loan Documents, this authorization being irrevocable as long as there are unpaid credit balances. Within three (3) Business Days following the date on which the setoff or charge in question is made, the Lender must notify in writing to the Borrower of the setoff or charge made pursuant to the irrevocable instructions contained in this clause (b), provided that the lack of said notice shall not affect the validity of said charge or setoff.
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(c) Waterfall. The parties undertake and agree that the amounts any of the Borrower or the Guarantors, as applicable, pay to the Lender in connection with the Loan under the Loan Documents shall be applied in the following order (to the extent existing):
| first, |
to the payment of the value added tax on fees and expenses payable to the Lender, if any; | |
| second, |
to the payment of any expense or fee the Borrower owes to the Lender under the Loan Documents; | |
| third, |
to the payment of the value added tax, default interests of the Loan, pro rata between the Tranche A Loan and the Tranche B Loan, , if any, incurred pursuant to this Agreement; | |
| fourth, |
to the payment of the default interests of the Loan, pro rata between the Tranche A Loan and the Tranche B Loan, if any, incurred pursuant to this Agreement until the date on which the payment in question is made; | |
| fifth, |
to the payment of the value added tax on default interest on the Loan, pro rata between the Tranche A Loan and the Tranche B Loan, if any, accrued under this Agreement; | |
| sixth, |
to the payment of ordinary interest on the Loan; | |
| seventh, |
to the payment of unpaid principal amounts of the Loan pro rata between the Tranche A Loan and the Tranche B Loan. | |
Section 2.8. Performance Protection; Change in Applicable Law; Illegality.
(a) Breakage Costs. Unless otherwise indicated in this Agreement if the Borrower makes any payment or advance payment of the principal amount of the Loan, on a date other than an Interest Payment Date, the Borrower hereby irrevocably agrees to indemnify the Lender for any loss, cost or expense documented in the certificate described in the following paragraph and suffered by it as a result of the foregoing.
Upon prior request from the Borrower, the Lender shall inform, in detail and in writing, if it will incur in any breakage costs derived from the circumstances described in the preceding paragraph, through the delivery of a certificate from the Lender indicating the relevant amount. Said certificate shall be conclusive and binding for the Borrower absent manifest error or explicit in its calculation. The Borrower is required to pay on demand the amounts that derived from said certificate.
(b) Change in Applicable Law. In the event of (a) the adoption or taking effect of any law, rule, regulation, or treaty, (b) any change in any law, rule, regulation, or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority, that enters into force after the execution date of this Agreement, and that (1) subjects the Lender to Additional taxes (other than Taxes subject to payment of additional sums under Section 2.9 and other than the Taxes described in subsection (c) of the definition “Excluded Taxes”) on the Loan or Commitment of the Lender, or any portion thereof, or on the payments of principal or interest payable to the Lender under the Loan Documents, or (2) imposes any additional requirement for the establishment of reserves with respect to assets, deposits or other obligations on loans made by the Lender
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or imposes on the Lender, any additional regarding requirements or capitalization rates (including any requirements or requests or agreements that affect the manner in which the Lender distributes its capital resources to its various obligations) or affects the cost of the Lender’s funding as a result of any of the foregoing events, and provided that said legal provisions or interpretations are general and binding, and have not been legally contested by the Lender, or their application has been temporarily or permanently suspended or declared not definitively applicable in its favor, then (i) the Borrower shall have the right (but not the obligation) to pay in advance and without any fees, the unpaid balance of the Loan owed to the Lender on the earlier of (a) the following Interest Payment Date, or (b) the date on which the provision of general application of any Applicable Law or interpretation enters into force, and if it decides not to make said payment, (ii) the Borrower irrevocably agrees to pay the Lender, with the prior written request of the Lender, the amount or additional amounts detailed and necessary to offset said additional costs or reductions.
The Lender shall deliver a certificate indicating the applicability of the regulation or interpretation, in detail, and such additional amounts. The provisions of said certificate shall be final and mandatory for the Borrower, manifest error absent or explicit, in the calculation thereof, the Borrower agrees to pay to the Lender the amounts indicated in said certificate no later than the following Interest Payment Date or the date that is ten (10) Business Days after the request, whichever is later.
(c) Illegality. If after the execution date hereof, any Applicable Law to the Lender or any of its offices in charge of the management and funding of the Loan is modified, or the interpretation of any Applicable Law is changed by any competent Governmental Authority and, as a consequence thereof, it is illegal for the Lender to make or maintain the Loan in its favor, the Borrower, at the request of the Lender, shall prepay, on the earlier to occur, (i) within ninety (90) days following the Lender’s request or (ii) within the period of entry into force of, or that indicated in, the applicable modified provisions, the unpaid balance of the Loan owed to the Lender without any penalty, together with any interest, costs and expenses and the amounts that are required to offset the Lender for any additional cost or expense incurred as a result of said prepayment since the last Interest Payment Date and until the date of the prepayment in question, provided that the Lender shall deliver to the Borrower the calculations related to said costs or expenses, and said costs and expenses shall be conclusive and binding, absent manifest error in the calculation thereof.
Section 2.9. Taxes. (a) The Loan Parties agree to pay the amounts payable under the Loan Documents without any withholding, deduction or setoff, and free and clear of any present or future Taxes, except as required by Applicable Law.
If at any time, under Applicable Law, any of the Loan Parties must withhold from any payment to be made to the Lender under the Loan Documents, any Tax imposed by any Governmental Authority, provided that said legal provisions are of general and binding application, and have not been legally contested by the Lender, or their application has been temporarily or permanently suspended or declared not definitively applicable in its favor, and, in each and every case, said Taxes are not Excluded Taxes (in which case this provision will not be applicable) then, the Loan Parties shall pay the Lender in the corresponding payment date the additional required amounts for it to receive the full amount that it would have received if said withholding or deduction had not been made, shall make the applicable withholding or deduction (to the extent that said payment does not breach the Applicable Laws) on said amounts and shall make the payment of the Tax in question to the applicable Governmental Authority, no later than on the date on which said Tax is due and payable, and shall deliver to the Lender any other information and documentation that is required by the Lender to prove that said Tax has been paid in full and in a timely manner, in accordance with the provisions of the Applicable Law.
(b) The Loan Parties shall release and hold harmless the Lender from any liability
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that may exist for any Taxes withheld and not disclosed to the relevant Government Authorities, excluding in every and any case by and regarding the Excluded Taxes, and agree to reimburse it for any amount that has been effectively paid, derived from Taxes (except as required by the Applicable Law and excluding in each and every case by and regarding the Excluded Taxes) caused from any payment pursuant to this Agreement;
(c) The obligations of the Loan Parties under this Section 2.9 shall survive during the full period of statute of limitations of the Taxes, regardless of whether the Loan made hereunder is fully repaid prior to the end of said period.
Section 2.10. Sustainability Adjustments.
(a) Following the date on which the Borrower provides a Pricing Certificate pursuant to Section 5.14 in respect of its most recently ended Annual Period, the Applicable Margin shall be increased or decreased (or neither increased nor decreased), as applicable, pursuant to the Sustainability Margin Adjustment as set forth in such Pricing Certificate. For purposes of the foregoing, (A) the Sustainability Margin Adjustment shall be determined as of the fifth (5th) Business Day following receipt by the Lender of a Pricing Certificate based upon the KPI Metrics set forth in such Pricing Certificate and the calculation of the Sustainability Margin Adjustment therein (such day, the “Sustainability Pricing Adjustment Date”), and (B) each change in the Applicable Margin resulting from a Pricing Certificate shall be in force on the first date of the Interest Period immediately following the applicable Sustainability Pricing Adjustment Date or, if the Sustainability Pricing Adjustment Date is the same as the commencement of an Interest Period, on said date, and shall end the last day of the Interest Period on which the Sustainability Pricing Adjustment Date occurred (or, in the case of non-delivery of a Pricing Certificate, the last day of the Interest Period in which said Pricing Certificate could have been delivered under Section 5.14).
(b) For the avoidance of doubt (i) the Borrower may only deliver a Pricing Certificate with respect to any Annual Period, and (ii) any Sustainability Margin Adjustment shall be iterative and not cumulative year after year.
(c) If the Borrower fails to provide a Pricing Certificate within the period indicated in Section 5.14, the Sustainability Margin Adjustment shall be positive five (5) basis points, commencing on the last day such Pricing Certificate could have been delivered pursuant to the terms of Section 5.14 and shall be in force as of the first day of the Interest Period immediately following the date on which the Pricing Certificate should have been delivered and until the Borrower delivers a Pricing Certificate to the Lender and a new Applicable Margin is determined pursuant to Section 2.10(a) above, provided that pending delivery of a Pricing Certificate no Default or Event of Default shall occur.
(d) If (i) (a) any of the Borrower or the Lender identifies any material inaccuracy in the Sustainability Margin Adjustment or the KPI Metrics as reported on the applicable Pricing Certificate (a “Pricing Certificate Inaccuracy”) and, if it was the Borrower who had knowledge of the Pricing Certificate Inaccuracy, not later than thirty (30) Business Days after obtaining knowledge thereof delivers a written notice to the Lender describing such Pricing Certificate Inaccuracy in reasonable detail, or (b) the Borrower and the Lender agree that there was a Pricing Certificate Inaccuracy at the time of delivery of the relevant Pricing Certificate and, (ii) a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in an increase in the Applicable Margin for such period, then the Borrower shall be required to pay to the Lender, promptly on demand by the Lender, but in no event in less than ten (10) Business Days after the Borrower has received written notice of, or has agreed in writing that there was, a Pricing Certificate Inaccuracy, an amount equal to: (x) the amount of interest that should have been paid for such period, pursuant to the proper calculation, less (y) the amount of interest
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actually paid for such period. If the Borrower becomes aware of any Pricing Certificate Inaccuracy and, in connection therewith, the proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in a decrease in the Applicable Margin for such period, then, upon receipt by the Lender of notice from the Borrower of such Pricing Certificate Inaccuracy (which notice shall include corrections to the calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable), commencing on the Business Day following receipt by the Lender of such notice, the Applicable Margin shall be adjusted to reflect the corrected calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable.
As used below, “Sustainability Recalculation Event” means (i) any material acquisition, disposition, merger or similar transaction or series of related transactions consummated by the Borrower and its Subsidiaries whereby, as a result of the consummation of such transaction or series of related transactions any of the KPI Metrics would reasonably be expected to be (as determined in good faith by the Borrower), or shall be, increased or decreased by 10% or more (on a consolidated basis) as compared to the KPI Metrics in effect immediately prior to the consummation of such transaction, (ii) a material change to the KPI Metrics calculation methodologies (as determined in good faith by the Borrower) or (iii) any Change in Law applicable to any party hereto the result of which shall (A) prohibit or modify any sustainability calculation hereunder or cause any other violation of any sustainability provision hereunder, or impose or modify any reporting obligation in respect thereof, (B) cause the Borrower to fail to attain or maintain any KPI Metric or target or threshold with respect thereto or (C) prohibit or otherwise limit such party’s ability to make or maintain the Loans hereunder after applying the sustainability provisions hereunder. If, after the date hereof, there occurs any Sustainability Recalculation Event (it being understood and agreed that such Sustainability Recalculation Event shall follow the Sustainability Linked Loan Principles as most recently published by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading Association, as may be amended from time to time), and either (i) the Borrower notifies the Lender in writing that the Borrower requests an amendment to any provision hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event, or (ii) the Lender notifies the Borrower of an amendment to any provision or provisions hereof for such purpose (it being understood and agreed that any such notice may be given before or after such Sustainability Recalculation Event has occurred), then (A) the Borrower and the Lender shall negotiate in good faith to amend the provisions hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event for the period from and after the occurrence of such Sustainability Recalculation Event, and (B) the provisions of this Agreement shall be interpreted on the basis of the provisions in effect and applied immediately prior to such Sustainability Recalculation Event for a period of not more than 30 days (unless the provisions hereof shall have been amended in accordance herewith or such notice shall have been withdrawn). If, after 30 days following any such notice, the consent of the Borrower and the Lender has not been obtained, there will cease to be any Sustainability Margin Adjustment (including for purposes of determining the Commitment Fee) until such time as the parties hereto can agree upon any such adjustments in accordance with the terms hereof.
(f) The parties agree that any Pricing Certificate Inaccuracy shall not constitute a Default or Event of Default under this Agreement, provided that the Borrower complies with the terms of this Section with respect to such Pricing Certificate Inaccuracy. Notwithstanding anything to the contrary herein, (i) any additional amounts required to be paid pursuant to clause (d) above shall not be due and payable until a written demand is made for such payment by the Borrower or the Lender in accordance with clause (d) above, (ii) any nonpayment of such additional amounts prior to such demand for payment by the Borrower or the Lender shall not constitute a Default (whether retroactively or otherwise), and (iii) none of such additional amounts shall be deemed overdue prior to such a demand or shall accrue interest at the Default Rate prior to such a demand, unless said amounts are owed with respect to the entry of an order, judgment or resolution with respect to the Borrower in accordance with Applicable Law.
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(g) The Lender shall have no responsibility for (or liability in respect of) reviewing, auditing or otherwise evaluating any calculation by the Borrower of any Sustainability Margin Adjustment (or for the KPI Metrics or any of the other data or computations that are part of or related to any such calculation) set forth in any Pricing Certificate, or for evaluating or determining any Pricing Certificate Inaccuracy (and the Lender may rely conclusively, and shall not incur any liability in so relying, on any such certificate or related notice, without further inquiry).
Article III. Guarantors.
Section 3.1. Joint Obligors (Fiadoras).
(a) Guarantee (Fianza). Each Joint Obligor (Fiadora) hereby becomes a joint obligor (fiadora civil) of the Borrower with respect to the Lender and hereby guarantees the full and timely payment of each of the payment obligations of the Borrower under this Agreement and under the other Loan Documents, and waives the benefits of order, excussion, division, removal, and waiting in accordance with articles 2813, 2814 , 2815, 2817, 2818, 2820, 2821, 2822, 2824, 2827, 2830, 2836, 2840, 2842, 2844, 2845, 2846, 2847, 2848, 2849 and other applicable articles of the Federal Civil Code and their correlative articles in the Civil Codes of the states of the Mexican Republic.
The guarantee made herein secures the payment obligations even if such obligations are subject to restructuring, amendment, renewal, extension or waiting, events the occurrence of which this guarantee shall survive as granted, with this being the consent of each Joint Obligor (Fiadora) referred to in Article 2846 of the Federal Civil Code and other applicable articles of the Federal Civil Code and its correlative articles in the Civil Codes of the states of the Mexican Republic.
Under no circumstances may the Joint Obligors (Fiadoras) excuse themselves from their obligations assumed hereby, except upon full payment or total extinction of the secured payment obligations described above. Also, it shall not be necessary to prove the full or partial default of said secured payment obligations to demand, in or out of court, full payment thereof to any of the Joint Obligors (Fiadoras). If the due date of the secured payment obligations has occurred and said obligations have not been fully satisfied, the Lender may demand payment thereof to the Joint Obligors (Fiadoras) without any further action needed.
The obligations of each Joint Obligor (Fiadora) pursuant to the guarantee made hereunder are valid and fully enforceable and shall (i) be in full force and effect until all the secured payment obligations have been fully paid and discharged (as the case may be), and (ii) benefit, and be enforceable by the Lender and its permitted successors or assigns pursuant to this Agreement. Therefore, this guarantee may only be extinguished and released, in all its parts, by the Lender and its successors or assigns, as appropriate, upon full satisfaction of the secured payment obligations.
Each Joint Obligor (Fiadora) also hereby undertakes to execute each Promissory Note to document each Borrowing of the Loan as guarantor (avalista) in accordance with the provisions of the General Law on Negotiable Instruments and Credit Transactions.
(b) Each Joint Obligor (Fiadora) hereby waives the benefit provided in Article 2812 of the Federal Civil Code and its correlative articles in the Civil Codes of the states of the Mexican Republic, that is, it expressly and unconditionally waives to claim any exception included in said Article of the secured payment obligations, unless this guarantee has been extinguished and released, in all its parts, by the Lender or its permitted successors or assigns pursuant to this Agreement, as appropriate, upon full satisfaction or otherwise extinction of the secured payment obligations.
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(d) Subordination. If this guarantee becomes enforceable or any of the Joint Obligors (Fiadoras) has disbursed in favor of the Lender any amount as a result of this guarantee, the Joint Obligors (Fiadoras) hereby agree not to take any action or enforce any right available against the Borrower, by virtue of the legal subrogation to the rights of the Lender to receive payments from the Borrower in accordance with Articles 2829 and 2830 of the Federal Civil Code and their correlative articles in the Civil Codes of the states of the Mexican Republic, expressly waiving in favor of the Lender the right to take such actions or exercise such rights until the date on which the Lender has received full payment of the secured payment obligations and this situation has been informed in writing by the Lender to the Joint Obligors (Fiadoras). The waiver and subordination contained in this section have been agreed and are established for the benefit of the Lender.
Each Joint Obligor (Fiadora) accepts and agrees that, in case of a Default or Event of Default or in case of bankruptcy (concurso mercantil) of any Loan Party, any collection right or action of the Joint Obligor (Fiadora) or any of its Subsidiaries may have against the Borrower, under any inter-company loan or otherwise, shall rank junior to all rights and actions of the Lender against the Borrower under the Loan Documents until the obligations with the Lender have been satisfied. If any of the Joint Obligors (Fiadoras) makes a partial payment under the Loan Documents, said Joint Obligor (Fiadora) agrees with the Lender not to exercise its collection rights or any other available legal actions against the Borrower until the Lender has received full payment of the Borrower’s obligations under the Loan Documents or the obligations with the Lender have been satisfied.
Section 3.2. Joint Obligors.
(a) Joint and Several Obligation. Each Joint Obligor expresses its express consent with the Loan being formalized herein, including with respect to breakage costs, if any, reason for which, it assumes the capacity of joint obligor of the Borrower and acknowledges the execution of this Agreement to become, a joint obligor of the Borrower vis-à -vis the Lender, pursuant to Articles 1987, 1988, 1989 and other applicable Articles of the Federal Civil Code and their correlatives in the Civil Codes of the states of the Mexican Republic, and agrees to be absolutely and unconditionally liable for the full and time payment of each of the present or future of payment obligations of the Borrower hereunder and under the other Loans Documents. For the purposes of the joint and several obligations assumed herein, each Joint Obligor agrees that the obligations of the Borrower under the Loan Documents are indivisible, and so, each Joint Obligor is fully liable for the Loan and other obligations of the Borrower under the Loan Documents.
Each Joint Obligor undertakes to execute each Promissory Note to document the Borrowing of the Loan as guarantor (avalista) in accordance with the General Law on Negotiable Instruments and Credit Transactions of Mexico, as well as any Promissory Note that replaces it, if applicable.
(b) Subordination. Each Joint Obligor accepts and agrees that, in the event of a Default or Event of Default or bankruptcy of any Loan Party, any right of collection or action the Joint Obligors or any of their Subsidiaries may have against the Borrower, derived from any inter-company loan, shall be subordinate to the rights and actions of the Lender against the Borrower under the Loan Documents. If any of the Joint Obligors makes a partial payment under the Loan Documents, said Joint Obligor agrees with the Lender not to exercise its collection rights or any other available legal actions against the Borrower until they have received full payment of the Borrower’s obligations under the Loan Documents.
Section 3.3. Release of Guarantors. The Lender may release any Guarantor from its obligations under the Loan Documents. If any Guarantor ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents, then such Guarantor shall be automatically released from its obligations under the Loan Documents. The Lender shall, without delay, upon written request
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from Borrower and at the sole expense of the Borrower, execute any documentation reasonably requested to evidence or confirm said release.
Article IV. (a) Certain Conditions Precedent and Requirements for the Borrowing of the Tranche A Loan. The obligation of the Lender to make the Tranche A Loan available to the Borrower, and the right of the Borrower to make the Borrowing of the Tranche A Loan, are subject to having been fulfilled or considered fulfilled, within the Tranche A Availability Period and previously to the Borrowing (or simultaneously to the Borrowing, if so indicated in this section), the conditions precedent and other requirements mentioned in this section, in a reasonably form and substance acceptable to the Lender.
(i) The Lender shall have received:
(1) this Agreement, executed by the Borrower, the Initial Mexican Guarantors and the other parties hereto, with ratification of signatures before a notary public;
(2) the Guaranty duly executed by all the parties thereof;
(3) on the Borrowing Date, the Tranche A Promissory Note documenting said Borrowing in accordance with the terms of this Agreement, signed by the Borrower, as issuer (suscriptor), and the Mexican Guarantors as guarantors (avalistas);
(4) copy of the Financial Statements described in Representation I(5);
(5) a legal opinion from Ritch, Mueller y Nicolau, S.C., outside counsel in Mexico to the Borrower and the Initial Mexican Guarantors, substantially in the form of Exhibit F-1 attached hereto;
(6) a legal opinion from Skadden, Arps, Slate, Meagher & Flom LLP, outside counsel in New York to the Borrower and the Guarantors, substantially in the form of Exhibit F-2 attached hereto;
(7) a legal opinion from GHR Rechtsanwälte AG, outside counsel in Switzerland to the Borrower and the Guarantors, substantially in the form of Exhibit F-3 attached hereto;
(8) a legal opinion from Galicia Abogados, S.C., outside counsel in Mexico to the Lender, substantially in the form of Exhibit F-4 attached hereto;
(9) with respect to the Borrower and each of the Mexican Guarantors, a certificate from the member secretary of the board of directors, or its equivalent, substantially in terms of Exhibit G-1, to which simple copies of the public deeds containing the corporate authorizations granted by the party in question must be attached to execute the Loan Documents of which it is a party, and simple copies of the public deeds that contain (i) their current Organization Documents, and (ii) the powers of the legal representatives who will sign the Loan Documents of which they are part, in the understanding that the powers of the representatives of the Borrower and the Mexican Guarantors must be granted in accordance with article 9 of the General Law on Negotiable Instruments and Credit Transactions, and (a) be registered in the Public Registry of Property and Commerce, or (b) be granted by letter or declaration signed by the party in question, addressed to the Lender;
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(10) with respect to each Foreign Guarantor, a Responsible Officer certificate, substantially in the form of Exhibit G-2, to which simple copies of the public deeds containing the corporate authorizations granted by the party in question must be attached to execute the Loan Documents of which it is a party, and simple copies of (i) their current Organization Documents, and (ii) the powers of the legal representatives who will sign the Loan Documents of which they are part, that evidence (A) the authorities of each Responsible Office executing the Loan Documents on behalf of the Loan Party in question, and (B) that said Loan Party has been duly incorporated and exists, in accordance with the laws of its place of incorporation and existence, and has the necessary capacity to conduct its business in each of the jurisdictions in which it has properties, leases and carries out operations, except for breaches that could not reasonably be expected to have a Material Adverse Effect;
(11) the Borrowing Notice, delivered within the term mentioned in Section 2.2, clause (b);
(12) evidence of payment, or the granting of irrevocable instructions to the Lender, which may be stated in the Borrowing Notice, for the Lender to pay, once the amounts have been transferred to the Borrower’s Account, with funds corresponding to the Loan, and the costs and expenses incurred by the Lender in the making of the Tranche A Loan and the negotiation and execution of the Loan Documents;
(13) any document the Lender previously requests in writing in accordance with its know your customer policies;
(14) evidence of the appointment by the Foreign Guarantors of the Process Agent as their agent for service of process in connection with any proceeding initiated under the Guaranty in the State of New York and of the Process Agent’s acceptance of such appointment. No event shall have occurred that constitutes a Default or an Event of Default. The representations of the Loan Parties contained in the Loan Documents shall be true, complete, and correct in all their aspects as of the relevant Borrowing Date, as if made on that date (except for those specifically referred to a specific date and that are not applicable to a later date).
(b) Certain Conditions Precedent and Requirements for the Borrowing of the Tranche B Loan. The obligation of the Lender to make the Tranche B Loan available to the Borrower, and the right of the Borrower to make the Borrowing of the Tranche B Loan, are subject to having been fulfilled or considered fulfilled, within the Tranche B Availability Period and previously to the Borrowing (or simultaneously to the Borrowing, if so indicated in this section), the conditions precedent and other requirements mentioned in this section, in a reasonably form and substance acceptable to the Lender.
(i) The Lender shall have received:
| (1) | the First Amendment to the Credit Agreement, executed by the Borrower, the Initial Mexican Guarantors and the other parties thereto, with ratification of signatures before a notary public; |
(2) on the Borrowing Date, the Tranche B Promissory Note documenting said Borrowing in accordance with the terms of this Agreement, signed by the Borrower, as issuer (suscriptor), and the Mexican Guarantors as guarantors (avalistas);
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(3) Copy of the Closing Financial Statements.
(4) with respect to the Borrower and each of the Mexican Guarantors, a certificate from the member secretary of the board of directors, or its equivalent, substantially in terms of Exhibit G-1, to which simple copies of the public deeds containing the corporate authorizations granted by the party in question must be attached to execute the First Amendment to the Credit Agreement of which it is a party, and simple copies of the public deeds that contain (i) its current Organization Documents, and (ii) the powers of the legal representatives who will sign the First Amendment to the Credit Agreement of which it is a party, in the understanding that the powers of the representatives of the Borrower and the Mexican Guarantors must be granted in accordance with article 9 of the General Law on Negotiable Instruments and Credit Transactions, and (a) be registered in the Public Registry of Property and Commerce, or (b) be granted by letter or declaration signed by the party in question, addressed to the Lender;
(5) the Borrowing Notice, delivered within the term mentioned in Section 2.2, clause (b);
(6) evidence of payment, or the granting of irrevocable instructions to the Lender, which may be stated in the Borrowing Notice, for the Lender to pay, once the amounts have been transferred to the Borrower’s Account, with funds corresponding to the Loan, and the costs and expenses incurred by the Lender in the making of the Tranche B Loan and the negotiation and execution of the Loan Documents;
(7) any document the Lender previously requests in writing in accordance with its know your customer policies;
(8) No event shall have occurred that constitutes a Default or an Event of Default.
(9) The representations of the Loan Parties, as appropriate, contained in the Loan Documents shall be true, complete, and correct in all their aspects as of the relevant Borrowing Date, as if made on that date (except for those specifically referred to a different date in which case they will be understood to be made at a different date).
Article V. Affirmative Covenants. Cemex agrees with the Lender that, from the Borrowing Date and so long as any unpaid balance of the Loan shall remain unpaid and outstanding, it shall comply, and will cause its Subsidiaries to comply (except for the provisions of Sections 5.1, 5.2 and 5.3) with the following obligations:
Section 5.1. Financial Statements. Provide to the Lender:
(a) as soon as available, but in any event within 120 (one hundred twenty) days after the end of each fiscal year of the Borrower, the annual consolidated Financial Statements of the Borrower and its Subsidiaries, for the relevant fiscal year, signed by a Responsible Officer of the Borrower, audited by a firm of public accountants of recognized standing and accompanied in each case by the relevant report of said auditor (which should not contain “going concern” or similar qualifications, except for any reservation regarding the maturity of the Loan within twelve (12) months following the audit in question or for any breach or anticipated breach of obligations to do of a financial nature), in each case, prepared in
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accordance with the International Financial Reporting Standards, including the relevant balance sheets and the related statements of income, changes in shareholders’ equity, and cash flows setting forth in each case in comparative form the figures for the immediately previous fiscal year; and
(b) as soon as available, but in any event within 60 (sixty) days after the end of each of the first three fiscal quarters, the consolidated internal quarterly Financial Statements of the Borrower and its Subsidiaries, corresponding to the quarter in question and the completed portion of the annual fiscal year, which must be signed by a Responsible Officer of the Borrower, including the relevant balance sheets and statements of income, changes in shareholders’ equity, and cash flows, setting forth in each case in comparative form the respective figures against those of the relevant quarter in the immediately preceding fiscal year and the relevant concluded portion of the immediately preceding annual fiscal year, subject to end-of-year adjustments and absence of notes.
Section 5.2. Certificates; Other Information. Provide to the Lender:
(a) concurrently with the delivery of the Financial Statements referred to in Sections 5.1(a) and (b), a completed Compliance Certificate signed by a Responsible Officer of the Borrower (which delivery may be by electronic communication including email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(b) within the following five (5) Business Days after any request by the Lender, copies of any audit report, management letters or communications or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower, that having been prepared by independent accountants in connection with the accounts, records or books of the Borrower or any Subsidiary, or any audit of any of them;
(c) within the following five (5) Business Days after the same are available, copies of each annual report or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and prospect which the Borrower may file or be required to file with any Governmental Authority, and not otherwise required to be delivered to the Lender pursuant hereto;
(d) within the following five (5) Business Days after the furnishing thereof, copies of any financial statements, compliance certificate or notice of default furnished to any holder of debt securities of any Loan Party or any Subsidiary pursuant to the terms of any financing, indenture, loan or credit or similar agreement relating to debt or borrowed money and not otherwise required to be furnished to the Lender pursuant to any other clause of this Section 5.2; provided that this clause (d) shall not apply to any such financing, indenture, loan or credit or similar agreement with an outstanding principal amount or unused commitments less than US$50.0 million (fifty million Dollars 00/100); and
(e) as soon as requested by the Lender, but in any case within fifteen (15) calendar days following receipt of the relevant request by the Lender, the information that it reasonably requests, which is necessary for the purpose of complying with the applicable regulations and provisions regarding anti-money laundering and customer identification (“know your customer”).
Documents required to be delivered pursuant to Section 5.1 or Section 5.2 (whether or not any such documents are included in materials otherwise filed with the Governmental Authorities) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the website on the Internet at the website address described on Schedule 5.2; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender have access (whether a
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commercial, third-party website or whether sponsored by the Lender); provided that the Borrower shall notify the Lender (by electronic mail) of the posting of any such documents and provide to the Lender by electronic mail electronic versions (i.e., soft copies) of such documents.
The Borrower hereby acknowledges that the Lender may have personnel who do not wish to receive relevant non-public information regarding the Borrower or its Affiliates, or the respective securities of any of them, who may participate in investment activities and other related securities market activities regarding said Persons. The Borrower agrees that (x) all materials and/or information provided by or on behalf of the Borrower in accordance with the terms hereof (together, the “Borrower Materials”) that shall be made available to the Lender shall be marked clearly and visibly as “PUBLIC,” which, as a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; and (y) by marking the Borrower Materials as “PUBLIC,” the Borrower shall be deemed to have authorized the Lender to treat said Borrower Materials in the sense that they do not contain important non-public information in relation to the Borrower or its securities for the purposes of the Applicable Law in matters of securities (provided, however, that to the extent such Borrower Materials constitute information, they shall be treated as set forth in 9.9).
Section 5.3. Notices. Promptly notify the Lender any of the following events but in any case, within two (2) Business Days after the date it occurs, except for section (a), which must be notified within ten (10) Business Days following what occurs first between (x) a notice from the Lender, or (y) that the Borrower has knowledge of a Default or Event of Default:
(a) the occurrence of any Default or Event of Default;
(b) any circumstance that resulted or results in a Material Adverse Effect; and
(c) any relevant change in the accounting policies or financial reporting practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section 5.3 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the event referred to therein in reasonable detail and stating what action, if any, the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to this Section 5.3(a) shall describe in reasonable detail any and all provisions of this Agreement and any other Loan Document that have been breached.
Section 5.4. Pari Passu Obligations. The Borrower shall take measures so that its Obligations under this Agreement always rank at least pari passu with respect to the payment of any other unsecured, unsubordinated obligations, present or future, of the Borrower resulting from the Borrower’s Debt (except for that Debt that has priority by operation of law).
Section 5.5. Payment of Obligations. Pay, when due and payable: (a) all Taxes that are determined or required, (b) all claims that are made according to law, the non-payment of which results or could result in a Lien; provided that, for purposes of clauses (a) and (b) above, neither the Loan Parties nor their Subsidiaries shall be required to pay or cause to be paid any Taxes or claims that are being contested by the relevant party in good faith, by proper proceedings and as to which appropriate reserves are being maintained (if required in accordance with the International Financial Reporting Standards), and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained
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in any instrument or agreement evidencing such Indebtedness, except in each case to the extent that it could not reasonably have a Material Adverse Effect.
Section 5.6. Maintenance of Licenses and Existence. (a) Maintain in full force and effect its legal existence, and comply with its obligations pursuant to the Applicable Law, except for (i) the provisions of Section 6.3 or (ii )any default of a Subsidiary that is not a Loan Party that does not have, nor could be expected to reasonably have, a Material Adverse Effect, (b) take all reasonable action to maintain all rights, licenses, permits, notices, and, in general, any authorizations necessary in the normal conduct of its business, except for those rights, licenses, permits, registrations or authorizations whose lack or absence do not have, and could not reasonably have, a Material Adverse Effect, and (c) to the extent reasonably possible under Applicable Law, preserve and renew all its patents, trademarks and other industrial property, except for those cases that do not have, nor could reasonably have, a Material Adverse Effect.
Section 5.7. Property. Maintain the ownership of any tangible or relevant equipment that are necessary in the ordinary conduct of its business and keep said assets working and in good condition (without prejudice to the natural wear and tear of said assets derived from their use according to their nature), except in those cases that do not have, and could not reasonably have, a Material Adverse Effect.
Section 5.8. Insurance. Maintain, with financially sound companies (which may be Affiliates of the Borrower), insurance with respect to its assets and business with the coverage and for the amounts as maintained by other entities engaged in the same line of business as the Loan Parties in similar circumstances.
Section 5.9. Compliance with Applicable Law. Comply, in all of its relevant aspects, with the Applicable Law and with all the requirements, judgments, awards, precautionary measures, and decrees applicable to its business or assets, except for those cases that do not have, nor could reasonably have, a Material Adverse Effect, or that are being contested in good faith, by proper proceedings diligently conducted.
Section 5.10. Books and Records. Keep and maintain proper books of record (including corporate records) and accounts, in which complete and correct, in all of its relevant aspects, entries are made regarding all financial transactions and relevant assets and businesses of each Loan Party and its Subsidiaries, in all cases of compliance with the International Financial Reporting Standards consistently applied.
Section 5.11. Use of Loan Proceeds. The Borrower shall use the Tranche A Loan proceeds to, pay the fees, costs and expenses related to the negotiation and execution of the Loan Documents and for general corporate purposes, and (ii) the entire proceeds of the Tranche B Loan for the payment of fees, costs, and related expenses to the negotiation and execution of the First Amendment to the Credit Agreement and the other Loan documents, and for the refinancing of existing Debt (the “Use of Loan Proceeds”). The Borrower shall (a) procure that no funds received under the Loan shall be directly or indirectly used in Switzerland or be, directly or indirectly, remitted to any Swiss tax resident company or Swiss tax resident permanent establishment unless a written confirmation or countersigned tax ruling application from the Swiss Federal Tax Administration has been obtained confirming that such use does not result in interest payments under this Agreement being subject to Swiss withholding tax, (b) not permit or authorize any Person to use, directly or knowingly indirectly, all or any portion of the Loan to finance any transaction, business or activity (i) involving any Sanctions Target or Designated Jurisdiction, in each case, in violation of Sanctions or (ii) that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target and (c) not finance, directly or knowingly indirectly, any payments in respect of this Agreement to the Lender with income from or involving (i) a
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Sanctions Target or a Designated Jurisdiction, in each case, in violation of Sanctions or (ii) any activity that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target.
Section 5.12. Anti-Corruption Laws; Sanctions. Conduct its businesses in compliance in all material respects with the Applicable Law in matters of anti-corruption and Sanctions and maintain policies and procedures reasonably designed to promote and achieve compliance with said Applicable Laws and Sanctions (provided that any breach to the Applicable Law resulting from any violation of the Applicable Law resulting from the matters under investigation that have been revealed in the Borrower’s annual report presented in form 20-F corresponding to fiscal year 2022, will not imply or result in a violation of this Section 5.12)
Section 5.13. Proceeds of Lawful Origin. Each Loan Party, as appropriate, shall (i) pay the Loan only with funds that have legal origin; and (ii) have the policies, processes, and supervision required under Applicable Law and designed to prevent their income from having illicit origin.
Section 5.14. Sustainability Reporting. The Borrower shall provide to the Lender:
(a) opportunely after becoming available and in any event within 150 (one hundred fifty) calendar days following the end of each fiscal year of the Borrower (commencing with the fiscal year ending December 31, 2021), a Pricing Certificate for the most recently ended Annual Period for each KPI Metric; provided that, in any fiscal year, the Borrower may elect not to deliver a Pricing Certificate, and such election shall not constitute a Default or Event of Default nor a failure to comply with the conditions precedent for making a part of the Loan available to the Borrower (but such failure to so deliver a Pricing Certificate by the end of such 150-calendar day period shall result in the Sustainability Margin Adjustment being applied as set forth in Section 2.10(c)). In the event the Borrower’s fiscal year is changed to a non-calendar year fiscal year, the Borrower will be permitted to adjust the timing delivery of the Pricing Certificate at its election in a manner intended to maintain consistency with the foregoing, provided that the Borrower shall be permitted to make such adjustment only once until the Maturity Date.
(b) the KPI Metrics Reviewer, all information the KPI Metrics Reviewer may reasonably request in order to perform the tasks contemplated to be performed by it under the Loan Documents.
Section 5.15. Replacement of Promissory Notes; Inconsistency.
| (a) | No later than ten (10) Business Days following a written request from the Lender, the Borrower and each of the Mexican Guarantors undertake to replace any Promissory Note issued pursuant to this Agreement, in case the Promissory Note in question does not reflect the terms and conditions of this Agreement including, without limitation, the Applicable Margin; notwithstanding the foregoing, neither the Borrower nor the Mexican Guarantors will have the obligation to make said replacement, unless it is against the delivery of the Promissory Note to be replaced. |
| (b) | The parties hereby agree that, in case of any inconsistency or difference between the terms of this Agreement and the terms of any Promissory Note, the terms of this Agreement shall prevail. |
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Article VI. Negative Covenants. Starting on the Borrowing Date and as long as any amount payable under any of the Loan Documents remains unpaid:
Section 6.1. Liens. The Borrower and its Subsidiaries, directly or indirectly, agree not to constitute, assume or allow any Liens to exist on any of their respective assets, whether they are currently owned or acquired after this date, except for the following Liens:
(a) Liens derived from any obligation of a tax, labor or social security nature or created by operation of Law, provided that any of said Liens is being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provision, as shall be required by the IFRS, shall have been made;
(b) Liens granted pursuant to or in connection with (i) any netting or set-off agreement entered into in the ordinary course of trading (including, for the avoidance of doubt, any cash pooling or cash management arrangements with a bank or financial institution) or (ii) any intragroup loans granted or any intragroup Indebtedness incurred or entered into or any cash pooling or cash management arrangements entered into by and between the Borrower and its Subsidiaries or between Subsidiaries (for so long as such Persons continue to be Subsidiaries);
(c) statutory Liens derived from the Applicable Law for the benefit of landlords and carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or as shall be required by the IFRS, shall have been made;
(d) Liens incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security, or (ii) other insurance maintained by the Borrower or any of its Subsidiaries in accordance with Section 5.8;
(e) any attachment or Lien under a judgment, unless, within 60 days after the entry thereof, the judgment has been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;
(f) Liens existing as of the execution date of this Agreement the First Amendment to the Credit Agreement and described in Schedule 6.1(f) and Liens that currently secure any Indebtedness that is being refinanced or replaced; provided that the principal amount secured is not increased, save that principal amounts secured by Liens in respect of (i) Swap Contracts where there are fluctuations in the market value of the exposures of those Swap Contracts and (ii) Indebtedness where the principal may increase by virtue of capitalization of interest, the principal of which may be increased by the amount of such fluctuations or capitalizations, as the case may be;
(g) Liens expressly permitted by the Lender;
(h) licenses of, or other grants of rights to use with respect to, Intellectual Property Rights granted by Borrower or any Subsidiary (i) in the ordinary course of business and not materially interfering with the business of the Borrower and its Subsidiaries, taken as a whole, (ii) existing as of the Borrowing Date, or (iii) between or among Borrower and any of its Subsidiaries or between or among any of its Subsidiaries;
(i) any Liens created or deemed created pursuant to a Securitization;
(j) any Liens granted in connection with any Swap Contract; provided that the aggregate
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value of the assets that are the subject of such Liens does not exceed US$200.0 million (or its equivalent in other currencies) at any time;
(k) Liens granted or arising over receivables, inventory, plant or equipment that fall within Section 5.2(d);
(l) (i) any Liens over bank accounts arising under clause 24 or clause 25 of the general terms and conditions (algemene bankvoorwaarden) of any member of the Dutch Bankers’ Association (Nederlandse Vereniging van Banken) and (ii) other Liens granted to any financial institution with whom it maintains accounts to the extent required by the relevant institution’s (or custodian’s or trustee’s, as applicable) standard terms and conditions, in each case, which are within the general parameters customary of the banking industry;
(m) any Liens that are created or deemed created on shares of the Borrower or any of its Subsidiaries, pursuant to an obligation in respect of an executive compensation plan by virtue of such shares being held on trust for the holders of the convertible securities pending exercise of any conversion option, where such Lien is customary for such transaction;
(n) any Liens granted in connection with any Indebtedness referred to Section 6.2(f);
(o) other Liens securing obligations of the Borrower and its Subsidiaries at any one time outstanding equal to the greater of (x) 10% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 5.1, and (y) US$1,500.0 million; and
(p) Liens granted in connection with or arising out of a Lease; provided that such Liens are over the right to use the asset or equipment subject of the lease in question pursuant to the terms and conditions of said lease, or the rights of the Borrower or any of its Subsidiaries over the asset or equipment which is the subject of the Lease.
Section 6.2. Subsidiaries Debt. The Borrower shall not permit any of its Subsidiaries that is not a Loan Party to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, except:
(a) Indebtedness existing at the execution date of the First Amendment to the Credit Agreement and described Schedule 1(a) and any renewals, extensions or refinancings thereof; provided that Indebtedness of any Loan Party shall not be refinanced with Indebtedness of a Subsidiary that is not a Loan Party and the aggregate principal amount of such Indebtedness shall not be increased except by the amount of any capitalized interest under any facility or instrument that provides for capitalization of interest on those terms as at the execution date hereof or by an amount equal to a reasonable premium or other reasonable amount paid in connection with, and fees and expenses reasonably incurred with respect to, any renewal, extension or refinancing thereof and by an amount equal to any existing commitments unutilized thereunder;
(b) Indebtedness owed by any Subsidiary to the Borrower or to any other Subsidiary (which shall include, without limitation, liabilities arising from cash management agreements, tax and accounting operations); provided that such Indebtedness shall not have been transferred or assigned to any Person other than the Borrower or any Subsidiary;
(c) Indebtedness arising from a Securitization;
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(d) Indebtedness arising under factoring arrangements, inventory financing arrangements or export credit facilities or any similar arrangements (including Leases) for the purchase of equipment (provided that any Lien granted to guarantee financing for the purchase of said equipment) or pursuant to sale and lease-back transactions, provided that the maximum aggregate Indebtedness of members of the Borrower and its Subsidiaries, which are not Loan Parties under such transactions does not exceed US$500.0 million at any time (disregarding, for the purpose of such limit, any amount of Indebtedness of the Borrower and its Subsidiaries arising under such arrangements permitted under this paragraph (d) and in place on the execution date of the First Amendment to the Credit Agreement, including any amounts under such Indebtedness which has been repaid and reborrowed whether pursuant to the terms of the arrangement constituting such Indebtedness when originally advanced or otherwise);
(e) Indebtedness of the Borrower and its Subsidiaries pursuant to any acquisition provided that: (i) such Indebtedness existed prior to the date of the acquisition and was not incurred, increased or extended in contemplation of, or since, the relevant acquisition; and (ii) the aggregate amount of any such Indebtedness of the Borrower and its Subsidiaries which are not Loan Parties does not exceed US$200.0 million at any time;
(f) Indebtedness incurred pursuant to or in connection with any cash pooling or other cash management agreements with a bank or financial institution, but only to the extent of offsetting credit balances of the Borrower and its Subsidiaries which are not Loan Parties;
(g) Indebtedness for Taxes determined, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of business; and
(h) additional Indebtedness, if, after giving effect to the incurrence of any such Indebtedness, the aggregate outstanding amount of Indebtedness of all Guarantor Subsidiaries would not exceed the greater of (x) 15% of the consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 5.1, and (y) US$2,000.0 million, provided that the percentage set forth in clause (x) shall automatically increase to 25% during any Covenant Modification Period. No Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the 15% threshold during the Covenant Modification Period (or upon termination of the Covenant Modification Period or after that time based solely on events that occurred during the Covenant Modification Period and did not constitute a Default or Event of Default during such period)
For the avoidance of doubt, the aggregate amount of the Indebtedness shall be calculated for purposes of this Section 6.2 solely by reference to such Indebtedness of each of the Borrower’s Subsidiaries that is not a Loan Party.
Section 6.3. Relevant Changes and Sale of Assets.
(a) The Borrower shall not, nor shall it permit any of its Subsidiaries, whether in a single transaction or in a series of related transactions to enter consolidate or merge with any other Person, unless no Default would exist and such transaction would not be prohibited by clause (b) below; provided that (i) in the case of a merger or consolidation involving the Borrower, the surviving entity thereof (1) is the Borrower or (2) (A) assumes the Obligations of the Borrower pursuant to an agreement reasonably satisfactory to the Lender and (B) is a Person organized and validly existing under the laws of Mexico, the United States, any State thereof or the District of Columbia, Canada, France, Belgium, Germany, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland or the United Kingdom, or any political subdivision thereof or any other jurisdiction reasonably acceptable to the Lender and (ii) in the case of a merger or consolidation involving a Guarantor, (1) the surviving entity thereof is the Borrower, is (or shall concurrently become) a Guarantor or otherwise assumes the Obligations of the Guarantors pursuant
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to an agreement reasonably satisfactory agreement to the Lender or (2) such transaction (A) results in the Guarantor no longer being a direct or indirect Subsidiary of the Borrower and (B) is not prohibited under Section 6.3(b).
(b) The Borrower shall not, nor shall it permit any of its Subsidiaries to, whether in a single transaction or in a series or related transactions (including through liquidation, division, bankruptcy, or other insolvency proceedings), Dispose all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, other than through a contribution of assets to a newly-formed Wholly Owned Subsidiary of the Borrower.
Section 6.4. Restricted Payments. The Borrower shall not, nor shall it permit any of its Subsidiaries, to make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiary of the Borrower and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of Equity Interest in respect of the Restricted Payment in question;
(b) the Borrower and each Subsidiary may make Restricted Payments payable in the Common Stock or other common Equity Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by them with the proceeds from the issuance, concurrent with the of new shares of Common Stock or other common Equity Interests;
(d) the Borrower may make Restricted Payments to comply with any obligation in respect of any executive compensation plan of the Borrower; and
(e) the Borrower and each Subsidiary may make any Restricted Payment, so long as (i) no Default shall have occurred and be continuing at the time of such Restricted Payment, or would result therefrom and (ii) the Borrower shall be in compliance with the covenants in Section 6.5 after giving pro forma effect to such Restricted Payment.
Section 6.5. Financial Covenants.
(a) The Borrower shall not permit the Consolidated Leverage Ratio to be greater than 3.75:1.0 on the last day of any fiscal quarter of the Borrower as of the Borrowing Date.
(b) The Borrower shall not permit the Consolidated Coverage Ratio to be less than 2.75:1.0 on the last day of any fiscal quarter of the Borrower as of the Borrowing Date.
Each of the financial ratios referred to above shall be calculated for the Borrower and its Subsidiaries on a consolidated basis for each consecutive four (4) fiscal quarter period.
Article VII. Defaults; Events of Defaults; Acceleration. The Lender may early terminate the term for the payment of any unpaid amount under the Loan and its accessories (with the Loan Parties, as applicable, required to pay the total unpaid amount of the Loan and its accessories), by a written statement notified to the Borrower in accordance with the Section 10.4 hereof, in any of the following events (comprising and once the cure periods applicable to each of said events have elapsed, an “Event of
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Default”), without the need for a demand, resolution or judicial procedure or any other notice of any nature, and once the cure periods that, if applicable, are provided in this section have elapsed:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of the Loan, or (ii) within three (3) Business Days after the same becomes due, any interest on the Loan, or (iii) within three (3) Business Days after the same becomes due, any amount due hereunder or under any other Loan Document.
(b) Specific Covenants. The Borrower fails to perform or observe any obligation provided in Article V (and such failure shall continue uncured within the following 30 thirty (30) days after the Borrower becomes aware of such failure) or Article VI hereof; or
(c) Representations. Any representation made by the Loan Parties herein, in any other Loan Document, or in any document delivered in connection herewith or therewith, or any documentation provided under this Agreement or under any of the other Loan Documents, shall be incorrect, false or misleading, in any relevant aspect when it is made or considered to be made, provided that any such representation or documentation that cannot be cured due to its nature, may be cured within a period of 30 days after the Borrower becomes aware of the representation, information, or documentation that is incorrect or misleading.
(d) Cross Payment Default. The Borrower or any Subsidiary fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder), after giving effect to any applicable cure period, having an outstanding aggregate principal amount equal to or greater than US$50.0 million (or the equivalent thereof in other currencies); provided that such failure is unremedied and is not waived by the holders of such Indebtedness prior to any termination of the Commitment or early maturity of the Loan hereunder, provided, further, that the threshold referred to in this clause (d) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 5.2(a) that 75% or more of the Borrower’s Consolidated Debt has a corresponding threshold of U.S.$100.0 million or more.
(e) Cross-Default. The Borrower or any of its Subsidiaries shall default any agreement, obligation or condition relating to any Indebtedness in an outstanding principal amount equal to or greater than US$50.0 million, or its equivalent in other currencies, individually or in the aggregate, or contained in any agreement or instrument evidencing, securing, governing or relating thereto, or any other event shall occur or exist, the effect of which default or other event or condition makes, or to permits the holder or holders of such Indebtedness (or a third party on behalf of said holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity and such default shall continue unremedied within the applicable grace period set forth in the documents evidencing such Indebtedness; or any such Indebtedness in an outstanding principal amount equal to or greater than US$50.0 million or its equivalent in other currencies, individually or in the aggregate, of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; provided that this clause (e) shall be applicable with respect to (i) secured Indebtedness that becomes due as a result of the Disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness, (ii) Guarantees of Indebtedness that are satisfied promptly when required or (iii) with respect to Indebtedness incurred under any Swap Contract, termination events or equivalent events pursuant to the terms of the relevant Swap Contract which are not the result of any default thereunder by the Borrower or any of its Subsidiaries; provided, further,; provided, further, that the threshold referred to in this clause (e) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 6.2(a) that 75% or more of the Borrower’s Consolidated Debt has a
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corresponding threshold of U.S.$100.0 million or more; or
(f) Insolvency; Concurso Mercantil; Bankruptcy. (A) Any Loan Party shall institute any proceeding or action (i) in accordance with any law, present or future, of any country (whether in Mexico or abroad) related to concurso mercantil, insolvency, bankruptcy, reorganization or debtor relief the purpose of which is to request its respective concurso mercantil, bankruptcy, insolvency, reorganization, restructuring, dissolution, liquidation or any other legal assistance regarding any Loan Party or its debts, or (ii) seeking the appointment of a receiver, conciliator, auditor, trustee, custodian, administrator or any similar official with respect to all or a substantial portion of its assets or if any Loan Party makes a general assignment of its assets for the benefit of its creditors, or (B) any proceeding or action of the types mentioned in subsection (A) above shall be initiated against any Party, which (i) results in the entering of an order of judicial assistance or concurso mercantil or the appointment of officials to carry out judicial assistance or insolvency-related functions and (ii) continues without being legally dismissed for a period of sixty (60) calendar days, or (C) any proceeding or other action that seeks the issuance of an order of seizure, foreclosure or similar process against all or a relevant portion of its assets that results in an order for such purposes and that it is not dismissed or rendered ineffective within sixty (60) days following the date on which said order is entered shall be initiated against any Party, as to any present or future law of Mexico or any other applicable country, or (D) any of the Loan Parties shall become unable to generally pay its debts when due or shall admit in writing its inability to pay its debts when due; or
(g) Judgments. There is entered against the Borrower or any of tis Subsidiaries any final non-appealable judgments or definitive orders for the payment of money in the aggregate (for all judgements or orders for the payment of money), US$100.0 million (or its equivalent in other currencies), and (i) to the extent not (i) covered by independent third-party insurance as to which the insurer does not dispute coverage or (ii) paid, discharged or bonded within sixty (60) days after the entry of such judgment); or
(h) Invalidity of Loan Documents. Any provision of the Loan Documents ceases to be legal, valid or enforceable, except to the extent permitted in this Agreement, or if any Loan Party contests, in writing, the validity or enforceability of any Loan Document except to the extent permitted in this Agreement, or if any Loan Party denies being bound by the Loan Documents, or purports to revoke, terminate or rescind any provision of the Loan Documents for any reason other than as expressly permitted hereunder; or
(i) Invalidity of Guarantees. Any guarantee issued under any Loan Document ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any guarantee issued under any Loan Document for any reason other than as expressly permitted hereunder; or
(j) Condemnation; Revocation; Ownership Extinction. Any Governmental Authority shall condemn, seize, take possession, or otherwise expropriate, all or a portion, that taken as a whole is considered relevant, of the assets of the Loan Parties, or carry out any act (including the foregoing) in such a way that, based on the value of the property condemned, expropriated or seized, such action would be reasonably expected to have a Material Adverse Effect.
(k) Moratorium. Any Governmental Authority shall, by moratorium laws or other similar laws (except for any such law relating to matters of public health or national emergency), cancel, suspend or defer any material payment obligation when the same becomes due and payable and such cancellation, suspension or deferral shall continue for sixty (60) or more consecutive days.
For clarification purposes, the Borrower’s failure to comply with its obligations contained in Section 5.14(a) will not give rise to the existence of an Event of Default.
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Article VIII. Indemnification. (a) Each Loan Party shall jointly indemnify the Lender, its holding company, and its respective Affiliates and Subsidiaries, and their directors, shareholders, managers, officers, advisors and employees (each, an “Indemnitee”) and hold them harmless from any actions, obligations, damages, losses, penalties, lawsuits, judgments, claims, costs and documented expenses (including reasonable and documented legal expenses) or payments incurred by or attributed to or imposed against any Indemnitee, in each case arising out of or in connection with (1) the execution of this Agreement or any Loan document, or any agreement or instrument contemplated herein or therein, or compliance or the performance by the respective parties of their obligations hereunder or therein, (2) the Loan or the use that is given to the proceeds thereof, (3) any exposure or release of Hazardous Materials on or from any property owned or administered by the Borrower or any of its Subsidiaries, and (4) any action or litigation or investigation related to what is provided in sections (1), (2), or (3) above, provided that the indemnification obligations included in this Article VIII, will not apply and no Indemnitee will have rights pursuant to such, if that said action, obligation, damage, loss, penalty, demand, judgment, claim, cost or expense is declared in a final and unappealable judgment issued by a competent court, as a result of the willful misconduct, bad faith or negligence of said Indemnitee or the default of said Indemnitee of its obligations contained in the Loan Documents or the Applicable Law provided that said default is not caused by an action or omission of any Loan Party or its Subsidiaries or results from any claim that does not result from an act or omission of any Loan Party but from disputes or claims between the Indemnitees.
(b) The obligations of the Loan Parties, as applicable, in accordance with this Section shall remain in force even after the termination of this Agreement and until expiration of their statute of limitation under Applicable Law.
(c) The indemnification contained in this Article VIII, will not be applicable in regard to any Tax, except for Taxes with respect to losses, damages or costs derived from a claim that has not been presented with respect to any Tax
Article IX. Miscellaneous.
Section 9.1. Amendments. This Agreement may only be amended by a written agreement entered into by the Lender and the Loan Parties that acknowledge the execution of this Agreement (for clarification purposes, the acknowledge of the Foreign Guarantors is not required).
Section 9.2. Assignments.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder or under the other Loan Documents without the prior written consent of the Lender (except as otherwise permitted pursuant to Section 5.3).
(b) Assignments by Lender. (i) The Lender may, at any time, assign in whole or in part its rights hereunder, and when it has the written consent of the Borrower (not to be unreasonably withheld or delayed; it being understood that withholding or delaying consent with respect to an assignment to any Disqualified Lender or any Sanctioned Lender shall not be deemed unreasonable) unless (a) an Event of Default has occurred and is continuing, in which case such assignment may be made to any Person other than a Disqualified Lender or a Sanctioned Lender, or (b) the assignment is an Affiliate of the Lender or an Approved Fund in each case that is not a Disqualified Lender. For any assignments for which the Borrower’s consent is required, such consent shall be deemed to have been given if the Borrower shall not have responded within ten (10) Business Days following the written request for such consent. The
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Borrower and each of the Mexican Guarantors agree, at the request and cost of the Lender, to substitute any Promissory Note issued pursuant to this Agreement, if the Lender so requires by reason of the assignments made in accordance with this Section.; notwithstanding the foregoing, neither the Borrower nor the Mexican Guarantors shall be required to make such substitution if it is not upon delivery of the Promissory Note to be substituted.
(ii) The Lender shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Lenders or Sanctioned Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be required to ascertain, monitor or inquire as to whether any prospective Lender is a Disqualified Lender or Sanctioned Lender or (y) have any liability with respect to or arising out of any assignment, or disclosure of confidential information, to any Disqualified Lender or Sanctioned Lender.
(iii) The assignments mentioned above shall not constitute any novation of the Loan or this Agreement and any documented costs and expenses derived therefrom shall be paid by the Lender and the relevant assignee..
(c) Participations. The Lender may participate, totally or partially, even before the expiration of this Agreement or of any Promissory Note, the Loan made hereunder and under any Promissory Note (as well as the rights that result in its favor according to the Loan Documents), without the need to give notice to, or obtain the consent of, the Loan Parties, any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of one or more natural Persons, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”). The participations made by the Lender, provided that it maintains the ownership of the Loan and other rights under the Loan Documents and only assumes the obligation to pay certain interest and principal payments thereon to a third party, shall not be considered assignments. Notwithstanding any participation under this subsection (c), the Lender (or its permitted assigns or successors) (i) will have all, and will be responsible for, each of its obligations under this Agreement and the rest of the Loan Documents, (ii) will be liable for any part of its obligations under this Agreement and the rest of the Loan Documents. In no event shall the Participant have any action against the Loan Parties. A Participant shall have the same benefits as the Lender granting such participation with respect to (a) yield protection and increased cost (but not requiring payments in excess of those payable to such Lender in the absence of such participation), (b) with respect to pro rata treatment provisions, and (c) Section 3.1, except (i) such Participant shall not be entitled to receive any greater payment under Section 3.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation, and (ii) the Participant (as a consequence of the participation or even if it remains hidden), will not have the right to receive any additional sum, which exceeds that which would correspond to the Lender or its permitted assignees in terms of Section 2.9.
Section 9.3. Costs and Expenses. The Borrower shall pay the reasonable and documented costs or expenses (including expenses and costs of legal advisors of the Lender) incurred in the preparation and execution of this Agreement and the other Loan Documents. The Borrower shall pay the Lender, within five (5) Business Days immediately following the date on which it is requested in writing, any reasonable and documented expenses and documented fees (including expenses and costs of legal advisors of the Lender), incurred as a result of any amendment to this Agreement or any other Loan Document, and any cost or documented expenses, if any, in connection with the specific performance or
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the enforcement (including expenses and documented costs of legal advisors of the Lender) of any Loan Document.
Section 9.4. Addresses; Notices. (a) For the purposes related to this Agreement, each of the parties designates the following as its domicile:
The Loan Parties
Avenida Ricardo Margáin Zozaya $325
Colonia Valle del Campestre
San Pedro Garza García
Nuevo León, 66265
Mexico
Attention: Director of Corporate Finance
Tel: +5281-8888-4150
Email: fernando.reiter@cemex.com, and
Attention: Legal Department
Tel: +5281-8888-4054
Email: guillermof.hernandez@cemex.com
The Lender
David Alfaro Siqueiros No. 106, 16 Floor
Col. Valle Oriente
Postal Code 66278
San Pedro Garza García
Nuevo León, Mexico
Attention: Manuel Ramírez García, Fidel Garza Chapa, and Claudia Ailed de la Rosa Reyes
Tel: 81 81739000 Email: manuel.ramirez.garcia@banorte.com, fidel.garza.chapa@banorte.com y claudia.delarosa@banorte.com
(b) Notices and other communications to any party shall be in writing and may be delivered by email or other electronic means, in person, or by a Mexican parcel service with next day delivery, , to the address indicated in this Article for said purposes.
(c) Notices made hereunder shall be deemed to have been made at the time they are delivered to the recipient thereof, or at the time their delivery is denied by said recipient, as indicated in the acknowledgment of receipt, in case of having been sent by mail, or in the receipt of delivery in case of having been sent by parcel or other service, as the case may be or, in the case of notices sent by email or any other electronic means, at the time they are transmitted and confirmation of transmission is obtained.
(d) As long as a change of address is not notified in writing to the other parties hereto, notices and other judicial and extrajudicial proceedings that are made at the addresses indicated shall be fully effective.
Section 9.5. Waiver of Rights. (a) No failure by the parties in exercising any rights under the Loan Documents shall operate as a waiver thereof nor shall any single or partial exercise thereof by said person of any right under the Loan Documents excludes any other right, power or privilege (including those provided in the Applicable Law).
(b) No waiver or approval by the parties shall be applicable to subsequent transactions, unless
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otherwise stated in said waiver or approval. No waiver or approval hereunder shall require the granting or denial of any subsequent waiver or approval hereunder.
Section 9.6. Exhibits; Schedules; Headings. The parties agree that the exhibits and schedules referred to in this Agreement form an integral part hereof. The headings of the Articles and Sections that appear in this Agreement have been inserted with the sole purpose of facilitating their reading; therefore, they do not define or limit their content. For the purposes of interpreting this Agreement, only the content of its Representations and Articles, and not the headings, shall be considered.
Section 9.7. Severability. If any of the provisions of this Agreement is held to be illegal, invalid or unenforceable, said provision shall be considered independent from the remainder of this Agreement, and the validity, legality and enforceability of the remainder of the provisions shall not be affected or annulled.
Section 9.8. Entire Agreement. The parties agree that this Agreement, together with the other Loan Documents, constitutes the entire agreement between them and supersedes all other prior agreements and understandings, verbal and written, between the parties regarding the subject matter of this Agreement (or the other Loan Documents, as the case may be).
Section 9.9. Confidentiality. (a) None of the parties to this Agreement shall disclose Confidential Information to any Person, without the prior consent of the other parties, except to (i) their respective Affiliates and Subsidiaries and their officers, directors, employees, agents, auditors, accounting, financial or legal advisors and, in the case of the Lender, to its current or potential assignees and participants, and only on a confidential basis, or (ii) as required under Applicable Law or by order of the competent Governmental Authority.
(b) For purposes of this Section 9.9, “Confidential Information” means any information, whether written, oral or contained in electromagnetic media that is provided by the parties in relation to, or derived from, the Loan Documents, before or after the date of this Agreement, regarding its business, finances or transactions, provided that Confidential Information excludes any information that (i) is or becomes public, except for a breach of this section, (ii) was in the possession of the party in question before the other party made any disclosure of Confidential Information, (iii) the party obtains from other sources from which, after having made a reasonable investigation, were not aware of being subject to confidentiality obligations, (iv) is developed independently by the party in question, or (v) is disclosed with the written consent of the other parties.
Section 9.10. Instrument Coupled with Enforcement. This Agreement, together with the account statements certified by the accountant legally authorized by the Lender, shall be an instrument coupled with enforcement (título ejecutivo) in accordance with the provisions of Article 68 of the Banking Law.
Section 9.11. Advisory; Mutual Negotiation. Each of the parties has had legal representation by legal advisors of their choice for the negotiation of this Agreement. Therefore, the parties agree that this Agreement has been negotiated and prepared in accordance with the request, direction and joint interpretation of the parties under equal conditions, with the advice and participation of their respective legal advisors, and therefore, it shall be construed in accordance with its terms without favoring any of the parties. The Loan Parties acknowledge and agree that they have been in charge of preparing or supervising the preparation of the Schedules of this Agreement.
Section 9.12. Applicable Law; Competent Courts. The parties agree that for the interpretation and performance of this Agreement, the laws of Mexico shall be applicable and the parties expressly and
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irrevocably submit to the exclusive jurisdiction of the competent Federal courts sitting in Mexico City, Mexico, in any dispute that may arise due to the interpretation or enforcement of this Agreement, expressly and irrevocably waiving any other jurisdiction that may correspond to them due to their domicile, present or future, or for any other reason.
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Exhibit 4.11-1
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO THE CREDIT AGREEMENT, dated as of April 11, 2024 (this “Amendment”), by and among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable, (the “Borrower”), BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (as defined below) (the “Administrative Agent”), BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, as sustainability structuring agent (in such capacity, the “Sustainability Structuring Agent”), the Bookrunners (as defined below), and the Lenders party hereto. Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Amended Credit Agreement (as defined below).
RECITALS:
WHEREAS, the Borrower, the Administrative Agent, the Sustainability Structuring Agent, BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BNP Paribas, Citigroup Global Markets Inc., and Mizuho Bank Ltd., as joint bookrunners and joint lead arrangers, and each lender from time to time party thereto (the “Lenders”) have previously entered into that certain Credit Agreement, dated as of October 7, 2022 (as amended, restated, amended and restated, supplemented and/or otherwise modified prior to the date hereof, the “Existing Credit Agreement”; the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”);
WHEREAS, the Borrower has requested that, automatically and immediately upon giving effect to this Amendment on the Amendment Effective Date, without any further instructions, notices or consents, each of the entities listed on Schedule 1 hereto (the “Revolving Lenders”) make available revolving commitments equal to the amounts set forth on Schedule 1 hereto under the column labelled “Revolving Commitments” (the “Revolving Commitments”), so that the aggregate amount of Revolving Commitments will be equal to €300,000,000;
WHEREAS, the Revolving Lenders have agreed to provide the Revolving Commitments in the amounts indicated therein under the column labelled “Revolving Commitments”, subject to the terms and conditions set forth herein;
WHEREAS, pursuant to Section 2.3 of the Existing Credit Agreement, prior to or substantially concurrently with the Amendment Effective Date, the Borrower will (i) prepay an outstanding principal amount of €50,000,000 of the Term Loans outstanding under the Existing Credit Agreement (the “2022 Term Loans”), and all accrued and unpaid interest on such 2022 Term Loans, and (ii) pay any additional amounts required pursuant to the Existing Credit Agreement in connection with such prepayment, in each case of (i) and (ii), to the existing Term Lenders as of such prepayment date (but, in any case, immediately prior to the Amendment Effective Date) pursuant to the terms of the applicable Notice of Loan Prepayment delivered by the Borrower in connection therewith;
WHEREAS, the Borrower has requested that all the remaining portion of the 2022 Term Loans be refinanced with a new tranche of replacement Term Loans pursuant to a new term facility (such Term Loans, collectively, and including for the avoidance of doubt, Continuing Term Loans (as defined below) and Additional Term Loans (as defined below), the “2024 Term Loans”);
WHEREAS, the Borrower has requested that (i) certain Term Lenders under the Existing Credit Agreement listed on Schedule 2 hereto (the “Continuing Term Lenders”) continue their outstanding
2022 Term Loans in the amounts set forth on Schedule 2 hereto under the column labelled “Continuing Term Loans” (the “Continuing Term Loans”) as 2024 Term Loans in a principal amount equal to the aggregate principal amount of such 2022 Term Loans so continued, and (ii) (A) certain Continuing Term Lenders that desire to make 2024 Term Loans in amounts that are greater than their Continuing Term Loans (the “Incremental Continuing Term Lenders”) and (B) certain Term Lenders listed on Schedule 2 hereto that are not Continuing Term Lenders or Incremental Continuing Term Lenders (the “Additional Term Lenders”), in each case (1) provide term loan commitments in the amounts set forth on Schedule 2 hereto under the column labelled “2024 Term Loan Commitments” (the “2024 Term Loan Commitments”), effective as of the Amendment Effective Date, and (2) make 2024 Term Loans to the Borrower on the Amendment Effective Date in an amount equal to their respective 2024 Term Loan Commitments (the “Additional Term Loans”);
WHEREAS, (i) the Continuing Term Lenders have agreed to continue the Continuing Term Loans and (ii) the Incremental Continuing Term Lenders and Additional Term Lenders have agreed to provide the 2024 Term Loan Commitments and make the Additional Term Loans, subject to the terms and conditions set forth herein;
WHEREAS, the proceeds of the Additional Term Loans will be used to prepay the outstanding principal amount of the 2022 Term Loans that are not continued as 2024 Term Loans, so that, after giving effect to this Amendment, the aggregate amount of the 2024 Term Loans will be equal to €450,000,000;
WHEREAS, pursuant to Section 10.01 of the Existing Credit Agreement, the Borrower, the Administrative Agent (acting at the direction of the Required Lenders), the Sustainability Structuring Agent and the Lenders under the Existing Credit Agreement party hereto (which collectively constitute the Required Lenders) wish to amend the Existing Credit Agreement in connection with the transactions contemplated hereby on the terms and subject to the conditions set forth herein;
WHEREAS, (i) BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México will act as Administrative Agent, and Sustainability Structuring Agent, and (ii) BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BNP PARIBAS SECURITIES CORP, Citigroup Global Markets Inc., HSBC Continental Europe, ING Bank N.V., Dublin Branch, Mizuho Bank Ltd., The Bank of Nova Scotia and Sumitomo Mitsui Banking Corporation will act as joint lead arrangers and joint bookrunners (in connection with the Amended Credit Agreement, in such capacity, the “Bookrunners” and individually, a “Bookrunner”);
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendments. Subject to the satisfaction of the Lenders (or waiver thereof by the Lenders) of the conditions set forth in Section 4 hereof, effective as of the Amendment Effective Date (as defined below) and subject to the terms and conditions set forth herein the Existing Credit Agreement is hereby amended and restated in the form attached as Exhibit A hereto, except that any Schedule, Exhibit or other attachment to the Existing Credit Agreement not amended pursuant to the terms of this Amendment or otherwise included as part of said Exhibit A shall remain in effect without any amendment or other modification thereto.
SECTION 2. Additional Agreements.
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(a) Subject to the terms and conditions set forth herein, each Revolving Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment and (ii) severally commits to provide the Revolving Commitment in the amount set forth opposite its name on Schedule 1 hereto upon the occurrence of the Amendment Effective Date. The Revolving Commitments shall be on the terms set forth in the Amended Credit Agreement.
(b) Subject to the terms and conditions set forth herein, each Continuing Term Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment, and (ii) severally agrees to continue its Continuing Term Loans as 2024 Term Loans in the amount set forth opposite its name on Schedule 2. The Continuing Term Loans shall be on the terms set forth in the Amended Credit Agreement for the Term Loans.
(c) Subject to the terms and conditions set forth herein, each Incremental Continuing Term Lender and Additional Term Lender party hereto hereby (i) irrevocably consents to the terms and conditions of this Amendment, (ii) severally commits to provide the 2024 Term Loan Commitment in the amount set forth opposite its name on Schedule 2 and (iii) agrees to make the Additional Term Loans to the Borrower on the Amendment Effective Date. The 2024 Term Loan Commitments shall be on the terms set forth in the Amended Credit Agreement for the Term Loans, and shall automatically and permanently terminate upon funding of the Additional Term Loans on the Amendment Effective Date.
(d) Subject to the terms and conditions set forth herein, the Borrower hereby (i) commits to apply the net proceeds of the Additional Term Loans on the Amendment Effective Date to prepay in full the outstanding principal amount of the 2022 Term Loans that are not continued as Continuing Term Loans, and all accrued and unpaid interest on such 2022 Term Loans, and any additional amounts required pursuant to the Existing Credit Agreement in connection with such prepayment, and (ii) hereby instructs the Administrative Agent to apply such net proceeds to make such prepayments as set forth in the flow of funds memorandum attached hereto as Exhibit B. On the Amendment Effective Date, immediately after the Additional Term Loans are made and the net proceeds are applied as set forth in this Section, each 2024 Term Lender will have a Term Credit Exposure equal to the amount set forth opposite its name on Schedule 2 hereto under the column labelled “Total Term Loans”.
(e) Subject to the terms and conditions set forth herein, (i) each 2024 Term Loan Commitment shall constitute a “Term Loan Commitment” and “Commitment”, (ii) the 2024 Term Loans (including the Continuing Term Loans and the Additional Term Loans) shall constitute “Term Loans” and “Loans,” and (iii) each Revolving Lender shall become a “Lender” (if and to the extent such Revolving Lender is not already a Lender prior to the Amendment Effective Date).
SECTION 3. Representations and Warranties. In order to induce the Administrative Agent and the Lenders party hereto to enter into this Amendment, the Borrower represents and warrants to the Administrative Agent and such Lenders on and as of the Amendment Effective Date that:
(a) Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (i) is (1) duly organized or formed, validly existing and (2) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (ii) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (1) own or lease its assets and carry on its business and (2) execute, deliver and perform its obligations under this Amendment and the other the Loan Documents to which it is a party, if any, and (iii) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (i)(2), (ii)(1) or (iii), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
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(b) Authorization; No Contravention. The execution and delivery by each Loan Party of this Amendment and performance by each Loan Party of this Amendment and each other Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (i) contravene the terms of any of such Person’s Organization Documents; (ii) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (1) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (2) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (iii) violate any Applicable Law in any material respect.
(c) Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Amendment or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
(d) Binding Effect. This Amendment has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Amendment constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
(e) Incorporation of Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party set forth in the Amended Credit Agreement and in any other Loan Document are true and correct in all material respects (or, in the case of any such representation or warranty already qualified by materiality, in all respects) on and as of the Amendment Effective Date (or, in the case of any such representation or warranty expressly stated to have been made as of a specific date, as of such specific date).
SECTION 4. Conditions to Effectiveness. This Amendment shall become effective as of the date (the “Amendment Effective Date”) on which each of the following conditions shall have been satisfied (or waived) as determined by the Lenders:
(a) The Administrative Agent’s receipt of the following (in the case of certificates of governmental officials, dated no earlier than a recent date before the Amendment Effective Date), each in form and substance satisfactory to the Lenders:
(i) an executed counterpart of this Amendment, properly executed by a duly authorized signatory (apoderado) of the Borrower and a duly authorized signatory of each other party hereto, dated the Amendment Effective Date;
(ii) an executed counterpart of the amended and restated Guaranty, properly executed by a Responsible Officer of each Initial Guarantor organized under the laws of a country other than Mexico and by a Person holding powers for acts of ownership (actos de
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dominio) of each Initial Guarantor organized under the laws of Mexico, dated the Amendment Effective Date (the “A&R Guaranty”);
(iii) with respect to each Loan Party organized under the laws of Mexico, true, correct and complete copies of (A) the resolutions of the board of directors authorizing the execution and delivery of this Amendment and the other Loan Documents, (B) incorporation deed (escritura constitutiva) and current bylaws (estatutos sociales vigentes) evidencing that the execution of this Amendment and the other Loan Documents to which such Loan Party is a party is contemplated within the corporate purpose of such Loan Party, and (C) the public deeds containing the powers of attorney granted to the individuals executing this Amendment and the other Loan Documents to which such Loan Party is a party on behalf of such Loan Party (including poderes para actos de administración (in case of the Borrower) and poderes para actos de dominio (in case of the Guarantors) and registered poderes para suscribir títulos de crédito conforme al artículo 9 de la Ley General de Títulos y Operaciones de Crédito);
(iv) with respect to each Loan Party other than a Loan Party organized under the laws of Mexico, a certificate of a Responsible Officer of the Borrower evidencing (A) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which such Loan Party is a party and (B) that each Loan Party is duly organized or formed, and that each such Loan Party is validly existing, in good standing (to the extent such concept exists in the relevant jurisdiction) and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect;
(v) favorable opinions of (A) Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to the Borrower, (B) the Borrower’s General Counsel, (C) GHR Rechtsanwälte AG, special Swiss counsel to the Borrower, (D) Cleary Gottlieb Steen & Hamilton LLP, New York counsel to the Bookrunners, and (E) Galicia Abogados, S.C, Mexican counsel to the Bookrunners, in each case addressed to the Administrative Agent and each Lender, as to such customary matters concerning the Borrower, this Amendment and the other Loan Documents, as the Required Lenders may reasonably request;
(vi) a certificate signed by a Responsible Officer of the Borrower certifying that (A) the representations and warranties of the Borrower contained in Section 3 hereof are true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date, and (B) no Default exists, or would occur immediately after giving effect to this Amendment, on the Amendment Effective Date;
(vii) the acceptance by the Process Agent of an irrevocable appointment to act as agent for service of process for the Loan Parties in connection with any proceeding relating to this Amendment and the other Loan Documents brought in the State of New York;
(viii) a copy certified by a Mexican notary public of the irrevocable special power of attorney for lawsuits and collections (poder especial irrevocable para pleitos y cobranzas) granted by each of the Loan Parties organized under the laws of Mexico before a Mexican notary public in favor of the Process Agent; and
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(ix) the Audited Financial Statements of the Borrower referred to in Section 5.5(a) of the Amended Credit Agreement.
(b) The Borrower shall have paid (or, substantially concurrently with the Amendment Effective Date, shall pay) any fees of the Lenders, the Bookrunners and the Administrative Agent required to be paid on or before the Amendment Effective Date.
(c) To the extent invoiced at least three (3) Business Days prior to the Amendment Effective Date, the Borrower shall have paid (or, substantially concurrently with the Amendment Effective Date, shall pay) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent), plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).
(d) (i) Upon the reasonable request of any Lender or the Administrative Agent made at least ten (10) Business Days prior to the Amendment Effective Date, the Borrower shall have provided to such Lender or the Administrative Agent, as applicable, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least three (3) Business Days prior to the Amendment Effective Date and (ii) if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, the Borrower shall have delivered to each Lender that so requests a Beneficial Ownership Certification in relation to the Borrower at least ten (10) Business Days prior to the Amendment Effective Date.
(e) The Administrative Agent shall have received a Committed Loan Notice with respect to the 2024 Term Loans no later than 12:00 p.m., New York City time, three (3) Business Days prior to the Amendment Effective Date.
(f) The representations and warranties of the Loan Parties contained in Article V of the Amended Credit Agreement or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the Amendment Effective Date, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date.
(g) No Default shall exist, or would result from this Amendment, the proposed Borrowing, or from the application of the proceeds thereof.
(h) Upon the request of any Lender at least one (1) Business Day prior to the Amendment Effective Date, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the 2024 Term Loans to be continued and/or disbursed by that Lender and the relevant Applicable Margin, on the Amendment Effective Date.
(i) The Borrower shall have prepaid (or, substantially concurrently with the Amendment Effective Date, shall pay) (i) €50,000,000 of principal amount of the 2022 Term Loans and (ii) all accrued and unpaid interest (to, but not including, the Amendment Effective Date) on such loans.
SECTION 5. Reaffirmation of Guarantees. The Borrower hereby (a) acknowledges its receipt of a copy of this Amendment and its review of the terms and conditions hereof and consents to the terms and conditions of this Amendment and the transactions contemplated thereby, (b) affirms and
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confirms, as applicable, its guarantees, pledges, grants and other undertakings under the Amended Credit Agreement and the other Loan Documents to which it is a party and (c) agrees that, except to the extent amended on the Amendment Effective Date, (i) each Loan Document to which it is a party shall continue to be in full force and effect and (ii) all guarantees, pledges, grants and other undertakings thereunder shall continue to be in full force and effect (with the same priority, as applicable) and shall accrue to the benefit of the applicable secured party or parties thereunder.
SECTION 6. Miscellaneous.
(a) Survival. Except as expressly provided in this Amendment, all of the terms, provisions, covenants, agreements, representations and warranties and conditions of the Existing Credit Agreement and the other Loan Documents shall be and remain in full force and effect as written, unmodified hereby and are hereby ratified by the Borrower and each other Loan Party. In the event of any conflict between the terms, provisions, covenants, representations and warranties and conditions of this Amendment, on the one hand, and the Existing Credit Agreement, on the other hand, this Amendment shall control.
(b) Further Assurances. Each of the Borrower and each other Loan Party each agrees to execute such other documents, instruments and agreements and take such further actions reasonably requested by the Administrative Agent to effectuate the provisions of this Amendment.
(c) Severability. Any term or provision of this Amendment that is invalid, illegal or unenforceable in any jurisdiction shall, solely as to that jurisdiction, be ineffective solely to the extent of such invalidity, illegality or unenforceability without rendering invalid, illegal or unenforceable the remaining terms and provisions of this Amendment or affecting the validity, legality or enforceability of any of the terms or provisions of this Amendment in any other jurisdiction. If any provision of this Amendment is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.
(d) Entire Agreement. This Amendment, the Amended Credit Agreement and the other applicable Loan Documents constitute the entire agreement among the parties to the Amended Credit Agreement and such other applicable Loan Document with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and verbal, among such parties or any of them with respect to the subject matter hereof. Any exhibits or annexes attached hereto are hereby incorporated herein by reference and made a part hereof.
(e) Binding Effect, Beneficiaries. This Amendment shall be binding upon and inure to the benefit of the parties to the Amended Credit Agreement and each other applicable Loan Document and their respective heirs, executors, administrators, successors, legal representatives and assigns, and no other party shall derive any rights or benefits herefrom.
(f) Governing Law, Etc.
(i) This Amendment and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Amendment and the transactions contemplated hereby shall be governed by, and construed in accordance with, the laws of the State of New York.
(ii) The provisions of Sections 10.15(b), 10.15(c), 10.15(d) and 10.16 of the Amended Credit Agreement are hereby incorporated by reference mutatis mutandis as if full set forth herein.
7
(g) Construction. This Amendment shall be construed without regard to any presumption or other rule requiring construction against the party drafting this Amendment.
(h) Notices. All notices relating to this Amendment shall be delivered in the manner and subject to the provisions set forth in the Amended Credit Agreement.
(i) Counterparts; Effectiveness; Electronic Execution. This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single agreement. Except as provided in Section 4, this Amendment shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of each other party hereto. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” and words of like import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
(j) Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.
(k) Reference to and Effect on the Credit Agreement and the Other Loan Documents. On and after the Amendment Effective Date, each reference in any Loan Document to “the Credit Agreement” shall mean and be a reference to the Amended Credit Agreement, each reference in the Existing Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Amended Credit Agreement and each reference in each of the other Loan Documents to the “Credit Agreement,” “thereunder,” “thereof,” or words of like import referring to the Existing Credit Agreement shall mean and be a reference to the Amended Credit Agreement. Except as specifically amended by, or contemplated to be amended pursuant to, this Amendment, the Loan Documents shall remain in full force and effect (with the same priority, as applicable) and are hereby ratified and confirmed and this Amendment shall not be considered a novation. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative Agent or any Lender or any other party under, the Amended Credit Agreement, any of the other Loan Documents or otherwise. This Amendment shall be deemed to be a “Loan Document”, “Credit Document”, “Transaction Document”, “Financing Agreement” or “Related Document” (or other analogous or similar defined term) for purposes of the Amended Credit Agreement and the other Loan Documents.
(l) Administrative Agent Provisions.
(i) By their signatures hereto, each Lender (which collectively constitute the Required Lenders under the applicable Loan Documents) hereby (A) acknowledges, accepts, and consents to this Amendment, (B) designates this Amendment as a Loan Document in all respects in connection with the Amended Credit Agreement and the other Loan Documents and (C) authorizes and instructs the Administrative Agent to execute, deliver, and perform this Amendment and the A&R Guaranty.
8
(ii) It is acknowledged and agreed that (A) this Amendment and the A&R Guaranty are executed and delivered by BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, not individually or personally but solely as Administrative Agent in the exercise of the powers and authority conferred and vested in it hereunder and under the Amended Credit Agreement, (B) the Administrative Agent has executed and delivered this Amendment and the A&R Guaranty in accordance with the instructions of the Lenders set forth in Section 6(l)(i) above, (C) the Administrative Agent assumes no responsibility for the correctness of the recitals contained herein and shall not be responsible or accountable in any way whatsoever for or with respect to the validity, execution (except with respect to itself) or sufficiency of this Amendment or the A&R Guaranty and makes no representation with respect thereto, and (D) in connection with its execution, delivery, and performance of this Amendment and the A&R Guaranty, the Administrative Agent (and its Related Parties) shall be entitled to the benefit of every provision of the Amended Credit Agreement limiting the liability of or affording rights, benefits, protections, privileges, immunities, exculpations, immunities, or indemnities to the Administrative Agent as if they were each expressly set forth herein mutatis mutandis. In the case of any reference herein to the taking or omitting to take any action and/or the giving of any consent, approval or direction by the Administrative Agent, it is understood and agreed that in all cases the Administrative Agent shall only take such action in accordance with the written direction of the Required Lenders. In the case of a conflict between this Amendment and the Amended Credit Agreement, the Amended Credit Agreement shall govern and control the liabilities, rights, obligations, privileges, protections, exculpations, immunities, indemnities and benefits of the Administrative Agent.
[Remainder of this page intentionally left blank.]
9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the day and year first above written.
| Cemex, S.A.B. de C.V., | ||
| as Borrower | ||
| By: |
/s/ Fernando José Reiter Landa | |
| Name: Fernando José Reiter Landa | ||
| Title: Attorney-in-Fact | ||
| BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, | ||||
| as Administrative Agent | ||||
| By: | /s/ David Licon | |||
| Name: | David Licon | |||
| Title: Attorney-in-Fact | ||||
| By: | /s/ Ismael De La Garza | |||
| Name: | Ismael De La Garza | |||
| Title: Attorney-in-Fact | ||||
| BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, | ||||
| as Sustainability Structuring Agent | ||||
| By: | /s/ David Licon | |||
| Name: | David Licon | |||
| Title: Attorney-in-Fact | ||||
| By: | /s/ Ismael De La Garza | |||
| Name: | Ismael De La Garza | |||
| Title: Attorney-in-Fact | ||||
| BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, | ||||
| as Lender and Bookrunner | ||||
| By: | /s/ David Licon | |||
| Name: | David Licon | |||
| Title: Attorney-in-Fact | ||||
| By: | /s/ Ismael De La Garza | |||
| Name: | Ismael De La Garza | |||
| Title: Attorney-in-Fact | ||||
| BNP PARIBAS SECURITIES CORP., | ||||
| as Bookrunner | ||||
| By: | /s/ Julien Pecoud-Bouvet | |||
| Name: | Julien Pecoud-Bouvet | |||
| Title: Director | ||||
| By: | /s/ Marine Ausset | |||
| Name: | Marine Ausset | |||
| Title: Vice President | ||||
| BNP PARIBAS, | ||||
| as a Lender | ||||
| By: |
/s/ Julien Pecoud-Bouvet | |||
| Name: |
Julien Pecoud-Bouvet | |||
| Title: Director | ||||
| By: |
/s/ Marine Ausset | |||
| Name: |
Marine Ausset | |||
| Title: Vice President | ||||
| Citigroup Global Markets, Inc., | ||||
| as Bookrunner | ||||
| By: | /s/ Nicolas Bendersky | |||
| Name: | Nicolas Bendersky | |||
| Title: Head of Latin America Syndicated Loans | ||||
| Citibank, N.A., | ||||
| as a Lender | ||||
| By: | /s/ Adrian Guzzoni | |||
| Name: | Adrian Guzzoni | |||
| Title: Head of Latin America Debt Capital Markets | ||||
| Mizuho Bank Ltd., | ||||
| as Lender and Bookrunner | ||||
| By: | /s/ Paul Grayson | |||
| Name: | Paul Grayson | |||
| Title: Director | ||||
| HSBC Continental Europe, | ||||
| as a Lender | ||||
| By: | /s/ Felipe Yung | |||
| Name: | Felipe Yung | |||
| Title: Sales Manager | ||||
| By: | /s/ Sebastian Leon | |||
| Name: | Sebastian Leon | |||
| Title: CMB Manager | ||||
| ING Bank N.V., Dublin Branch, | ||||
| as a Lender | ||||
| By: |
/s/ Cormac Langford | |||
| Name: |
Cormac Langford | |||
| Title: Managing Director | ||||
| By: |
/s/ Robert O’Donoghue | |||
| Name: |
Robert O’Donoghue | |||
| Title: Managing Director | ||||
| The Bank of Nova Scotia, | ||||
| as Lender and Bookrunner | ||||
| By: |
/s/ Mauricio Maldonado | |||
| Name: |
Mauricio Maldonado | |||
| Title: Director, International Banking | ||||
| Sumitomo Mitsui Banking Corporation, | ||||
| as Lender and Bookrunner | ||||
| By: | /s/ Raphael Dumas | |||
| Name: | Raphael Dumas | |||
| Title: Co-Head of Latam Corporate Finance | ||||
| Bank of China Limited (Panama Branch), | ||||
| as a Lender | ||||
| By: | /s/ Wu Xichun | |||
| Name: | Wu Xichun | |||
| Title: Executive Vice President | ||||
| Bank of America, N.A., | ||||
| as a Lender | ||||
| By: | /s/ Gonzalo Isaacs | |||
| Name: | Gonzalo Isaacs | |||
| Title: Managing Director | ||||
| Crédit Agricole Corporate and Investment Bank, | ||||
| as a Lender | ||||
| By: |
/s/ Jaime Frontera | |||
| Name: |
Jaime Frontera | |||
| Title: Managing Director | ||||
| By: |
/s/ Daniela Alvarado | |||
| Name: |
Daniela Alvarado | |||
| Title: Director | ||||
| KfW IPEX-Bank GmbH, | ||||
| as a Lender | ||||
| By: |
/s/ Michael Waitz | |||
| Name: |
Michael Waitz | |||
| Title: Director | ||||
| By: |
/s/ Florian Markart | |||
| Name: |
Florian Markart | |||
| Title: Vice President | ||||
| Deutsche Bank AG New York Branch, | ||||
| as a Lender | ||||
| By: | /s/ Marko Lukin | |||
| Name: | Marko Lukin | |||
| Title: Vice President | ||||
| By: | /s/ Alison Lugo | |||
| Name: | Alison Lugo | |||
| Title: Vice President | ||||
| CaixaBank S.A., | ||||
| as a Lender | ||||
| By: | /s/ Felipe Plaza Soto | |||
| Name: | Felipe Plaza Soto | |||
| Title: Director | ||||
| By: | /s/ Ignacio Gonzalez | |||
| Name: | Ignacio Gonzalez | |||
| Title: Director | ||||
| INTESA SANPAOLO S.P.A., NEW YORK | ||||
| as a Lender | ||||
| By: | /s/ Javier Richard Cook | |||
| Name: | Javier Richard Cook | |||
| Title: Managing Director | ||||
| By: | /s/ Jennifer Feldman Facciola | |||
| Name: | Jennifer Feldman Facciola | |||
| Title: Business Director | ||||
| Natixis New York Branch, | ||||
| as a Lender | ||||
| By: | /s/ Helena Radzyminski | |||
| Name: | Helena Radzyminski | |||
| Title: Managing Director | ||||
| By: | /s/ Gabriela Davis | |||
| Name: | Gabriela Davis | |||
| Title: Executive Director | ||||
| BANKINTER, S.A., | ||||
| as a Lender | ||||
| By: |
/s/ Vicente Navarro | |||
| Name: |
Vicente Navarro | |||
| Title: |
||||
| By: |
/s/ Javier Sáez Martos | |||
| Name: |
Javier Sáez Martos | |||
| Title: |
||||
| Ibercaja Banco, S.A., | ||||
| as a Lender | ||||
| By: | /s/ Sergio Echevarria Garcia | |||
| Name: | Sergio Echevarria Garcia | |||
| Title: Head of Corporate and Syndicated Financing | ||||
EXHIBIT A
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 11, 2024,
among
Cemex, S.A.B. de C.V.,
as the Borrower,
BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México,
as Administrative Agent,
BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México,
as Sustainability Structuring Agent,
BBVA México S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México,
BNP Paribas Securities Corp,
Citigroup Global Markets Inc.,
HSBC Continental Europe,
ING Bank N.V., Dublin Branch,
Mizuho Bank, Ltd.,
The Bank of Nova Scotia, and
Sumitomo Mitsui Banking Corporation
as Joint Lead Arrangers and Joint Bookrunners
and
The Lenders Party Hereto
TABLE OF CONTENTS
| Section |
Page | |||||
| ARTICLE I DEFINITIONS AND ACCOUNTING TERMS |
39 | |||||
| Section 1.1 |
Defined Terms |
39 | ||||
| Section 1.2 |
Other Interpretive Provisions |
65 | ||||
| Section 1.3 |
Accounting Terms |
66 | ||||
| Section 1.4 |
Rounding |
66 | ||||
| Section 1.5 |
Times of Day |
67 | ||||
| Section 1.6 |
Interest Rates |
67 | ||||
| ARTICLE II THE COMMITMENTS AND LOANS |
67 | |||||
| Section 2.1 |
Loans |
67 | ||||
| Section 2.2 |
Borrowings and Continuations of Loans |
67 | ||||
| Section 2.3 |
Prepayments |
68 | ||||
| Section 2.4 |
Termination or Reduction of Commitments. |
69 | ||||
| Section 2.5 |
Repayment of Loans |
70 | ||||
| Section 2.6 |
Interest |
70 | ||||
| Section 2.7 |
Fees |
71 | ||||
| Section 2.8 |
Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin | 71 | ||||
| Section 2.9 |
Evidence of Debt |
72 | ||||
| Section 2.10 |
Payments Generally; Administrative Agent’s Clawback |
72 | ||||
| Section 2.11 |
Sharing of Payments by Lenders |
74 | ||||
| Section 2.12 |
Defaulting Lenders |
74 | ||||
| Section 2.13 |
Sustainability Adjustments |
75 | ||||
| ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY |
78 | |||||
| Section 3.1 |
Taxes |
78 | ||||
| Section 3.2 |
Illegality |
81 | ||||
| Section 3.3 |
[Reserved.] |
81 | ||||
| Section 3.4 |
Increased Costs; Reserves |
81 | ||||
| Section 3.5 |
Compensation for Losses |
83 | ||||
| Section 3.6 |
Mitigation Obligations; Replacement of Lenders |
83 | ||||
| Section 3.7 |
Survival |
84 | ||||
| Section 3.8 |
Inability to Determine Rates |
84 | ||||
| ARTICLE IV CONDITIONS PRECEDENT TO LOANS |
85 | |||||
| Section 4.1 |
Conditions to Restatement Date |
85 | ||||
| Section 4.2 |
Conditions to all Loans |
85 | ||||
| ARTICLE V REPRESENTATIONS AND WARRANTIES |
85 | |||||
| Section 5.1 |
Existence, Qualification and Power |
86 | ||||
| Section 5.2 |
Authorization; No Contravention |
86 | ||||
| Section 5.3 |
Governmental Authorization; Other Consents |
86 | ||||
| Section 5.4 |
Binding Effect |
86 | ||||
| Section 5.5 |
Financial Statements; No Material Adverse Effect |
86 | ||||
| Section 5.6 |
Litigation |
87 | ||||
| Section 5.7 |
No Default |
87 | ||||
| Section 5.8 |
Ownership of Property |
87 | ||||
| Section 5.9 |
Environmental Compliance |
87 | ||||
| Section 5.10 |
Insurance |
87 | ||||
| Section 5.11 |
Taxes |
88 | ||||
| Section 5.12 |
ERISA Compliance |
88 | ||||
| Section 5.13 |
Subsidiaries; Equity Interests |
89 | ||||
| Section 5.14 |
Margin Regulations; Investment Company Act |
89 | ||||
| Section 5.15 |
Disclosure |
89 | ||||
| Section 5.16 |
Compliance with Laws |
90 | ||||
| Section 5.17 |
Intellectual Property; Licenses, Etc |
90 | ||||
| Section 5.18 |
Sanctions |
90 | ||||
| Section 5.19 |
Anti-Corruption Laws |
90 | ||||
| Section 5.20 |
Affected Financial Institutions |
91 | ||||
| Section 5.21 |
Covered Entities |
91 | ||||
| Section 5.22 |
Solvency |
91 | ||||
| Section 5.23 |
Immunity |
91 | ||||
| Section 5.24 |
Pari Passu Status |
91 | ||||
| ARTICLE VI AFFIRMATIVE COVENANTS |
92 | |||||
| Section 6.1 |
Financial Statements |
92 | ||||
| Section 6.2 |
Certificates; Other Information |
92 | ||||
| Section 6.3 |
Notices |
94 | ||||
| Section 6.4 |
Pari Passu Obligations |
94 | ||||
| Section 6.5 |
Payment of Obligations |
94 | ||||
| Section 6.6 |
Preservation of Existence, Etc |
95 | ||||
| Section 6.7 |
Maintenance of Properties |
95 | ||||
| Section 6.8 |
Maintenance of Insurance |
95 | ||||
| Section 6.9 |
Compliance with Laws |
95 | ||||
| Section 6.10 |
Books and Records |
95 | ||||
| Section 6.11 |
Use of Proceeds |
95 | ||||
| Section 6.12 |
Anti-Corruption Laws; Sanctions |
96 | ||||
| Section 6.13 |
Delivery of Notes and Appointment of Custodian |
96 | ||||
| Section 6.14 |
Sustainability Reporting |
96 | ||||
| ARTICLE VII NEGATIVE COVENANTS |
97 | |||||
| Section 7.1 |
Liens |
97 | ||||
| Section 7.2 |
Subsidiary Debt |
99 | ||||
| Section 7.3 |
Fundamental Changes and Asset Dispositions |
100 | ||||
| Section 7.4 |
Restricted Payments |
101 | ||||
| Section 7.5 |
Financial Covenants |
101 | ||||
| ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES |
102 | |||||
| Section 8.1 |
Events of Default |
102 | ||||
| Section 8.2 |
Remedies Upon Event of Default |
104 | ||||
| Section 8.3 |
Application of Funds |
105 | ||||
| ARTICLE IX ADMINISTRATIVE AGENT |
105 | |||||
| Section 9.1 |
Appointment and Authority |
105 | ||||
| Section 9.2 |
Rights as a Lender |
106 | ||||
| Section 9.3 |
Exculpatory Provisions |
106 | ||||
| Section 9.4 |
Reliance by Administrative Agent |
108 | ||||
| Section 9.5 |
Erroneous Payments |
108 | ||||
| Section 9.6 |
Delegation of Duties |
111 | ||||
| Section 9.7 |
Resignation of Administrative Agent |
111 | ||||
| Section 9.8 |
Non-Reliance on the Administrative Agent, the Bookrunners and the Other Lenders | 112 | ||||
| Section 9.9 |
No Other Duties, Etc |
113 | ||||
| Section 9.10 |
Guaranty Matters |
113 | ||||
| Section 9.11 |
Certain ERISA Matters |
113 | ||||
| Section 9.12 |
Administrative Agent May File Proofs of Claim |
115 | ||||
| ARTICLE X MISCELLANEOUS |
115 | |||||
| Section 10.1 |
Amendments, Etc |
115 | ||||
| Section 10.2 |
Notices; Effectiveness; Electronic Communication |
116 | ||||
| Section 10.3 |
Reliance by Administrative Agent and Lenders |
119 | ||||
| Section 10.4 |
No Waiver; Cumulative Remedies; Enforcement |
119 | ||||
| Section 10.5 |
Expenses; Indemnity; Damage Waiver |
120 | ||||
| Section 10.6 |
Payments Set Aside |
122 | ||||
| Section 10.7 |
Successors and Assigns |
122 | ||||
| Section 10.8 |
Treatment of Certain Information; Confidentiality |
124 | ||||
| Section 10.9 |
Right of Setoff |
125 | ||||
| Section 10.10 |
Interest Rate Limitation |
126 | ||||
| Section 10.11 |
Counterparts; Integration; Effectiveness |
126 | ||||
| Section 10.12 |
Survival of Representations and Warranties |
126 | ||||
| Section 10.13 |
Severability |
127 | ||||
| Section 10.14 |
Replacement of Lenders |
127 | ||||
| Section 10.15 |
Governing Law; Jurisdiction; Etc |
128 | ||||
| Section 10.16 |
WAIVER OF JURY TRIAL |
129 | ||||
| Section 10.17 |
Waiver of Immunities |
130 | ||||
| Section 10.18 |
Judgment Currency |
130 | ||||
| Section 10.19 |
No Advisory or Fiduciary Responsibility |
130 | ||||
| Section 10.20 |
Electronic Execution of Assignments and Certain Other Documents |
131 | ||||
| Section 10.21 |
USA PATRIOT Act |
131 | ||||
| Section 10.22 |
Acknowledgement and Consent to Bail-In of Affected Financial Institutions |
132 | ||||
| Section 10.23 |
Acknowledgement Regarding Any Supported QFCs |
132 | ||||
| Section 10.24 |
Use of English Language |
133 | ||||
| Section 10.25 |
Swiss Guarantee Limitation |
133 | ||||
| Section 10.26 |
EU Blocking Regulations |
136 | ||||
SCHEDULES
| 1.1 |
Applicable Margin and KPI Targets | |
| 2.1 |
Commitments and Applicable Percentages | |
| 5.6 |
Litigation and Environmental Matters | |
| 5.13 |
Subsidiaries and Other Equity Investments | |
| 5.17 |
Intellectual Property Matters | |
| 7.1 |
Existing Liens | |
| 7.2 |
Existing Indebtedness | |
| 10.2 |
Administrative Agent’s Office; Certain Addresses for Notices |
EXHIBITS
| A |
Form of Committed Loan Notice | |
| B |
Form of Note | |
| C |
Form of Compliance Certificate | |
| D |
Form of Pricing Certificate | |
| E |
Form of Assignment and Assumption | |
| F |
Form of Amended and Restated Guaranty | |
| G |
Form of Notice of Loan Prepayment | |
| H |
Form of Acceptable Assumption Agreement |
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is dated as of April 11, 2024, among Cemex, S.A.B. de C.V., a sociedad anónima bursátil de capital variable (the “Borrower”), BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, not in its individual capacity but solely in its capacity as administrative agent for the Lenders (the “Administrative Agent”), BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, solely in its capacity as sustainability structuring agent (the “Sustainability Structuring Agent”), BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México, BNP Paribas, Citigroup Global Markets Inc., HSBC Continental Europe, ING Bank N.V., Dublin Branch, Mizuho Bank, Ltd., The Bank of Nova Scotia, and Sumitomo Mitsui Banking Corporation, as joint lead arrangers and joint bookrunners (in such capacity, collectively, the “Bookrunners” and individually, a “Bookrunner”), and each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”).
WHEREAS, reference is hereby made to the Credit Agreement dated as of October 7, 2022 (as amended from time to time and in effect immediately prior to the effectiveness of this Agreement, the “Original Credit Agreement”), among the Borrower, the Administrative Agent, the Sustainability Structuring Agent and the lenders party thereto; and
WHEREAS, on April 11, 2024, the Borrower, the Administrative Agent, the Sustainability Structuring Agent, the Bookrunners and the financial institutions party thereto, as Lenders, entered into the First Amendment (as defined below), which amended the terms of the Original Credit Agreement as of the Restatement Date (as defined below).
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“Acceptable Assumption Agreement” means an Assumption Agreement with respect to the Obligations of the Borrower or a Guarantor, as applicable, in substantially the form of Exhibit H.
“Additional Guarantor” means any Person that, with the written acknowledgment of the Borrower, executes a guaranty supplement in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F, and who shall, promptly following any request from the Administrative Agent or any Lender, provide information and documentation reasonably requested by the Administrative Agent or such Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
“Administrative Agent” has the meaning set forth in the preamble of this Agreement.
39
“Administrative Agent’s Account” means the Administrative Agent’s account as set forth on Schedule 10.2, or such other account as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
“Administrative Agent’s Office” means the Administrative Agent’s address as set forth on Schedule 10.2, or such other address as the Administrative Agent may from time to time notify to the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire delivered by each Lender in the form supplied by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Aggregate Commitments” means the Revolving Commitments of all the Lenders.
“Agreement” means this Credit Agreement.
“Alternative Fuels” are defined following the Global Cement and Concrete Association Sustainability Guidelines, as in effect on the Restatement Date, for co-processing fuels and raw materials in cement manufacturing and include, but are not limited to, industrial waste, municipal solid waste, biomass residues and tires.
“Annual Period” means each calendar year.
“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person or to which such a Person is subject.
“Applicable Margin” means the percentage per annum, based on the Consolidated Leverage Ratio, applicable to each Loan as set forth in Schedule 1.1 hereto, and after giving effect to any Sustainability Margin Adjustment.
“Applicable Percentage” means, (a) with respect to any Lender in respect of the Revolving Facility, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender’s Revolving Commitment at such time; provided, however, that if the Revolving Commitments have terminated pursuant to Section 8.2 or expired, the Applicable Percentage of each Lender shall be determined based upon the Revolving Commitments of each Lender most recently in effect, giving effect to any subsequent assignments and to any Revolving Lender’s status as a Defaulting Lender at the time of determination, and (b) with respect to any Lender in respect of the Term Facility, the percentage of the aggregate outstanding Term Loans under the Term Facility of all Term Lenders represented by the aggregate outstanding Term Loans under the Term Facility of such Lender at such time. The Applicable Percentage of each Lender with respect to the Revolving Facility and the Term Facility, as applicable, as of the Restatement
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Date, is set forth opposite the name of such Lender on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.7), and acknowledged by the Administrative Agent, in substantially the form of Exhibit E.
“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2023, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time that is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their Affiliate (other than through liquidation, administration or other insolvency proceedings).
“Benchmark Replacement Rate” has the meaning specified in Section 3.8.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Borrower” has the meaning specified in the preamble hereto.
“Borrower Materials” has the meaning specified in Section 6.2.
“Borrowing” means a borrowing of Term Loans or Revolving Loans under this Agreement.
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“Business Day” means any day (a) other than (i) a Saturday or Sunday, or (ii) other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, (1) Mexico City, Mexico, or (2) New York, New York, United States, or (3) if such day relates to the date of a Borrowing, continuation of a Loan or delivery of a Committed Loan Notice, (A) Paris, France, for so long as HSBC Continental Europe (or any of its Affiliates) is a Lender hereunder and the Lending Office of such Lender is located in France, or (B) Toronto, Canada, for so long as The Bank of Nova Scotia (or any of its Affiliates) is a Lender hereunder and the Lending Office of such Lender is located in Canada, and (b) if such day relates to the date of a Borrowing or continuation of a Loan, any such day that is also a TARGET Day.
“Capital Stock” means:
| (a) | with respect to any Person that is a corporation, any and all shares, equity quotas (partes sociales), interests, participations or other equivalents (however designated and whether or not voting) of corporate stock, including each class of Common Stock and Preferred Stock of such Person; and |
| (b) | with respect to any Person that is not a corporation, any and all partnership or other equity or ownership interests of such Person. |
(c) “Cash” means the amount of “Cash and cash equivalents” as set out in the relevant line in the relevant financial statements as determined in accordance with IFRS.
“Cementitious Product” means all clinker volumes produced by a company for cement making or direct clinker sale, plus gypsum, limestone, cement kiln dust and all mineral components for blending of cements, plus blending, plus all cement substitutes produced. Clinker bought from third parties for the production of cement shall not constitute Cementitious Product.
“Central Bank Rate” means the greater of (a) (i) one of the following three rates as may be selected by the Administrative Agent: (1) the fixed rate for the main refinancing operations of the European Central Bank (or any successor thereto), or, if that rate is not published, the minimum bid rate for the main refinancing operations of the European Central Bank (or any successor thereto), each as published by the European Central Bank (or any successor thereto) from time to time, (2) the rate for the marginal lending facility of the European Central Bank (or any successor thereto), as published by the European Central Bank (or any successor thereto) from time to time or (3) the rate for the deposit facility of the central banking system of the Participating Member States, as published by the European Central Bank from time to time plus (ii) the applicable Central Bank Rate Adjustment, and (b) the Floor.
“Central Bank Rate Adjustment” means, for any day, a rate equal to the difference (which may be a positive or negative value or zero) of (a) the average of the EURIBOR Rate for the five most recent Business Days preceding such day for which the EURIBOR Rate was available (excluding, from such averaging, the highest and the lowest EURIBOR Rate applicable during such period of five Business Days) minus (b) the Central Bank Rate in respect of Euro in effect on the last Business Day in such period.
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“Change in Law” means the occurrence, after the Restatement Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
“Change of Control” means the beneficial ownership (within the meaning of Rule 13d-3 promulgated by the SEC under the Securities and Exchange Act of 1934, as amended) of twenty percent (20%) or more in voting power of the outstanding Voting Stock of the Borrower is acquired by any Person. Notwithstanding the foregoing, a transaction will not be deemed to constitute a Change of Control if (1) the Borrower becomes a direct or indirect Wholly Owned Subsidiary of a holding company and (2)(A) the direct or indirect holders of the Voting Stock of such holding company immediately following that transaction are substantially the same as the holders of the Borrower’s Voting Stock immediately prior to that transaction or (B) immediately following that transaction no Person (other than a holding company satisfying the requirements of this sentence) has beneficial ownership of twenty percent (20%) or more in voting power of the Voting Stock of such holding company.
“Code” means the Internal Revenue Code of 1986.
“Commitment” means a Term Loan Commitment or a Revolving Commitment, as the context may require.
“Commitment Fee” has the meaning specified in Section 2.7.
“Committed Loan Notice” means a request for a Borrowing or continuation of any Loan, which shall be substantially in the form of Exhibit A, duly completed and signed by a Responsible Officer of the Borrower.
“Common Stock” of any Person means any and all shares, equity quotas (partes sociales), interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of such Person’s common equity interests, whether outstanding on the Restatement Date or issued after the Restatement Date, and includes, without limitation, all series and classes of such common equity interests. For the avoidance of doubt, “Common Stock” of the Borrower will be deemed to include the Borrower’s American Depositary Receipts and Ordinary Participation Certificates (Certificados de Participación Ordinarios).
“Compliance Certificate” means a certificate substantially in the form of Exhibit C.
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“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Coverage Ratio” means, on any date of determination, the ratio of (a) Consolidated EBITDA for the one (1) year period ending on such date to (b) Consolidated Interest Expense for the one (1) year period ending on such date.
“Consolidated Debt” means, at any date, the sum (without duplication) of (a) the aggregate amount of all Financial Debt of the Borrower and its Subsidiaries on a consolidated basis at such date, plus or minus, as applicable, (b) to the extent not included in Financial Debt, the aggregate net mark-to-market amount, which may be positive or negative, of all Swap Contracts (except to the extent such exposure is cash collateralized to the extent permitted under, or not restricted by, the Loan Documents). Notwithstanding the foregoing, Consolidated Debt shall exclude any existing or future obligations under any Securitization, any subordinated notes with no fixed maturity (which shall include, for the avoidance of doubt, the Borrower’s U.S.$1.0 billion 5.125% subordinated notes with no fixed maturity and U.S.$1.0 billion 9.125% subordinated notes with no fixed maturity), and any Indebtedness (whether in the form of perpetual, convertible, hybrid or similar securities or financial instruments) that is subordinated to the Obligations.
“Consolidated EBITDA” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, operating earnings before other (expenses) income, plus net depreciation and amortization expense, in each case determined in accordance with IFRS, as adjusted for any Discontinued EBITDA, and solely for the purpose of calculating the Consolidated Leverage Ratio on a Pro Forma Basis for any Material Disposition and/or Material Acquisition.
“Consolidated Interest Expense” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, the sum of: (a) consolidated interest expense, to the extent such expense was deducted (and not added back) in computing consolidated net income (or loss), including (i) amortization of original issue discount resulting from the issuance of indebtedness at less than par, (ii) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptances, (iii) non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark-to-market valuation of obligations under any hedge agreements or other derivative instruments pursuant to IFRS), (iv) net payments, if any, made (less net payments, if any, received) pursuant to interest rate obligations under any hedge agreements with respect to indebtedness, (v) penalties and interest relating to taxes, and (vi) any expensing of bridge, commitment or other financing fees, and excluding amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses; plus (b) consolidated capitalized interest and the interest component of Leases that constitute Indebtedness of such person for such period, whether paid or accrued.
“Consolidated Leverage Ratio” means, on any date of determination, the ratio of (a) Consolidated Net Debt on such date to (b) Consolidated EBITDA for the one (1) year period ending on such date.
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“Consolidated Net Debt” means, at any date, for the Borrower and its Subsidiaries on a consolidated basis, the Consolidated Debt net of Cash of the Borrower and its Subsidiaries that would not appear as “restricted” on a balance sheet in accordance with IFRS on such date.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Convertible Indebtedness” means any (a) Indebtedness the terms of which provide for conversion into, or exchange for, Common Stock of the Borrower, cash in lieu thereof and/or a combination of Common Stock of the Borrower and cash in lieu thereof or (b) contingent convertible units and related note purchase contracts.
“Corporate Office” means the Borrower’s corporate office located at Avenida Ricardo Margain Zozaya 325, Colonia Valle del Campestre, San Pedro Garza Garcia, Nuevo Leon, Mexico 66265, or any other office that might be notified from time to time to the Administrative Agent.
“Covenant Modification Date” means the date on which Covenant Modification Event has occurred, as notified to the Administrative Agent by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower, provided that such notice is delivered no later than five (5) Business Days after such Covenant Modification Event has occurred.
“Covenant Modification Event” means the occurrence of all of the following events, concurrently: (i) no Default or Event of Default has occurred and is continuing and (ii) a “Suspension Period” (as such term is defined in the Indenture as of the date hereof without giving effect to any waiver or amendment thereto) is continuing under the Indenture; provided that if the Notes (as defined in the Indenture) are repaid or otherwise no longer outstanding, the immediately preceding clause (ii) shall be replaced in its entirety by the requirement that the Borrower has Investment Grade Ratings from two Rating Agencies.
“Covenant Modification Period” means the period of time between the Covenant Modification Date and the Covenant Reversion Date.
“Covenant Reversion Date” means the date on which any of the following has occurred, as notified to the Administrative Agent by the Borrower pursuant to a certificate signed by a Responsible Officer of the Borrower: (i) the Borrower ceases to have Investment Grade Ratings from two Rating Agencies, (ii) a Default or an Event of Default occurs and is continuing or (iii) the applicable “Suspension Period” (as such term is defined in the Indenture as of the date hereof without giving effect to any waiver or amendment thereto) under the Indenture is terminated or is otherwise no longer applicable.
“Custodian” means any custodian of the Notes acting as agent for and on behalf of the Lenders for the time being appointed on behalf of the Lenders by the Administrative Agent (acting
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at the direction of the Required Lenders) with the Borrower’s prior written consent (not to be unreasonably withheld, conditioned or delayed) provided that such Custodian must maintain an office in the metropolitan area of Monterrey, Nuevo León, Mexico.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, the Mexican Bankruptcy Law (Ley de Concursos Mercantiles), and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, concurso mercantil, quiebra or similar debtor relief Laws of the United States, Mexico or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means the Interest Rate plus 2.00% per annum.
“Defaulting Lender” means, subject to Section 2.12(b), any Lender that has failed to (a) fund all or any portion of its Loans on the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing prior to such date that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (b) pay to the Administrative Agent, or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, or has notified the Borrower or the Administrative Agent, in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, visitador, conciliador, síndico, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity, or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of (i) an Undisclosed Administration and (ii) the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent (in each case, acting at the written direction of the Required Lenders) that a Lender is a Defaulting Lender under any one or more of
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clauses (a) through (d) above, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.12(b)) upon written notice of such determination to the Borrower and each other Lender.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory itself is the subject of any comprehensive Sanction (at the time of this Agreement, Cuba, Iran, North Korea, Syria, and the Crimea, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic regions of Ukraine).
“Discontinued EBITDA” means, for any period, the sum for Discontinued Operations of the operating income for such period plus, without duplication and to the extent deducted in determining such discontinued operating income, depreciation, amortization expense and impairment of assets of the Discontinued Operations. For the avoidance of doubt, the Discontinued EBITDA will be added to the Consolidated EBITDA for any period for which the Disposition of the Discontinued Operations has not yet occurred.
“Discontinued Operations” means operations that are accounted for as discontinued operations for which the Disposition of such assets has not yet occurred.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (in one transaction or in a series of transactions and whether effected pursuant to a Division or otherwise) of any property by any Person (including any sale and leaseback transaction and any issuance of Equity Interests by a Subsidiary of such Person), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.
“Disqualified Lender” means (a) certain financial institutions and other institutional lenders that have been specified to the Administrative Agent by the Borrower in writing at any time prior to the Restatement Date; (b) any of the Borrower’s competitors that have been specified to the Administrative Agent by the Borrower in writing at any time and from time to time, provided, however, that such specification shall not have retroactive effects, provided, further, that the Borrower shall not retroactively specify as its competitor any Person that is a Lender or Participant (or an Affiliate thereof) as of such time; and (c) in the case of each of clauses (a) and (b), any of their respective Affiliates that are either (x) identified in writing by the Borrower from time to time, or (y) clearly identifiable on the basis of such Affiliate’s name.
“Dividing Person” has the meaning assigned to it in the definition of “Division.”
“Division” means the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
“Dollar” and “U.S.$” mean lawful money of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described
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in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.7 (subject to such consents, if any, as may be required under Section 10.7).
“Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws (including common law), official standards (normas técnicas), regulations, ordinances, rules, applicable judgments, applicable orders, applicable decrees, permits and licenses relating to pollution and the protection of human health and safety with respect to exposure to Hazardous Materials, protection of the environment and natural resources or the release of Hazardous Materials into the environment, including any of the foregoing related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law, pursuant to or arising from (a) any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of Capital Stock of such Person and any warrants, rights or options to purchase any of the foregoing (but excluding any Convertible Indebtedness), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under
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Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan (if any resulting liability has not been satisfied or payments of such liability are delinquent) or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“Erroneous Payment” has the meaning assigned to it in Section 9.5(a).
“Erroneous Payment Deficiency Assignment” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Impacted Class” has the meaning assigned to it in Section 9.5(d).
“Erroneous Payment Return Deficiency” has the meaning assigned to it in Section 9.5(d).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“EU Blocking Regulation” means EU Council Regulation (EC) 2271/96 of 22 November 1996.
“EURIBOR Rate” means, in relation to any Loan: (a) the applicable Screen Rate; or (b) (if no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Administrative Agent at its request quoted by the Reference Banks to leading banks in the European interbank market, in each case as of 11:00 a.m. (Brussels time) two TARGET Days prior to the commencement of such Interest Period; provided that the EURIBOR Rate for any Loan shall be not less than the Floor.
“Euro” and “€” mean the single currency of the Participating Member States.
“Event of Default” has the meaning specified in Section 8.1.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan
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or Commitment (other than pursuant to an assignment request by the Borrower under Section 10.14) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.1, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) any Mexican withholding Taxes imposed on amounts payable under any Loan Document to or for the account of any Lender, in excess of the withholding Taxes that would have been imposed had such recipient been a Qualified Entity at the time of payment, and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Executive Compensation Plan” means any stock option plan, restricted stock plan or retirement plan which the Borrower or any of its Subsidiaries, any other obligor customarily provides to its employees, consultants and directors.
“Facilities” means the Term Facility and the Revolving Facility, together.
“FATCA” means Sections 1471 through 1474 of the Code, as of the Restatement Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities entered into in connection with the implementation of the foregoing.
“Fee Letters” means, collectively, (a) the letter agreement, dated February 20, 2024, between the Borrower and the Bookrunners and (b) the letter agreement, dated April 9, 2024, between the Borrower and the Administrative Agent.
“Financial Debt” means, at any date with respect to any Person, the sum (without duplication) of the following, in each case, as determined in accordance with IFRS:
| (a) | Indebtedness of such Person pursuant to clause (a) of the definition thereof; |
| (b) | Indebtedness of such Person pursuant to clause (b) of the definition thereof; |
| (c) | Indebtedness of such Person pursuant to clause (c) of the definition thereof; |
| (d) | Indebtedness of such Person pursuant to clause (e) of the definition thereof; |
| (e) | Indebtedness of such Person pursuant to clause (f) of the definition thereof; and |
| (f) | all Guarantees of such Person in respect of any of the foregoing. |
“First Amendment” means that certain First Amendment to the Credit Agreement dated as of April 11, 2024, by and among the Borrower, the Administrative Agent, the Sustainability Structuring Agent, the Bookrunners and the Lenders party thereto.
“Floor” means a rate of interest equal to 0.00% per annum.
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“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“Governmental Authority” means the government of the United States, Mexico or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guarantors” means (a) as of the Restatement Date, the Initial Guarantors, and (b) after the Restatement Date, the Initial Guarantors together with any Additional Guarantor.
“Guaranty” means the Amended and Restated Guaranty, dated as of the Restatement Date, made by the Guarantors in favor of the Administrative Agent and the Lenders, substantially in the form of Exhibit F.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
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“IFRS” means international accounting standards within the meaning of International Accounting Standards Regulation 1606/2002 to the extent applicable to the relevant financial statements delivered under or referred to herein.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with IFRS (except as expressly set forth below):
| (a) | all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; |
| (b) | all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments which, for the avoidance of doubt, shall not deemed Indebtedness until they are required to be funded; |
| (c) | net obligations of such Person under any Swap Contract (as determined in accordance with IFRS); |
| (d) | all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) if (i) one of the primary reasons behind entering into such obligation is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 90 days after the date of supply; |
| (e) | Indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements) but only to the extent of the fair market value of the property secured thereby, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; |
| (f) | the aggregate amount of all financial obligations arising under any Leases of such Person recognized in the consolidated statement of financial position of such Person in accordance with IFRS less the sum (without duplication) of (i) all obligations of such Person to pay the deferred purchase price of property or services and (ii) all obligations of such Person with respect to product invoices incurred in connection with export financing; |
| (g) | all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment before the Term Facility Maturity Date (other than at the option of such Person) in respect of any Equity Interest in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and |
| (h) | all Guarantees of such Person in respect of any of the foregoing. |
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For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person, and in any case only to the extent of the recourse to such Person.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.
“Indemnitees” has the meaning specified in Section 10.5(b).
“Indenture” means the Indenture dated as of January 12, 2021 (as it may be amended or supplemented from time to time in accordance with the terms thereof), among the Borrower, The Bank of New York Mellon, as trustee, and the guarantors party thereto.
“Information” has the meaning specified in Section 10.8.
“Initial Lender Adjusted Interest Period” has the meaning specified in Section 3.8.
“Initial CBR Interest Period” has the meaning specified in Section 3.8.
“Initial Guarantors” means, collectively, Cemex Concretos, S.A. de C.V., Cemex Operaciones México, S.A. de C.V., Cemex Corp. and Cemex Innovation Holding Ltd. (formerly known as CEMEX TRADEMARKS HOLDING Ltd.).
“Interest Payment Date” means, (a) as to any Term Loan, the last day of each Interest Period applicable to such Term Loan and the Term Facility Maturity Date; and (b) as to any Revolving Loan, the last day of each Interest Period applicable to such Revolving Loan and the Revolving Facility Maturity Date.
“Interest Period” means as to each Loan, the period commencing on the date such Loan is disbursed or continued and ending on the numerically corresponding day in the calendar month that is one, three or six months thereafter, as selected by the Borrower in its Committed Loan Notice; provided that:
| (a) | any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day; |
| (b) | any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and |
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| (c) | no Interest Period shall extend beyond (i) the Term Facility Maturity Date, with respect to Term Loans, and (ii) the Revolving Facility Maturity Date, with respect to Revolving Loans. |
“Interest Rate” means, at any time of determination, the interest rate applicable to the Loans at such time, as determined in accordance with this Agreement.
“Inventory Financing” means any arrangement pursuant to which the Borrower or any of its Subsidiaries sells or otherwise disposes of inventory to a counterparty (including a bank or other institution or a special purpose vehicle or partnership incorporated or established by or on behalf of such bank or other institution or an Affiliate of such bank or other institution) and has an obligation to repurchase such inventory to the extent that it is not sold to a third party within a specified period.
“Investment Grade Rating” means a rating equal to or higher than BBB- (or the equivalent) by Fitch, Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P.
“IP Rights” has the meaning specified in Section 5.17.
“IRS” means the United States Internal Revenue Service.
“KPI Metrics” means:
| (a) | (i) direct CO2 emissions related to the production of cement and clinker (excluding on site electricity production) and (ii) indirect CO2 emissions from purchased electricity, in each case, measured in kg of CO2 per ton of Cementitious Product, minus emissions from biomass fuel sources and Alternative Fuels; |
| (b) | the amount of clinker consumed to produce clinker content in Cementitious Products; and |
| (c) | the percentage of fuel consumption from Alternative Fuels compared to the total fuel consumption for cement plant operations in a given period. |
“KPI Metrics Reviewer” means, with respect to any KPI Metric, KPMG Cárdenas Dosal, S.C.; or any replacement KPI Metrics Reviewer thereof as designated from time to time by the Borrower; provided that any such replacement KPI Metrics Reviewer (a) shall be (i) a qualified external reviewer (other than an Affiliate of the Borrower), with relevant expertise, such as an auditor, environmental consultant and/or independent ratings agency of recognized national standing (for the avoidance of doubt, any “big four” auditing firm or other auditing firm of recognized national standing shall be an acceptable replacement KPI Metrics Reviewer) or (ii) another firm designated by the Borrower and approved by the Sustainability Structuring Agent and the Required Lenders, and (b) shall apply standards and methodology of review that are the same as or substantially consistent with the standards and methodology of review used in the Borrower’s KPI Metrics Report delivered by the Borrower for the immediately preceding Annual Period, except for any changes to such standards and/or methodology that (x) are consistent with the generally accepted industry standards or (y) if not so consistent, are proposed by the Borrower and approved by the Sustainability Structuring Agent and the Required Lenders; provided, however,
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that, to the extent their approval is required, the Sustainability Structuring Agent and the Required Lenders shall be deemed to have approved any replacement KPI Metrics Reviewer proposed in writing by the Borrower to the Administrative Agent, unless the Borrower shall have received a written objection from the Administrative Agent (acting at the direction of the Required Lenders) within thirty (30) days of the Borrower’s proposal.
“KPI Metrics Report” means a report that may take the form of any nonfinancial disclosure of the Borrower’s performance of one or more KPI Metrics, prepared by or on behalf of the Borrower for one or more KPI Metrics for a specific Annual Period, and published on an Internet or intranet website to which each Lender and the Administrative Agent have been granted access free of charge (or at the expense of the Borrower). Such KPI Metrics Report shall be reviewed by the KPI Metrics Reviewer.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, official standards (normas técnicas), regulations, ordinances, codes, and all applicable administrative orders, directed duties, licenses, authorizations and permits issued by any Governmental Authority.
“Lease” means, as to any Person, the obligations of such Person under a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration. For the avoidance of doubt, for purposes of this definition and its application to the Borrower, short-term and low-value leases as defined by the Borrower’s policy under IFRS are excluded.
“Lender” means a Term Lender or a Revolving Lender, as the context may require.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent, which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, easement, right-of-way or other encumbrance on title to real property, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, and any financing lease having substantially the same economic effect as any of the foregoing); provided, however, that the following shall only constitute a Lien in circumstances where the arrangement or transaction is entered into primarily as a method of raising Indebtedness or of financing the acquisition of an asset:
(i) the sale, transfer or other Disposition of any of the assets of the Borrower or its Subsidiaries on terms whereby they are or may be leased to or re-acquired by the Borrower or its Subsidiaries;
(ii) the sale, transfer or other Disposition of any of the Borrower’s or its Subsidiaries’ receivables on recourse terms;
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(iii) the entering into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv) the entering into any other preferential arrangement having a similar effect as those described in (i) to (iii) above.
“Loan” means an extension of credit by a Lender to the Borrower under Article II.
“Loan Documents” means this Agreement, including schedules and exhibits hereto, each Note, the Guaranty, the Fee Letters (other than for purposes of Section 10.1), each Committed Loan Notice, and any amendments, modifications or supplements hereto or to any other Loan Document or waivers hereof or to any other Loan Document.
“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Material Acquisition” means any (a) acquisition of property or series of related acquisitions of property that constitutes assets comprising all or substantially all of an operating unit, division or line of business or (b) acquisition of or other investment in the Equity Interests of any Subsidiary or any person which becomes a Subsidiary or is merged or consolidated with the Borrower or any of its Subsidiaries, in each case, which involves the payment of consideration by the Borrower and its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Material Adverse Effect” means (a) a material adverse change in the business, financial condition, operations, performance or properties of the Borrower and its Subsidiaries taken as a whole; or (b) a material adverse effect on (i) the ability of any Loan Party to perform its payment Obligations under any Loan Document or (ii) the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party or (iii) the rights, remedies and benefits available to, or conferred upon, the Administrative Agent or any Lender under any Loan Documents.
“Material Disposition” means any Disposition of property or series of related Dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries in excess of U.S.$250.0 million (or the equivalent in other currencies).
“Mexico” means the United Mexican States (Estados Unidos Mexicanos).
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
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“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.1 and (b) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.
“Note” means a non-negotiable promissory note (pagaré no negociable) made by the Borrower as issuer (suscriptor), and by each Guarantor organized under the laws of Mexico as guarantor (avalista), in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B or any other form reasonably satisfactory to the Required Lenders if the EURIBOR Rate is substituted by a Benchmark Replacement Rate pursuant to the terms of Section 3.8, delivered pursuant to Section 2.9, Section 4.2 or Section 6.13 or the First Amendment.
“Notice of Loan Prepayment” means a notice of prepayment with respect to a Loan, which shall be substantially in the form of Exhibit G, duly completed and signed by a Responsible Officer.
“Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, indemnities, reimbursements and other amounts (including all fees, charges, expenses and disbursements of counsel to the Administrative Agent or any Lender) payable by any Loan Party under any Loan Document to the Administrative Agent or any Lender and (b) the obligation of the Loan Parties to reimburse any amount in respect of any of the foregoing that the Administrative Agent or any Lender, in each case in its sole discretion, may elect to pay or advance on behalf of the Loan Parties in accordance with the terms and conditions of the Loan Documents.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Organization Documents” means, as applicable (a) with respect to any corporation, the charter or certificate or articles of incorporation (including acta constitutiva) and the bylaws (estatutos sociales or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating or limited liability agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
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“Original Credit Agreement” has the meaning set forth in the recitals to this Agreement.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.6).
“Outstanding Amount” means, with respect to Revolving Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments of Revolving Loans occurring on such date.
“Participant” has the meaning specified in Section 10.7(d).
“Participant Register” has the meaning specified in Section 10.7(d).
“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“PATRIOT Act” has the meaning specified in Section 10.21.
“Payment Recipient” has the meaning assigned to it in Section 9.5(a).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum funding standards with respect to Pension Plans and set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan and other than a Multiemployer Plan) that is maintained by the Borrower and any ERISA Affiliate or with respect to which the Borrower or any ERISA Affiliate has any liability and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
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“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained by the Borrower and any Pension Plan maintained by an ERISA Affiliate.
“Platform” has the meaning specified in Section 6.2.
“Preferred Stock” of any Person means any Equity Interests of such Person that has preferential rights over any other Equity Interests of such Person with respect to dividends, distributions or mandatory redemptions or upon liquidation.
“Pricing Certificate” means a certificate substantially in the form of Exhibit D signed by a Responsible Officer of the Borrower attaching (a) true and correct copies of each KPI Metrics Report for the immediately preceding Annual Period and setting forth the Sustainability Margin Adjustment for the period covered thereby and for the KPI Metrics disclosed therein, and computations in reasonable detail in respect thereof and (b) if any KPI Metrics Report was reviewed by the KPI Metrics Reviewer, a report of the KPI Metrics Reviewer containing its customary limited assurances (or such other assurances as may be reasonably acceptable to the Required Lenders) with respect to the computations in such KPI Metrics Report.
“Process Agent” means (a) as of the Restatement Date, Cemex NY Corporation, and (b) after the Restatement Date, such other Person as the Borrower may appoint and empower from time to time pursuant to provisions substantially similar to Section 10.15(d) and designated in writing to the Administrative Agent.
“Pro Forma Basis” means, with respect to compliance with any test or covenant hereunder in respect of a specified measurement period, compliance with such covenant or test after giving effect to any Material Acquisition or Material Disposition, using, for purposes of determining such compliance, the historical financial statements of all entities or assets so acquired or disposed of and the consolidated financial statements of the Borrower and its Subsidiaries which shall be reformulated as if such Material Acquisition or Material Disposition which has been consummated during such period had been consummated on the first day of such period.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.2.
“Qualified Entity” means any Lender (or, if such Lender acts through a branch or agency, the principal office of such Lender) that (a) is the effective beneficiary of payments hereunder (i) made by any Loan Party organized under the laws of Mexico or (ii) deemed Mexican sourced and, therefore, subject to Mexican withholding Taxes, (b) meets the requirements imposed by article 166-I, paragraph (a), Section (2) (or any other successor provision) of the Mexican Income Tax Law (Ley del Impuesto Sobre la Renta) and delivers to the Borrower the information described in Sections 3.18.18. and/or 3.18.19, as applicable, of the Resolución Miscelánea Fiscal para 2024 (Tax Resolution for 2024) (or any substitute or successor provisions), and (c) is a resident for tax purposes of a country with which Mexico has entered into a treaty for the avoidance of double taxation that is in effect.
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“Rating Agencies” means Fitch, Moody’s and S&P. In the event that Fitch, Moody’s or S&P is no longer in existence or issuing ratings, such organization may be replaced by a nationally recognized statistical rating organization (as defined in Rule 15c3-1(c)(2)(vi)(F) of the Exchange Act or any successor provision) designated by the Borrower with notice to the Administrative Agent.
“Recipient” means the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Reference Banks” means the main offices of Banco Santander, S.A. and UniCredit Bank AG and failing that, of any other lender institution or institutions not linked to the Lenders originally or subsequently, that the Administrative Agent designates at any given time with the consent of the Required Lenders. If a Reference Bank merges, begins liquidation or ceases to exist for any other reason, the Administrative Agent shall (in consultation with the Borrower) appoint the replacement financial institution, and shall notify the designated financial institution to the Lenders and to the Borrower as soon as possible.
“Register” has the meaning specified in Section 10.7(c).
“Regulation U” means Regulation U of the FRB, as in effect from time to time and all official rulings and interpretations thereunder or thereof.
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the directors, officers, employees, agents, and advisors of such Person and of such Person’s Affiliates.
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.
“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than 50% of the Total Credit Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chairman of the board, the chief executive officer, president, chief financial officer, any vice president, treasurer, assistant treasurer, controller, secretary, assistant secretary or attorney-in-fact of a Loan Party, and solely for purposes of the delivery of incumbency certificates pursuant to Section 4.1 or Section 4.2 and notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
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“Restatement Date” means the date on which all of the conditions contained in Section 4 of the First Amendment have been satisfied (or waived).
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to the Borrower’s stockholders, partners or members (or the equivalent Person thereof).
“Revolving Availability Period” means the period from and including the Restatement Date to the earliest of (a) the Revolving Facility Maturity Date and (b) the date of termination of the commitment of each Revolving Lender to make Revolving Loans.
“Revolving Commitment” means, as to each Revolving Lender, its obligation to make Revolving Loans to the Borrower pursuant to Section 2.1(b), in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Revolving Lender’s name on Schedule 2.1 or in the Assignment and Assumption pursuant to which such Revolving Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.
“Revolving Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Revolving Loans.
“Revolving Facility” means the senior unsecured revolving credit facility in an aggregate principal amount of €300.00 million provided under this Agreement.
“Revolving Facility Maturity Date” means the date that is four (4) years from the Restatement Date; provided, however, that if such date is not a Business Day, the Revolving Facility Maturity Date shall be the immediately preceding Business Day.
“Revolving Lender” means the Persons listed on Schedule 2.1 holding a Revolving Loan under the Revolving Facility and any other Person that shall have become party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto holding Revolving Loans under the Revolving Facility pursuant to an Assignment and Assumption.
“Revolving Loan” has the meaning specified in Section 2.1(b).
“Sanctioned Lender” means any Person that is a Sanctions Target.
“Sanctions” means any economic or financial sanction administered or enforced by the United States Government (including without limitation, OFAC and the U.S. Department of State), the United Nations Security Council, the European Union, His Majesty’s Treasury, Federal Republic of Germany or Canada.
“Sanctions Target” means any Person that is (a) listed on, or 50% or more owned or Controlled by a Person listed on, a Sanctions list, (b) the government of a Designated Jurisdiction
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or a member of the government of a Designated Jurisdiction, or (c) located in or incorporated under the laws of any Designated Jurisdiction.
“Screen Rate” means the percentage rate per annum as determined by the European Money Markets Institute (or any other person which takes over the administration of the relevant rate) for the relevant period displayed on the appropriate page of the Bloomberg screen. If the agreed page is replaced or service ceases to be available, the Administrative Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower and the Lenders.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Securitization” means a transaction or series of related transactions providing for the securitization of receivables and related assets by the Borrower or its Subsidiaries, including a sale at a discount; provided that (i) such receivables have been transferred, directly or indirectly, by the originator thereof to a person that is not the Borrower or any of its Subsidiaries in a manner that satisfies the requirements for an absolute conveyance (or, where the originator is organized under the laws of Mexico, a true sale), and not merely a pledge, under the laws and regulations of the jurisdiction in which such originator is organized; and (ii) except for customary representations, warranties, covenants and indemnities, such sale, transfer or other securitization is carried out on a non-recourse basis or on a basis where recovery is limited solely to the collection of the relevant receivables (other than where such recourse or recovery is required pursuant to the Applicable Laws or regulations in any jurisdiction).
“Solvent” means, with respect to the Borrower, that as of the date of determination, (a) the sum of the debt (including contingent liabilities) of the Borrower and its Subsidiaries on a consolidated basis does not exceed the present fair saleable value of the present assets of the Borrower and its Subsidiaries on a consolidated basis; (b) the capital of the Borrower and its Subsidiaries on a consolidated basis is not unreasonably small in relation to its business as contemplated on the date of determination; or (c) the Borrower and its Subsidiaries on a consolidated basis do not intend to incur, or believe that they will incur, debts beyond their ability to pay such debts as they become due in the ordinary course of business. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under FASB Accounting Standards Codification Topic 450-20).
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.
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“Sustainability Margin Adjustment” means an adjustment to the Applicable Margin for any KPI Metric as provided by this Agreement.
“Sustainability Recalculation Event” has the meaning specified in Section 2.13(d).
“Sustainability Structuring Agent” has the meaning set forth in the preamble of this Agreement.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swiss Federal Tax Administration” means the tax authorities referred to in article 34 of the Swiss Federal Act on Withholding Tax of 13 October 1965, as from time to time amended (Bundesgesetz über die Verrechnungssteuer).
“Swiss Guarantor” means a Guarantor which is incorporated in Switzerland.
“T2” means the real time gross settlement system operated by the Eurosystem (the monetary authority of the Eurozone), or any successor system.
“TARGET Day” means any day on which T2 is open for the settlement of payments in Euros.
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Credit Exposure” means, as to any Lender at any time, the aggregate principal amount at such time of its outstanding Term Loans.
“Term Facility” means the senior unsecured term loan facility in an aggregate principal amount of €450.0 million provided under this Agreement.
“Term Facility Maturity Date” means the date that is five (5) years from the Restatement Date; provided, however, that if such date is not a Business Day, the Term Facility Maturity Date shall be the immediately preceding Business Day.
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“Term Lender” means the Persons listed on Schedule 2.1 holding a Term Loan Commitment or Term Loans under the Term Facility and any other Person that shall have become party hereto holding Term Loans under the Term Facility pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto holding Term Loans under the Term Facility pursuant to an Assignment and Assumption.
“Term Loan” has the meaning specified in Section 2.1(a).
“Term Loan Commitment” means, as to each Term Lender, its obligation to make a Term Loan on the Restatement Date pursuant to the terms set forth in the First Amendment.
“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments, Term Credit Exposure and Revolving Credit Exposure of such Lender at such time.
“Transfer and Inconvertibility Event” means any action by Mexico, Banco de México or any other Governmental Authority of Mexico asserting or exercising de jure governmental, legislative, regulatory, administrative, judicial or police powers which (a) renders any Loan Party unable legally to convert Pesos to make any payment in Euros to the Administrative Agent or any Lender in respect of any Obligation in accordance with the Loan Documents, or (b) restricts the availability of Euros through the Mexican banking system or authorized exchange bureaus (“casas de cambio” as regulated in the Mexican Ley General de Organizaciones y Actividades Auxiliares del Crédito) to enable each Loan Party to lawfully perform its payment Obligations under the Loan Documents.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain Affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Undisclosed Administration” means, in relation to a Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian, or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction, if applicable law requires that such appointment not be disclosed.
“United States” and “U.S.” mean the United States of America.
“Voting Stock” with respect to any Person, means securities of any class of Equity Interests of such Person entitling the holders thereof (whether pursuant to contract or otherwise, or at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the Board of Directors (or equivalent governing body) of such Person.
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“Wholly Owned Subsidiary” means, for any Person, any Subsidiary of which at least 99.5% of the outstanding Equity Interests (other than, in the case of a Subsidiary not organized in the United States, directors’ qualifying shares or an immaterial amount of shares required to be owned by other Persons pursuant to Applicable Law) is owned by such Person or any other Person that satisfies this definition in respect of such Person.
“Withholding Agent” means the Borrower, the Guarantors organized under the laws of Mexico and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.2 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law, rule or regulation shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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(b) Unless the context otherwise requires, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a statutory division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any statutory division of a limited liability company shall constitute a separate Person hereunder (and each such division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
Section 1.3 Accounting Terms.
(a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, IFRS applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.
(b) Changes in IFRS. If at any time any change in IFRS or the application thereof would affect the computation or interpretation of any financial ratio, basket, requirement or other provision set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Lenders and the Borrower shall negotiate in good faith to amend such ratio, basket, requirement or other provision to preserve the original intent thereof in light of such change in IFRS (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio, basket, requirement or other provision shall continue to be computed or interpreted in accordance with IFRS or the application thereof prior to such change therein and (B) the Borrower shall provide to the Administrative Agent (for distribution to the Lenders) financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio, basket, requirement or other provision made before and after giving effect to such change in IFRS.
Section 1.4 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
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Section 1.5 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
Section 1.6 Interest Rates. The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the continuation of, administration of, submission of, calculation of or any other matter related to the EURIBOR Rate, or any component definition thereof or rates referred to in the definition thereof, or any alternative, successor or replacement rate thereto, including whether the composition or characteristics of any such alternative, successor or replacement rate, will be similar to, or produce the same value or economic equivalence of, or have the same volume or liquidity as the EURIBOR Rate prior to its discontinuance or unavailability.
ARTICLE II THE COMMITMENTS AND LOANS
Section 2.1 Loans.
(a) Subject to the terms and conditions set forth herein and in the First Amendment, each Term Lender as of the Restatement Date has made a loan (each, a “Term Loan” and, collectively, the “Term Loans”) to the Borrower, on the Restatement Date, in an aggregate amount equal to such Term Lender’s Term Loan Commitment. Any amount borrowed under this Section 2.1(a) and repaid or prepaid may not be reborrowed.
(b) Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make revolving loans (each such loan, a “Revolving Loan” and, collectively, the “Revolving Loans”) to the Borrower from time to time, on any Business Day during the Revolving Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Revolving Lender’s Revolving Commitment; provided, however, that after giving effect to any Borrowing, (i) the Outstanding Amount shall not exceed the Aggregate Commitments, and (ii) the Revolving Credit Exposure of any Revolving Lender shall not exceed such Revolving Lender’s Revolving Commitment. Within the limits of each Revolving Lender’s Commitment, and subject to the other terms and conditions hereof, the Borrower may borrow under this Section 2.1(b), prepay under Section 2.3, and reborrow under this Section 2.1(b), in each case, Revolving Loans.
Section 2.2 Borrowings and Continuations of Loans.
(a) Each Borrowing and each continuation of Loans (including, for the avoidance of doubt, the Borrowing and/or continuation of 2024 Term Loans (as such term is defined under the First Amendment) and unless otherwise set forth in the First Amendment) shall be made upon the Borrower’s irrevocable notice to the Administrative Agent, which shall be given by a Committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 12:00 p.m. New York City time four (4) Business Days prior to the requested date of any Borrowing of, or continuation of Loans. Each Borrowing of, or continuation of Loans shall be in a principal amount of €5.0 million or a whole multiple of €1.0 million in excess thereof. Each Committed Loan Notice shall specify (i) whether the Borrower is requesting a Borrowing or a continuation of Loans, (ii) the requested date of the Borrowing or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Loans to be borrowed or
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continued, and (iv) if applicable, the duration of the Interest Period with respect thereto. If the Borrower requests a Borrowing of, or continuation of Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of three months.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Loans. In the case of a Borrowing, each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds in Euros at the Administrative Agent’s Account not later than 11:00 a.m. Madrid, Spain time on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.2 (or waiver thereof by the Lenders), the Administrative Agent shall make all funds so received available to the Borrower by crediting the account of the Borrower designated by the Borrower in the Committed Loan Notice.
(c) Except as otherwise provided herein, a Loan may be continued only on the last day of an Interest Period for such Loan. During the existence of a Default, no Loans may be requested or continued without the consent of the Required Lenders.
(d) The Administrative Agent shall promptly notify the Borrower and the Lenders of the Interest Rate applicable to any Interest Period upon determination of such Interest Rate.
(e) After giving effect to all Borrowings, and all continuations of Loans, there shall not be more than ten Interest Periods in effect with respect to Loans.
(f) Notwithstanding anything to the contrary in this Agreement, any Lender may exchange, continue or rollover all or a portion of its Loans in connection with any refinancing, extension, loan modification or similar transaction permitted by the terms of this Agreement, pursuant to a cashless settlement mechanism approved by the Borrower, the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
Section 2.3 Prepayments.
(a) The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay Loans in whole or in part without premium or penalty (except for any compensation required by the terms of Section 3.5(a)); provided that (i) such notice must be received by the Administrative Agent not later than 12:00 noon New York City time three (3) Business Days prior to any date of prepayment; and (ii) any prepayment of Loans shall be in a principal amount of €5.0 million or a whole multiple of €1.0 million in excess thereof or, if less, the entire principal amount thereof then outstanding; provided, further, that such notice may be only conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 12:00 p.m. New York City time no later than one (1) Business Day prior to the specified effective date) if such condition is not satisfied. Each such notice shall specify the date and amount of such prepayment and the Interest Period(s) of the Loans to be prepaid. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s
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Applicable Percentage of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Loan shall be made in Euros and accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.5. Subject to Section 2.12, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages in the order selected by the Borrower.
(b) If for any reason the Outstanding Amount at any time exceeds the Aggregate Commitments then in effect, the Borrower shall prepay Revolving Loans in an aggregate amount equal to such excess within one (1) Business Day.
(c) Loans may be prepaid at any time without premium or penalty, other than the payment of breakage costs reasonably determined by the Lenders and notified in writing to the Administrative Agent one Business Day prior to the date of such prepayment.
(d) Upon the occurrence of a Change of Control, (i) the Facilities will be immediately payable in full, (ii) any outstanding Commitments will be immediately terminated and (iii) any prepayment of Loans shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.5. Subject to Section 2.12, each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.
Section 2.4 Termination or Reduction of Commitments.
(a) Termination of Term Loan Commitments. The Term Loan Commitments shall automatically and permanently terminate on the Restatement Date upon the funding or continuation of the Term Loans under the Term Facility.
(b) Optional Termination or Reduction of Revolving Commitments. The Borrower may, upon notice to the Administrative Agent, terminate the Revolving Commitments, or from time to time permanently reduce the Revolving Commitments; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. New York City time, three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of €5.0 million or any whole multiple of €1.0 million in excess thereof, and (iii) the Borrower shall not terminate or reduce the Revolving Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Outstanding Amount would exceed the aggregate Revolving Commitments; provided, further, that such notice may be conditioned upon the effectiveness of other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent no later than 5:00 p.m. New York City time one (1) Business Day prior to the specified effective date) if such condition is not satisfied. The Administrative Agent will promptly notify the Lenders of any such notice of termination or reduction of the Revolving Commitments. Any reduction of the Revolving Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the date of any termination of the Revolving Commitments shall be paid on the date of such termination.
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Section 2.5 Repayment of Loans.
(a) Term Facility. The Borrower shall repay to the Administrative Agent for the ratable account of the Term Lenders the aggregate principal amount of all Term Loans outstanding under the Term Facility on the following dates in the respective amounts set forth opposite such dates (which amounts shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.3):
| Date
|
Amount | |
| 36 months after the Restatement Date
|
20% | |
| 42 months after the Restatement Date
|
20% | |
| 48 months after the Restatement Date
|
20% | |
| 54 months after the Restatement Date
|
20% | |
| Term Facility Maturity Date |
The aggregate principal amount of all Term Loans outstanding under the Term Facility on the Term Facility Maturity Date |
(b) Revolving Facility. Any outstanding Revolving Loans will be due and payable on the Revolving Facility Maturity Date.
Section 2.6 Interest.
(a) Subject to the provisions of subsection (i) below, each Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the EURIBOR Rate for such Interest Period plus the Applicable Margin.
(i) If any amount of principal of any Loan is not paid when due, whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(ii) If any amount (other than principal of any Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the applicable Default Rate.
(b) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall
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be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
Section 2.7 Fees.
(a) Commitment Fees. The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender (other than Defaulting Lenders), in accordance with its Applicable Percentage with respect to Revolving Commitments, a fee equal to 35% of the Applicable Margin times the actual daily amount (commencing with the Restatement Date) by which the Aggregate Commitments exceed the Outstanding Amount (the “Commitment Fee”). The Commitment Fee shall accrue at all times during the period commencing with the Restatement Date and ending upon the expiration of the Revolving Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Restatement Date, and on the last day of the Revolving Availability Period. The Commitment Fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Margin during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Margin separately for each period during such quarter that such Applicable Margin was in effect. For the avoidance of doubt, the calculation of the Commitment Fee payable for the account of any Lender shall not include any day on which such Lender is or was a Defaulting Lender.
(b) Other Fees. The Borrower shall pay to the Administrative Agent and the Bookrunners the fees and expenses payable in the amounts and at the times separately agreed upon in the applicable Fee Letter between the Borrower and such Person, together with the expenses of the Administrative Agent and the Bookrunners as specified in Section 10.5.
(c) Payment of Fees. All fees payable hereunder shall be paid on the dates due, in immediately available funds in Euros, for distribution, in the case of the fees set forth in Section 2.7(a), to the Lenders. Fees paid shall not be refundable under any circumstances.
Section 2.8 Computation of Interest and Fees; Retroactive Adjustments of Applicable Margin.
(a) All computations of fees and interest hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.10(a), bear interest for one day. The computation of interest rate shall be determined by the Administrative Agent, and such determination shall be conclusive and binding for all purposes, absent manifest error.
(b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower or the Lenders determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculation of the Consolidated Leverage Ratio would have resulted in
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higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action by the Administrative Agent or any Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This clause (b) shall not limit the rights of the Administrative Agent or any Lender, as the case may be, under Section 2.6(a)(i) or under Article VIII; provided that any inaccuracy described in this clause (b) shall not constitute a Default or Event of Default with respect to Section 8.1(a) or Section 8.1(c) so long as (x) the Borrower complies with the terms of this clause (b) and (y) the Borrower was in compliance with the covenants in Section 7.5 at the date the Consolidated Leverage Ratio was inaccurately calculated (as evidenced by a proper calculation of the Consolidated Leverage Ratio as of such date). The Borrower’s obligations under this clause (b) shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
Section 2.9 Evidence of Debt.
(a) The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of business. The Administrative Agent shall maintain the Register in accordance with Section 10.7(c). The accounts, records and Register maintained pursuant to this clause (a) shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the Register, the Register shall control in the absence of manifest error. Upon the request of any Lender, including due to an assignment or transfer of Loans, made through the Administrative Agent, the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista), shall execute and deliver to such Lender a Note (pagaré), which shall evidence such Lender’s Loans in addition to such accounts or records. It is the intent of the Loan Parties and the Lenders that the Notes qualify as pagarés under Mexican law.
(b) In the event that the Applicable Margin increases or the EURIBOR Rate is substituted pursuant to Section 3.8 with respect to a Loan held by such Lender, the Borrower shall, within ten (10) Business Days of the request of such Lender and only upon the receipt by the Borrower at the Corporate Office or through the Custodian at the Lender’s election, of any then-existing Notes evidencing such Loan, execute and deliver to such Lender one or more replacement Notes with respect to each such existing Note, reflecting the new Applicable Margin or the applicable Benchmark Replacement Rate as of the date of such increase or replacement, as applicable. Any such replacement Notes shall, at the Lender’s election, be made available at the Corporate Office or delivered to the Custodian on behalf of such Lender, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such replacement Note by courier or other nationally recognized delivery service.
Section 2.10 Payments Generally; Administrative Agent’s Clawback.
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(a) Payments by Borrower. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Account (or to such other account as the Administrative Agent may from time to time specify in writing) in Euros and in immediately available funds not later than 8:00 a.m. New York City time on the date specified herein. The Administrative Agent will, to the extent funds are received from the Borrower as provided herein, promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 8:00 a.m. New York City time shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be; provided that, if such next succeeding Business Day would fall after the applicable Revolving Facility Maturity Date or Term Facility Maturity Date, as the case may be, payment shall be made on the immediately preceding Business Day. All payments hereunder shall be made in Euros.
(b) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may (but shall not be obligated to) assume that such Lender has made such share available on such date in accordance with Section 2.2 and may (but shall not be obligated to), in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the applicable Interest Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by the Borrower, the Interest Rate applicable to such Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(c) Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may (but shall not be obligated to) assume that the Borrower has made such payment on such date in accordance herewith and may (but shall not be
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obligated to), in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the applicable Interest Rate.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.5(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 10.5(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 10.5(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
Section 2.11 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Loans made by it, resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall notify the Administrative Agent of such fact and make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that:
(a) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(b) the provisions of this Section 2.11 shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender), or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary thereof (as to which the provisions of this Section 2.11 shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.
Section 2.12 Defaulting Lenders.
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(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by Applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.1.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.9 shall be applied at such time or times as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement; third, to be held in a deposit account and released pro rata in order to satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement; fourth, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans and (y) such Loans were made at a time when the applicable conditions set forth in Section 4.2 were satisfied or waived, such payment shall be applied solely to pay the Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of such Defaulting Lender until such time as all Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(b) Defaulting Lender Cure. If the Borrower determines that a Lender is no longer a Defaulting Lender, the Borrower will instruct the Administrative Agent to notify the parties hereto, whereupon as of the date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders or take such other actions necessary to cause the Loans to be held pro rata by the Lenders in accordance with the Commitments, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
Section 2.13 Sustainability Adjustments.
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(a) Following the date on which the Borrower provides a Pricing Certificate pursuant to Section 6.14(a) in respect of its most recently ended Annual Period, the Applicable Margin (including for purposes of determining the Commitment Fee) shall be increased or decreased (or neither increased nor decreased), as applicable, pursuant to the Sustainability Margin Adjustment as set forth in such Pricing Certificate. For purposes of the foregoing, (A) the Sustainability Margin Adjustment shall be determined as of the fifth (5th) Business Day following receipt by the Administrative Agent of a Pricing Certificate based upon the KPI Metrics set forth in such Pricing Certificate and the calculation of the Sustainability Margin Adjustment therein (such day, the “Sustainability Pricing Adjustment Date”) and (B) each change in the Applicable Margin (including for purposes of determining the Commitment Fee) resulting from a Pricing Certificate shall be effective during the period commencing on and including the applicable Sustainability Pricing Adjustment Date and ending on the date immediately preceding the next such Sustainability Pricing Adjustment Date (or, in the case of non-delivery of a Pricing Certificate, the last day such Pricing Certificate could have been delivered pursuant to Section 6.14(a)); provided that if any Sustainability Pricing Adjustment Date shall occur before the last day of an Interest Period, no change to the Applicable Margin as a result of the Sustainability Margin Adjustment shall be effective for purposes of Section 2.6 until the first day of the immediately succeeding Interest Period.
(b) For the avoidance of doubt, it is understood and agreed that (i) only one Pricing Certificate may be delivered in respect of any Annual Period, (ii) any Sustainability Margin Adjustment shall be iterative and shall not be cumulative year-over-year (each applicable Sustainability Margin Adjustment shall only apply until the date on which the next Sustainability Margin Adjustment is due to take place) and (iii) Sustainalytics delivered a second party opinion to the Borrower on August 29, 2023.
(c) It is hereby understood and agreed that if no Pricing Certificate is delivered by the Borrower within the period set forth in Section 6.14(a), the Sustainability Margin Adjustment will be positive five (5) basis points, commencing on the last day such Pricing Certificate could have been delivered pursuant to the terms of Section 6.14(a) and continuing until the Borrower delivers a Pricing Certificate to the Administrative Agent and a new Applicable Margin is determined pursuant to Section 2.13(a) above and, pending delivery of a Pricing Certificate no Default or Event of Default shall occur in relation to the failure to deliver such Pricing Certificate.
(d) If (i)(A) any of the Borrower or any Lender becomes aware of any material inaccuracy in the Sustainability Margin Adjustment or the KPI Metrics as reported on the applicable Pricing Certificate (a “Pricing Certificate Inaccuracy”) and, not later than thirty (30) Business Days after obtaining knowledge thereof delivers a written notice to the Administrative Agent describing such Pricing Certificate Inaccuracy in reasonable detail (who shall furnish a copy to each of the Lenders and the Borrower) or (B) the Borrower and the Lenders agree that there was a Pricing Certificate Inaccuracy at the time of delivery of the relevant Pricing Certificate and (ii) a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in an increase in the Applicable Margin and the Commitment Fee for such period, then the Borrower shall be obligated to pay to the Administrative Agent for the account of the Lenders, promptly on demand by the Administrative Agent (acting at the direction of the Required Lenders) (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, automatically and without further action by the
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Administrative Agent or any Lender), but in no event less than ten (10) Business Days after the Borrower has received written notice of, or has agreed in writing that there was, a Pricing Certificate Inaccuracy, an amount equal to: (x) the excess of the amount of interest and fees that should have been paid for such period over (y) the amount of interest and fees actually paid for such period (the “True-Up Amount”). If the Borrower becomes aware of any Pricing Certificate Inaccuracy and, in connection therewith, if a proper calculation of the Sustainability Margin Adjustment or the KPI Metrics would have resulted in a decrease in the Applicable Margin and the Commitment Fee for such period, then, upon receipt by the Administrative Agent of notice from the Borrower of such Pricing Certificate Inaccuracy (which notice shall include corrections to the calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable), commencing on the Business Day following receipt by the Administrative Agent of such notice, the Applicable Margin and the Commitment Fee shall be adjusted to reflect the corrected calculations of the Sustainability Margin Adjustment or the KPI Metrics, as applicable.
As used below, “Sustainability Recalculation Event” means (i) any material acquisition, disposition, merger or similar transaction or series of related transactions consummated by the Borrower and its Subsidiaries whereby, as a result of the consummation of such transaction or series of related transactions any of the KPI Metrics would reasonably be expected to be (as determined in good faith by the Borrower), or shall be, increased or decreased by 10% or more (on a consolidated basis) as compared to the KPI Metrics in effect immediately prior to the consummation of such transaction, (ii) a material change to the KPI Metrics calculation methodologies (as determined in good faith by the Borrower) or (iii) any Change in Law applicable to any party hereto the result of which shall (A) prohibit or modify any sustainability calculation hereunder or cause any other violation of any sustainability provision hereunder, or impose or modify any reporting obligation in respect thereof, (B) cause the Borrower to fail to attain or maintain any KPI Metric or target or threshold with respect thereto or (C) prohibit or otherwise limit such party’s ability to make or maintain the Loans hereunder after applying the sustainability provisions hereunder. If, after the date hereof, there occurs any Sustainability Recalculation Event (it being understood and agreed that such Sustainability Recalculation Event shall follow the Sustainability Linked Loan Principles as most recently published by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading Association, as may be amended from time to time), and either (i) the Borrower notifies the Administrative Agent in writing that the Borrower requests an amendment to any provision hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event, or (ii) the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision or provisions hereof for such purpose (it being understood and agreed that any such notice may be given before or after such Sustainability Recalculation Event has occurred), then (A) the Borrower and the Administrative Agent (acting at the direction of the Required Lenders) shall negotiate in good faith to amend the provisions hereof to eliminate, accommodate or otherwise take into account the effect of such Sustainability Recalculation Event for the period from and after the occurrence of such Sustainability Recalculation Event, and (B) the provisions of this Agreement shall be interpreted on the basis of the provisions in effect and applied immediately prior to such Sustainability Recalculation Event for a period of not more than 30 days (unless the provisions hereof shall have been amended in accordance herewith or such notice shall have been withdrawn). If, after 30 days following any such notice, the consent of the Borrower, the Administrative Agent (acting at the direction of the Required Lenders) and the Required Lenders under Section 10.1 has not been obtained, (A) there will cease to be any
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Sustainability Margin Adjustment (including for purposes of determining the Commitment Fee) and (B) no Loan Party shall, without the prior written consent of the Administrative Agent (acting at the direction of the Required Lenders), make any public or private representations or description of the credit facility described in this Agreement as a sustainability-linked loan, in each case until such time as the parties hereto can agree upon any such adjustments in accordance with the terms hereof.
(e) To the extent the Sustainability Structuring Agent ceases to be a Lender, the Borrower undertakes to use reasonable endeavors to seek to appoint another entity that is a Lender to fulfill the role of Sustainability Structuring Agent.
(f) It is understood and agreed that any Pricing Certificate Inaccuracy shall not constitute a Default or Event of Default under this Agreement, provided that the Borrower complies with the terms of this Section 2.13 with respect to such Pricing Certificate Inaccuracy. Notwithstanding anything to the contrary herein, unless such amounts shall be due upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under any Debtor Relief Law, (i) any additional amounts required to be paid pursuant to clause (d) above shall not be due and payable until a written demand is made for such payment by the Administrative Agent in accordance with clause (d) above, (ii) any nonpayment of such additional amounts prior to such demand for payment by Administrative Agent shall not constitute a Default (whether retroactively or otherwise), and (iii) none of such additional amounts shall be deemed overdue prior to such a demand or shall accrue interest at the Default Rate prior to such a demand.
(g) The Administrative Agent and Sustainability Structuring Agent shall not have any responsibility for (or liability in respect of) reviewing, auditing or otherwise evaluating any calculation by the Borrower of any Sustainability Margin Adjustment (or for the KPI Metrics or any of the other data or computations that are part of or related to any such calculation) set forth in any Pricing Certificate, or for evaluating or determining any Pricing Certificate Inaccuracy (and the Administrative Agent may rely conclusively, and shall not incur any liability in so relying, on any such certificate or related notice, without further inquiry).
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
Section 3.1 Taxes.
(a) Defined Terms. For purposes of this Section 3.1, the term “Applicable Law” includes FATCA.
(b) Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including
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such deductions and withholdings applicable to additional sums payable under this Section 3.1) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.
(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.1) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. A payment shall not be increased under this clause (d) by reason of a tax deduction on account of Tax imposed by Switzerland if so required under Applicable Law (including double tax treaties), to the extent that on the date on which payment falls due, increasing such payment in such way would breach any Swiss law; provided that the Borrower or a Swiss Guarantor, as applicable, shall use commercially reasonable efforts to avoid such tax deduction on account of Tax imposed by Switzerland or to prevent such increase in payment from breaching any Swiss law, including, without limitation, by causing such payment to a Recipient to be made by or through an entity which is not a tax resident in Switzerland.
(e) Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.7(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this clause (e).
(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority as provided in this Section 3.1, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or
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other evidence of such payment reasonably satisfactory to the Administrative Agent (acting at the direction of the Required Lenders).
(g) Status of Lenders; Tax Documentation.
(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation and information reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding, including the information set forth in Sections 3.18.18 and/or 3.19.19 of the Resolución Miscelánea Fiscal para 2024 (or any substitute or successor provisions). In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by Applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.1 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(h) Treatment of Certain Refunds. Unless required by Applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or have any obligation to pay to any Lender any refund of Taxes withheld or deducted from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.1, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.1 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of the Recipient, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this clause (h), in no event will the applicable Recipient be required to pay any amount to the Borrower pursuant to this clause (h) the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund
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had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the Borrower or any other Person.
(i) Survival. Each party’s obligations under this Section 3.1 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
Section 3.2 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to EURIBOR Rate, or to determine or charge interest rates based upon EURIBOR Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Euros in the applicable offshore interbank market, then, upon notice thereof by such Lender to the Borrower and the Administrative Agent, any obligation of such Lender to make or continue Loans shall be suspended, until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay such Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans. Upon any such prepayment, the Borrower shall also pay accrued interest on the amount so prepaid, together with any additional amounts required pursuant to Section 3.5.
Section 3.3 [Reserved.]
Section 3.4 Increased Costs; Reserves.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.4(e));
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender any other condition, cost or expense affecting this Agreement or Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other
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amount) then, upon request of such Lender, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section 3.4(a) for any increased costs or reductions incurred more than one hundred eighty (180) days prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in clauses (a) or (b) of this Section 3.4 and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.4 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.4 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Reserves. The Borrower shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits, additional interest on the unpaid principal amount of each Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Borrower shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest shall be due and payable 10 days from receipt of such notice.
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Section 3.5 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:(a) any continuation, payment or prepayment of any Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by the Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow or continue any Loan on the date or in the amount notified by the Borrower; or
(c) any assignment of a Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrower pursuant to Section 10.14; including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.5, each Lender shall be deemed to have funded each Loan made by it at the EURIBOR Rate for such Loan by a matching deposit or other borrowing in the eurocurrency market for a comparable amount and for a comparable tenor, whether or not such Loan was in fact so funded.
Section 3.6 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. Each Lender may make any Loan to the Borrower through any Lending Office; provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Loan in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.4, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1, or if any Lender gives a notice pursuant to Section 3.2, then at the request of the Borrower such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.1 or Section 3.4, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.2, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 3.4, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.1 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.6(a), the Borrower may replace such Lender in accordance with Section 10.14.
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Section 3.7 Survival. All of the Borrower’s obligations under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
Section 3.8 Inability to Determine Rates.
(a) If prior to the first day of any Interest Period for any Loan (i) the Administrative Agent determines (which determination shall be conclusive and binding upon all parties hereto absent manifest error) that adequate and reasonable means do not exist for ascertaining the EURIBOR Rate (including because the Screen Rate is not available or published on a current basis) for such Interest Period, or (ii) the Administrative Agent is advised in writing by the Required Lenders that they have reasonably determined (1) deposits in Euros (in the applicable amounts) are not being offered to such Lenders in the European interbank market for such period or (2) the EURIBOR Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their affected Loans during such Interest Period (the first Interest Period as to which (i) or (ii) has occurred, the “Initial CBR Interest Period”), the Administrative Agent shall promptly give written notice thereof to the Borrower and the Lenders.
(b) The Borrower and the Administrative Agent shall negotiate in good faith, with a view to agreeing upon a benchmark replacement rate to be substituted for the EURIBOR Rate (the “Benchmark Replacement Rate”); provided that the Benchmark Replacement Rate for any Loan shall be not less than the Floor. Until the Administrative Agent notifies the Borrower and the Lenders that the Administrative Agent and the Borrower have agreed upon a Benchmark Replacement Rate, (i) the Interest Rate applicable to each Lender’s Loan to which such Initial CBR Interest Period (or such other Interest Period) relates, and effective from the commencement of such Initial CBR Interest Period (or such other Interest Period), shall be determined by reference to the Central Bank Rate, instead of the EURIBOR Rate, and (ii) the Borrower and the Administrative Agent shall continue negotiations in good faith, with a view to agreeing upon a Benchmark Replacement Rate.
(c) If at any time the Central Bank Rate is to be used for determining the Interest Rate for any Interest Period (i) the Administrative Agent determines (which determination shall be conclusive and binding upon all parties hereto absent manifest error) that adequate and reasonable means do not exist for ascertaining the Central Bank Rate or (ii) the Administrative Agent is advised in writing by the Required Lenders that they have reasonably determined the Central Bank Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their affected Loans during such Interest Period (the first Interest Period as to which (i) or (ii) has occurred, the “Initial Lender Adjusted Interest Period”), the Interest Rate during such Initial Lender Adjusted Interest Period (and any subsequent Interest Period ending prior to the adoption of a substituted rate in accordance with the foregoing clause (b)) applicable to each Lender’s Loan to which such Initial Lender Adjusted Interest Period relates and effective from the commencement of such Initial Lender Adjusted Interest Period shall be (1) such rate as all the Lenders shall determine in good faith (in a certificate delivered by the Lenders to the Administrative Agent setting forth the basis of the computation of such amount in reasonable detail, which certificate shall constitute prima facie evidence thereof) to be necessary to compensate the Lenders for their cost (rounded upward to the nearest 1/16 of 1%) of funding
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their Loans as of the commencement of such Initial Lender Adjusted Interest Period for such Initial Lender Adjusted Interest Period plus (2) the Applicable Margin. The Administrative Agent shall notify the Borrower of each such determination as promptly as practicable.
(d) If a Benchmark Replacement Rate is agreed upon by the Borrower and the Administrative Agent in accordance with this Section 3.8 and approved (or not objected to in writing within five Business Days of written notice to the Lenders of such Benchmark Replacement Rate) by the Required Lenders, such Benchmark Replacement Rate (together with any related conforming changes agreed upon by the Borrower and the Administrative Agent) shall be effective from the first day of the then-current Interest Period.
ARTICLE IV CONDITIONS PRECEDENT TO LOANS
Section 4.1 Conditions to Restatement Date. This Agreement became effective on the Restatement Date upon satisfaction or waiver of the conditions set forth in Section 4 of the First Amendment.
Section 4.2 Conditions to all Loans. The obligation of each Lender to honor any Committed Loan Notice after the Restatement Date (other than a Committed Loan Notice requesting only a continuation Loans) is subject to satisfaction of the following conditions precedent (unless waived in accordance with Section 10.1):
(a) The representations and warranties of the Loan Parties contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of the proposed Borrowing or continuation, except to the extent that such representations and warranties specifically refer to another date, in which case they shall be true and correct as of such other date.
(b) No Default shall exist, or would result from the proposed Borrowing or continuation or from the application of the proceeds thereof.
(c) The Administrative Agent shall have received a Committed Loan Notice in accordance with the requirements hereof. Such notice shall include a certification by a Responsible Officer of the Borrower (upon which the Administrative Agent may conclusively rely) that the conditions specified in Section 4.2(a), Section 4.2(b) and Section 4.2(d) will be fulfilled on the date of the proposed Borrowing.
(d) Upon the request of any Lender at least one (1) Business Day prior to the date of the proposed Borrowing or continuation, the Borrower shall issue and make available a Note to that Lender at the Corporate Office or deliver a Note to the Custodian on behalf of that Lender, at the Lender’s election, setting forth the amount of the Loan to be disbursed by that Lender and the relevant Applicable Margin, on the date of the relevant Loan.
ARTICLE V REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent and the Lenders on the Restatement Date and on each other occasion to the extent required by the Loan Documents, that:
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Section 5.1 Existence, Qualification and Power. Each Loan Party and each Subsidiary thereof (a) is (i) duly organized or formed, validly existing and (ii) as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, if any, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (a)(ii), (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 5.2 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) except as would not reasonably be expected to have a Material Adverse Effect, conflict with or result in any breach or contravention of, or the creation of (or the requirement to create) any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Applicable Law in any material respect.
Section 5.3 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for those which have been already obtained, approved, granted, taken, given or made, as the case may be.
Section 5.4 Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, capital impairment, recognition of judgments, recognition of choice of law, enforcement of judgments or other similar laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law and other matters which are set out as qualifications or reservations as to matters of law of general application in any legal opinion delivered to the Administrative Agent in connection with the Loan Documents.
Section 5.5 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with IFRS consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with IFRS
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consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(b) [Reserved.]
(c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
Section 5.6 Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or (b) would reasonably be expected to have a Material Adverse Effect if determined adversely, except as specifically disclosed in Schedule 5.6.
Section 5.7 No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to any Contractual Obligation that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
Section 5.8 Ownership of Property. Each of the Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in or other rights to use, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 5.9 Environmental Compliance. The Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties. Except as specifically disclosed in Schedule 5.6 or as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, to the knowledge of the Borrower: (a) the Borrower and its Subsidiaries have been and are in compliance with such Environmental Laws; (b) there are no claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, or threatened claims, disputes, proceedings or actions against the Borrower or its Subsidiaries, pursuant to such Environmental Laws; and (c) there are no facts and circumstances relating to the business or operations of the Borrower and its Subsidiaries that are reasonably likely to cause the Borrower or its Subsidiaries to incur Environmental Liabilities.
Section 5.10 Insurance. The properties of the Borrower and its Subsidiaries are insured by financially sound companies (which may be Affiliates of the Borrower), in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in
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similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.
Section 5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other tax returns and reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except (a) Taxes which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided to the extent required by IFRS, or (b) to the extent that the failure to do so would not have a Material Adverse Effect.
Section 5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is sponsored by the Borrower or an ERISA Affiliate and that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Pension Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the best knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b) There are no pending or, to the best knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that would reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (iv) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that would reasonably be expected to be subject to Section 4069 or Section 4212(c) of ERISA; and (v) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan, except where any events set forth in clauses (i)-(v) would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect. As of the most recent valuation date for any Pension Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that would reasonably be expected to cause
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the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date.
(d) The Borrower represents and warrants as of the Restatement Date that the Borrower’s assets are not and will not be deemed to constitute “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA).
Section 5.13 Subsidiaries; Equity Interests. As of the Restatement Date: (a) the Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and except as indicated in Part (a) of Schedule 5.13 all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Borrower and/or one or more Subsidiaries of the Borrower free and clear of all Liens (other than non-consensual Liens which may arise by operation of law), (b) the Borrower has no direct equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13, and (c) all of the outstanding Equity Interests in the Borrower have been validly issued and are fully paid and nonassessable.
Section 5.14 Margin Regulations; Investment Company Act.
(a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for the purpose of purchasing or carrying margin stock.
(b) None of the Borrower or any Subsidiary is required to be registered as an “investment company” under the Investment Company Act of 1940.
Section 5.15 Disclosure.
(a) No written report, financial statement, certificate or other written information furnished by or on behalf of any Loan Party as of the Restatement Date to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement (in each case, as modified or supplemented by other information furnished by or on behalf of any Loan Party) contains any material misstatement of material fact or omits to state any material fact necessary to make the statements therein, when furnished and after giving effect to all supplements thereto, in the light of the circumstances under which they were made, not misleading in any material respect; provided that, with respect to projected financial information and other projections, the Borrower represents only that such projections were prepared in good faith based upon assumptions believed to be reasonable at the time such projections were furnished (it being understood by the Administrative Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and its Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may significantly differ from the projected results and such differences may be material).
(b) As of the Restatement Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
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Section 5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
Section 5.17 Intellectual Property; Licenses, Etc. The Borrower and its Subsidiaries own, license or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, trade secrets, know-how and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses as currently conducted, without, to the knowledge of the Borrower, infringement, misappropriation or other violation of the IP Rights of any other Person, except for any such failure to own, license or possess, or such infringement, that would not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, no product, service, process, method, substance, part or other material now used by the Borrower or any Subsidiary in the conduct of their business as currently conducted infringes, misappropriates or otherwise violates upon any IP Rights held by any other Person, except for any such infringement, misappropriation or violation which would not reasonably be expected to have a Material Adverse Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. To the knowledge of the Borrower, in the two (2) year period preceding the Restatement Date, there has been no unauthorized use, access, interruption, modification, or corruption of any information technology systems (or any sensitive or personal information stored or contained therein or transmitted thereby) owned or controlled by the Borrower or any of its Subsidiaries, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
Section 5.18 Sanctions. None of the Borrower, any of its Subsidiaries, or the directors of the Borrower, or, to the knowledge of the Borrower, any director, officer, agent, employee, or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries is a Sanctions Target, nor is the Borrower, any of its Subsidiaries located, organized or resident in a Designated Jurisdiction; and the Borrower will not directly or knowingly indirectly use the proceeds of the Agreement hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund or facilitate any activities of or business with any person that, at the time of such funding or facilitation, is a Sanctions Target, (ii) to fund or facilitate any activities of or business in any Designated Jurisdiction or (iii) in any other manner that will result in a violation by any person participating in the transaction, whether as an initial purchaser, advisor, investor or otherwise, of Sanctions. The Borrower and its Subsidiaries are not now knowingly engaged in any dealings or transactions with any person that is a Sanctions Target or with any Designated Jurisdiction.
Section 5.19 Anti-Corruption Laws. During the five (5) years prior to the Restatement Date, none of the Borrower, any of its Subsidiaries, or the directors of the Borrower or, to the knowledge of the Borrower, any director, officer, agent, employee or Affiliate or other person acting on behalf of the Borrower or any of its Subsidiaries has (i) used any funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made
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or taken an act in furtherance of an offer, promise or authorization of any direct or indirect unlawful payment or benefit to any foreign or domestic government or regulatory official or employee, including of any government-owned or -controlled entity or of a public international organization, or any person acting in an official capacity for or on behalf of any of the foregoing, or any political party or party official or candidate for political office; (iii) except for any violation of Applicable Law resulting from matters under investigation on the Restatement Date as disclosed in the Borrower’s annual report on Form 20-F for 2022, violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, the Mexican Ley General del Sistema Nacional Anticorrupción, the Mexican Federal Criminal Code (Código Penal Federal), the Mexican Ley General de Responsabilidades Administrativas, or any applicable law or regulation implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, or committed an offence under the Bribery Act 2010 of the United Kingdom, or any other applicable anti-bribery or anti-corruption laws; or (iv) made, offered, agreed, requested or taken an act in furtherance of any unlawful bribe or other unlawful benefit, including, without limitation, any rebate, payoff, influence payment, kickback or other unlawful or improper payment or benefit; except, in each case, for matters under investigation by the U.S. Department of Justice and the staff of the SEC. During the five (5) years prior to the Restatement Date, the Borrower and its Subsidiaries have instituted, and maintain and enforce, policies and procedures reasonably designed to promote and ensure compliance with all applicable anti-bribery and anti-corruption laws.
Section 5.20 Affected Financial Institutions. No Loan Party is an Affected Financial Institution.
Section 5.21 Covered Entities. No Loan Party is a Covered Entity.
Section 5.22 Solvency. As of the Restatement Date, immediately after the consummation of the transactions contemplated by the First Amendment to occur on such date, the Borrower is Solvent.
Section 5.23 Immunity. Each Loan Party is subject to civil and commercial law with respect to its obligations under the Loan Documents to which it is a party, and the execution, delivery and performance by it of such Loan Documents constitute private and commercial acts rather than public or governmental acts. None of the Loan Parties nor any of their respective properties is entitled to any right of immunity on the grounds of sovereignty or otherwise from the jurisdiction of any court or from any action, suit, set-off or proceeding, or service of process in connection therewith, arising under the Loan Documents.
Section 5.24 Pari Passu Status. The obligations of the Borrower and each Guarantor under the Loan Documents to which such Person is a party constitute direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor, as applicable, and, under current law, rank at least pari passu in right of payment with all other direct, senior, unsecured, and unsubordinated obligations of the Borrower or such Guarantor resulting from any Indebtedness of the Borrower or such Guarantor (other than Indebtedness having priority by operation of law).
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ARTICLE VI AFFIRMATIVE COVENANTS
Commencing on the Restatement Date and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Section 6.1, Section 6.2, and Section 6.3) cause each Subsidiary to:
Section 6.1 Financial Statements. Deliver to the Administrative Agent:
(a) as soon as available, but in any event within 120 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2024), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with IFRS, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception as to the scope of such audit (except for any such qualification pertaining to the maturity of the Facilities occurring within twelve (12) months of the relevant audit or any breach or anticipated breach of any financial covenant); and
(b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended March 31, 2024), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, the related consolidated statements of income or operations for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and the related consolidated statements of changes in shareholders’ equity, and cash flows for the portion of the Borrower’s fiscal year then ended, in each case setting forth in comparative form, as applicable, the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with IFRS, subject only to normal year-end audit adjustments and the absence of footnotes.
As to any information contained in materials furnished pursuant to Section 6.2(c), the Borrower shall not be separately required to furnish such information under subsection (a) or (b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in subsection (a) or (b) above at the times specified therein.
Section 6.2 Certificates; Other Information. Deliver to the Administrative Agent:
(a) concurrently with the delivery of the financial statements referred to in Section 6.1(a) and Section 6.1(b), a duly completed Compliance Certificate signed by the chief executive officer, chief financial officer, treasurer or controller of the Borrower (which delivery
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may be by electronic communication including email and shall be deemed to be an original authentic counterpart thereof for all purposes);
(b) promptly after any request by the Administrative Agent (acting at the direction of the Required Lenders), copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of the Borrower by independent accountants in connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;
(c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic and special reports and registration statements which the Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to the Administrative Agent pursuant hereto;
(d) promptly after the furnishing thereof, copies of any financial statements, compliance certificate, and notice of default furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement relating to debt for borrowed money and not otherwise required to be furnished to the Lenders pursuant to any other clause of this Section 6.2; provided that this clause (d) shall not apply to any such indenture, loan or credit or similar agreement with an outstanding principal amount or unused commitments less than U.S.$50.0 million; and
(e) promptly following any request therefor, provide information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
Documents required to be delivered pursuant to Section 6.1 or Section 6.2 (whether or not any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 10.2; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Borrower shall notify the Administrative Agent (by electronic mail) of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Bookrunners may, but shall not be obligated to, make available to the Lenders materials and/or
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information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Bookrunners and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.7); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Bookrunners shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
Section 6.3 Notices. Promptly notify the Administrative Agent:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect; and
(c) of any material change in accounting policies or financial reporting practices by the Borrower or any Subsidiary.
Each notice pursuant to this Section 6.3 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein in reasonable particularity and stating what action, if any, the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.3(a) shall describe with reasonable particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
Section 6.4 Pari Passu Obligations. Ensure that its Obligations hereunder and under the Notes at all times constitute direct, senior, unsecured and unsubordinated obligations of the Borrower ranking at least pari passu in right of payment with all other present or future direct, senior, unsecured and unsubordinated obligations of the Borrower resulting from any Indebtedness of the Borrower (other than Indebtedness having priority by operation of law).
Section 6.5 Payment of Obligations. Generally pay and discharge as the same shall become due and payable (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being
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maintained by the Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves to the extent required by IFRS are being maintained by the Borrower or such Subsidiary; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness, except in each case to the extent that the failure to do so could not reasonably be expected to have a Material Adverse Effect.
Section 6.6 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except (i) in a transaction not prohibited by Section 7.3 or (ii) to the extent that failure of any Subsidiary that is not a Loan Party to do so would not reasonably be expected to have a Material Adverse Effect; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (c) to the extent reasonably able to do so under Applicable Law, preserve or renew all of its issued patents and registered trademarks and service marks, the non-preservation or non-renewal of which would reasonably be expected to have a Material Adverse Effect.
Section 6.7 Maintenance of Properties. (a) Maintain, preserve and protect all of its material tangible properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; and (b) make all necessary repairs thereto and renewals and replacements thereof except, in the case of (a) and (b) where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 6.8 Maintenance of Insurance. Maintain with financially sound companies (which may be Affiliates of the Borrower), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.
Section 6.9 Compliance with Laws. Comply in all material respects with the requirements of all Applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.
Section 6.10 Books and Records. Maintain proper books of record and account, in which full, true and correct entries in all material respects in conformity with IFRS consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be.
Section 6.11 Use of Proceeds. Use the proceeds of the Facilities as contemplated by the First Amendment and for general corporate purposes (including refinancing other financial obligations of the Borrower and its Affiliates). The Borrower (a) shall procure that no payments received under the Facilities will be directly or indirectly used in Switzerland or be, directly or
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indirectly, remitted to any Swiss tax resident company or Swiss tax resident permanent establishment unless a written confirmation or countersigned tax ruling application from the Swiss Federal Tax Administration has been obtained confirming that such use does not result in interest payments under the Agreement being subject to Swiss withholding tax, (b) shall not permit or authorize any Person to use, directly or knowingly indirectly, all or any part of the Loans to finance any transaction, business or activity (i) involving any Sanctions Target or Designated Jurisdiction, in each case, in violation of Sanctions, (ii) that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target, or (iii) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 or any other applicable anti-corruption law, and (c) shall not finance, directly or knowingly indirectly, any payments in respect of this Agreement to any of the Administrative Agent or the Lenders with income from or involving (i) a Sanctions Target or a Designated Jurisdiction, in each case, in violation of Sanctions or (ii) any activity that would result in the Borrower failing to comply with any Sanctions applicable to it or becoming a Sanctions Target.
Section 6.12 Anti-Corruption Laws; Sanctions. Conduct its businesses in compliance in all material respects with the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and other applicable anti-corruption legislation and with all applicable Sanctions, and maintain policies and procedures reasonably designed to promote and achieve compliance with such laws and Sanctions (it being understood that any violation of Applicable Law resulting from matters under investigation on the Restatement Date as disclosed in the Borrower’s annual report on Form 20-F for 2022 shall not constitute a violation of this Section 6.12).
Section 6.13 Delivery of Notes and Appointment of Custodian. Subject to the terms of Section 2.9, the Borrower shall deliver a Note executed by the Borrower as issuer (suscriptor) and each Guarantor organized under the laws of Mexico, as guarantor (avalista) in favor of each Lender that requests a Note within ten (10) Business Days of such request. Any such Note shall be made available at the Corporate Office or delivered to the Custodian on behalf of the applicable Lender, at such Lender’s election, and if the applicable Lender shall assume full liability and provide customary indemnification for the loss thereof in a manner reasonably acceptable to the Borrower, such Lender may elect for the Borrower to deliver such Note by courier or other nationally recognized delivery service.
Section 6.14 Sustainability Reporting. The Borrower shall:
(a) promptly after becoming available and in any event within 150 days following the end of each fiscal year of the Borrower (commencing with the fiscal year ending December 31, 2023), a Pricing Certificate for the most recently ended Annual Period for each KPI Metric; provided that, in any fiscal year the Borrower may elect not to deliver a Pricing Certificate, and such election shall not constitute a Default or Event of Default or otherwise result in the failure of any condition precedent to any advance (but such failure to so deliver a Pricing Certificate by the end of such 150-day period shall result in the Sustainability Margin Adjustment being applied as set forth in Section 2.13(c)). In the event the Borrower’s fiscal year is changed to a non-calendar year fiscal year, the Borrower will be permitted to adjust the timing delivery of the Pricing
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Certificate at its election in a manner intended to maintain consistency with the foregoing, provided that the Borrower shall be permitted to make such adjustment only once until the Term Facility Maturity Date.
(b) The Borrower shall provide the KPI Metrics Reviewer with all information the KPI Metrics Reviewer may reasonably request in order to perform the tasks contemplated to be performed by it under the Loan Documents.
ARTICLE VII NEGATIVE COVENANTS
Commencing on the Restatement Date, and for so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder (other than contingent obligations for which no claim has been made) shall remain unpaid or unsatisfied:
Section 7.1 Liens. The Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly create, incur, assume or suffer to exist any Liens upon any of its owned property, assets or revenues, whether now owned or hereafter acquired, other than the following Liens:
(a) Liens for taxes, assessments and other governmental charges the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
(b) Liens granted pursuant to or in connection with (i) any netting or set-off arrangements entered into in the ordinary course of trading (including, for the avoidance of doubt, any cash pooling or cash management arrangements with a bank or financial institution) or (ii) any intragroup loans granted or any intragroup Indebtedness incurred or entered into or any cash pooling or cash management arrangements entered into by and between the Borrower and its Subsidiaries or between Subsidiaries (for so long as such Persons continue to be Subsidiaries);
(c) statutory liens of landlords and liens of carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due or the payment of which is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and for which such reserves or other appropriate provision, if any, as shall be required by IFRS of the Borrower or the applicable Subsidiary shall have been made;
(d) Liens incurred or deposits made in the ordinary course of business in connection with (i) workers’ compensation, unemployment insurance and other types of social security, or (ii) other insurance maintained by the Borrower or any of its Subsidiaries in accordance with Section 6.8;
(e) any attachment or judgment lien, unless the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay;
(f) Liens existing as of the Restatement Date and set forth on Schedule 7.1 and Liens in relation to any Indebtedness that is refinancing or replacing any Indebtedness over which Liens
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are in place; provided that the principal amount secured thereby is not increased, save that principal amounts secured by Liens in respect of (i) Swap Contracts where there are fluctuations in the mark-to-market exposures of those Swap Contracts and (ii) Indebtedness where principal may increase by virtue of capitalization of interest, may be increased by the amount of such fluctuations or capitalizations, as the case may be;
(g) any Liens permitted by the Administrative Agent, acting on the instructions of the Required Lenders;
(h) licenses of, or other grants of rights to use, IP Rights granted by Borrower or any Subsidiary (i) in the ordinary course of business and not materially interfering with the business of Borrower and its Subsidiaries, taken as a whole, (ii) existing as of the Restatement Date, or (iii) between or among Borrower and any of its Subsidiaries or between or among any of its Subsidiaries;
(i) any Liens created or deemed created pursuant to a Securitization;
(j) any Liens granted in connection with any Swap Contract; provided that the aggregate value of the assets that are the subject of such Liens does not exceed U.S.$200.0 million (or its equivalent in other currencies) at any time;
(k) Liens granted or arising over receivables, inventory, plant or equipment that fall within Section 7.2(d);
(l) (i) any Liens over bank accounts arising under clause 24 or clause 25 of the general terms and conditions (algemene bankvoorwaarden) of any member of the Dutch Bankers’ Association (Nederlandse Vereniging van Banken) and (ii) other Liens granted to any financial institution with whom it maintains accounts to the extent required by the relevant institution’s (or custodian’s or trustee’s, as applicable) standard terms and conditions, in each case, which are within the general parameters customary in the banking industry;
(m) any Liens that are created or deemed created on shares of the Borrower or any of its Subsidiaries, pursuant to an obligation in respect of an Executive Compensation Plan by virtue of such shares being held on trust for the holders of the convertible securities pending exercise of any conversion option, where such Lien is customary for such transaction;
(n) any Liens granted in connection with any Indebtedness referred to Section 7.2(f);
(o) other Liens securing obligations of the Borrower and its Subsidiaries at any one time outstanding equal to the greater of (x) 10% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$1.5 billion; and
(p) Liens granted in connection with or arising out of a Lease; provided that such Liens are over the right to use the asset or equipment that is the subject of the Lease pursuant to the terms of the Lease, or the rights of the Borrower or any of its Subsidiaries over the asset or equipment which is the subject of the Lease.
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Section 7.2 Subsidiary Debt. The Borrower will not permit any of its Subsidiaries that is not a Loan Party to create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, except:
(a) Indebtedness outstanding on the Restatement Date and set forth on Schedule 7.2 and any renewals, extensions, replacements or refinancings thereof; provided that Indebtedness of any Loan Party shall not be refinanced with Indebtedness of a Subsidiary that is not a Loan Party and that the aggregate principal amount of such Indebtedness is not increased except by the amount of any capitalized interest under any facility or instrument that provided for capitalization of interest on those terms as at the Restatement Date or by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with any renewal, extension or refinancing thereof and by an amount equal to any existing commitments unutilized thereunder;
(b) Indebtedness owed by any Subsidiary to the Borrower or to any other Subsidiary (which shall include, without limitation, liabilities arising from cash management obligations, tax and accounting operations); provided that such Indebtedness shall not have been transferred or assigned to any Person other than the Borrower or any Subsidiary;
(c) Indebtedness constituting a Securitization;
(d) Indebtedness arising under factoring arrangements, Inventory Financing arrangements or export credit facilities or any similar arrangements (including Leases) for the purchase of equipment (provided that any Lien granted in relation to any such facility relates solely to equipment, the purchase of which was financed under such facility) or pursuant to sale and lease-back transactions provided that the maximum aggregate Indebtedness of members of the Borrower and its Subsidiaries, which are not Loan Parties under such transactions does not exceed U.S.$500.0 million at any time (disregarding, for the purpose of such limit, any amount of Indebtedness of the Borrower and its Subsidiaries arising under such arrangements permitted under this paragraph (d) and in place as at the Restatement Date including any amounts under such Indebtedness which has been repaid and reborrowed whether pursuant to the terms of the arrangement constituting such Indebtedness when originally advanced or otherwise);
(e) Indebtedness of the Borrower and its Subsidiaries pursuant to any acquisition provided that: (i) such Indebtedness existed prior to the date of the acquisition and was not incurred, increased or extended in contemplation of, or since, the acquisition; and (ii) the aggregate amount of any such Indebtedness of the Borrower and its Subsidiaries which are not Loan Parties does not exceed U.S.$200.0 million at any time;
(f) Indebtedness incurred pursuant to or in connection with any cash pooling or other cash management agreements with a bank or financial institution, but only to the extent of offsetting credit balances of the Borrower and its Subsidiaries which are not Loan Parties pursuant to such cash pooling or other cash management arrangement;
(g) Indebtedness for taxes levied, assessments due and other governmental charges required to be paid as a matter of law or regulation in the ordinary course of trading; and
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(h) additional Indebtedness, if, after giving effect to the incurrence of any such Indebtedness, the aggregate outstanding amount of Indebtedness of all non-guarantor Subsidiaries would not exceed the greater of (x) 15% of consolidated tangible assets of the Borrower and its Subsidiaries based on the last balance sheet delivered pursuant to Section 6.1, and (y) U.S.$2.0 billion; provided that the percentage set forth in clause (x) shall automatically increase to 25% during any Covenant Modification Period. No Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the 15% threshold during the Covenant Modification Period (or upon termination of the Covenant Modification Period or after that time based solely on events that occurred during the Covenant Modification Period and did not constitute a Default or Event of Default during such period).
For the avoidance of doubt, the aggregate amount of any Indebtedness will be calculated for purposes of this Section 7.2 solely by reference to such Indebtedness of each of the Borrower’s Subsidiaries that is not a Loan Party.
Section 7.3 Fundamental Changes and Asset Dispositions.
(a) The Borrower will not, nor will it permit any of its Subsidiaries, whether in a single transaction or in a series of related transactions to enter into any consolidation or merger with any other Person, unless no Default would exist and such transaction would not be prohibited by clause (b) below; provided that (i) in the case of a merger or consolidation involving the Borrower, the surviving entity thereof (1) is the Borrower or (2) (A) assumes the Obligations of the Borrower pursuant to an Acceptable Assumption Agreement, (B) is a Person organized and validly existing under the laws of Mexico, the United States, any State thereof or the District of Columbia, Canada, France, Belgium, Germany, Italy, Luxembourg, the Netherlands, Portugal, Spain, Switzerland or the United Kingdom, or any political subdivision thereof or any other jurisdiction reasonably acceptable to the Required Lenders, (C) delivers to the Administrative Agent favorable opinions of (x) its counsel licensed in the jurisdiction under which it is organized and validly existing and (y) its New York counsel, in each case addressed to the Administrative Agent and each Lender, as to such customary matters as the Required Lenders may reasonably request, (D) to the extent requested at least ten (10) Business Days prior to the date on which such merger or consolidation is expected to be consummated (as notified to the Administrative Agent by the Borrower), provides information and documentation reasonably requested by the Administrative Agent on behalf of the Lenders for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation, and (E) is a Subsidiary of the Borrower immediately prior to the consummation of such merger or consolidation, and (ii) in the case of a merger or consolidation involving a Guarantor, (1) the surviving entity thereof is the Borrower, (2) is (or will concurrently become) a Guarantor or otherwise assumes the Obligations of a Guarantor pursuant to an Acceptable Assumption Agreement, provided that if the surviving entity was not a Guarantor immediately prior to the consummation of the merger or consolidation, to the extent requested at least ten (10) Business Days prior to the date on which such merger or consolidation is expected to be consummated (as notified to the Administrative Agent by the Borrower), the Borrower shall provide information and documentation reasonably requested by the Administrative Agent on behalf of the Lenders for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the
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Beneficial Ownership Regulation or (3) such transaction (A) results in the Guarantor no longer being a direct or indirect Subsidiary of the Borrower, and (B) is not prohibited by Section 7.3(b).
(b) The Borrower will not, nor will it permit any of its Subsidiaries to, whether in a single transaction or in a series or related transactions (including through liquidation, division, administration or other insolvency proceedings), Dispose all or substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole, other than through a contribution of assets to a newly-formed Wholly Owned Subsidiary of the Borrower.
Section 7.4 Restricted Payments.
The Borrower will not, nor will it permit any of its Subsidiaries, to make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:
(a) each Subsidiary may make Restricted Payments to the Borrower, any Subsidiary of the Borrower and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;
(b) the Borrower and each Subsidiary may make Restricted Payments payable solely in the Common Stock or other common Equity Interests of such Person;
(c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its Common Stock or other common Equity Interests;
(d) the Borrower may make Restricted Payments to comply with any obligation in respect of any Executive Compensation Plan of the Borrower; and
(e) the Borrower and each Subsidiary may make any Restricted Payment, so long as (i) no Default shall have occurred and be continuing at the time of such Restricted Payment, or would result therefrom and (ii) the Borrower shall be in compliance with the covenants in Section 7.5 after giving pro forma effect to such Restricted Payment.
Section 7.5 Financial Covenants.
(a) The Borrower will not permit the Consolidated Leverage Ratio to be greater than 3.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended March 31, 2024.
(b) The Borrower will not permit the Consolidated Coverage Ratio to be less than 2.75:1.0 on the last day of any fiscal quarter of the Borrower, commencing with the last day of the first fiscal quarter of the Borrower ended March 31, 2024.
Each of the ratios referred to above will be calculated for the Borrower and its Subsidiaries on a consolidated basis for each consecutive four fiscal quarter period.
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ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
Section 8.1 Events of Default. Any of the following shall constitute an event of default (each, an “Event of Default”):
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan, or (ii) within three (3) Business Days after the same becomes due, any interest on any Loan, or any fee due hereunder, or (iii) within three (3) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Specific Covenants. The Borrower fails to perform or observe any term, covenant or agreement contained in Article VI (and such failure shall continue uncured for a period of 30 days after the Borrower becomes aware of such failure), or Article VII; or
(c) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading, in any material respect, when made or deemed made; provided that any such representation, warranty, certification or statement of fact that is curable by its nature may be cured within a period of 30 days after the Borrower becomes aware of such representation, warranty, certification or statement of fact being incorrect or misleading; or
(d) Cross Payment Default. The Borrower or any Subsidiary fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder), after giving effect to any applicable grace period, having an outstanding aggregate principal amount equal to or greater than U.S.$50.0 million (or the equivalent thereof in other currencies); provided that such failure is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2, provided, further, that the threshold referred to in this clause (d) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 6.2(a) that 75% or more of the Borrower’s Consolidated Debt has a corresponding threshold of U.S.$100.0 million or more; or
(e) Cross-Default. The Borrower or any of its Subsidiaries shall default in the observance or performance of any agreement, covenant or condition relating to any Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, or contained in any agreement or instrument evidencing, securing, governing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due prior to its stated maturity and such default shall continue unremedied beyond the applicable period of grace set forth in the documents evidencing such Indebtedness; or any such Indebtedness in an outstanding principal amount equal to or greater than U.S.$50.0 million, individually or in the aggregate, of the Borrower or any of its Subsidiaries shall be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the
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stated maturity thereof; provided that (x) such default is unremedied and is not waived by the holders of such Indebtedness prior to any termination of Commitments or acceleration of the Loans pursuant to Section 8.2 and (y) this clause (e) shall not apply to (i) secured Indebtedness that becomes due as a result of the Disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness, (ii) Guarantees of Indebtedness that are satisfied promptly on demand or (iii) with respect to Indebtedness incurred under any Swap Contract, termination events or equivalent events pursuant to the terms of the relevant Swap Contract which are not the result of any default thereunder by the Borrower or any of its Subsidiaries; provided, further, that the threshold referred to in this clause (e) shall automatically increase to U.S.$100.0 million in the event that the Borrower certifies in the Compliance Certificate delivered pursuant to Section 6.2(a) that 75% or more of the Borrower’s Consolidated Debt has a corresponding threshold of U.S.$100.0 million or more; or
(f) Insolvency Proceedings, Etc. (i) Any Loan Party or any of its Subsidiaries institutes, or consents to the institution of any proceeding under any Debtor Relief Law, including, but not limited to, reorganization, concurso mercantil, quiebra or bankruptcy, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for it or for all or substantially all of its property; or
(ii)(1) A court of competent jurisdiction shall enter a decree or order for relief in respect of any Loan Party in an involuntary case under any Debtor Relief Laws, which decree or order is not stayed; or any other similar relief shall be granted under any Applicable Law; or (2) an involuntary case shall be commenced against any Loan Party under any Debtor Relief Laws; or a decree or order of a court having jurisdiction for the appointment of a receiver, trustee, custodian, conservator, liquidator, rehabilitator, visitador, conciliador, síndico or similar officer for any Loan Party or for all or substantially all of its property over any Loan Party, or over all or substantially all of its property, shall have been entered, and any such event described in clauses (1) and (2) above shall continue for 60 consecutive calendar days; or
(iii) any Loan Party shall become unable, admit in writing its inability or fail generally to pay its debts as they become due or any Loan Party organized under the laws of Mexico becomes in a generalized default of its payment obligations (incumplimiento generalizado en el pago de sus obligaciones) within the meaning of Section I of Article 10 of the Mexican Bankruptcy Law (Ley de Concursos Mercantiles); or
(g) Judgments. There is entered against the Borrower or any Subsidiary one or more final non-appealable judgments or orders for the payment of money in an aggregate amount (as to all such judgments or orders) exceeding U.S.$100.0 million (to the extent not (i) covered by independent third-party insurance as to which the insurer does not dispute coverage or (ii) paid, discharged or bonded within 60 days after the entry of such judgment); or
(h) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of the Borrower or any of its Subsidiaries under Title IV of ERISA to the Pension Plan,
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Multiemployer Plan or the PBGC in an aggregate amount that would reasonably be expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount that would reasonably be expected to have a Material Adverse Effect; or
(i) Invalidity of Loan Documents. Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(j) Invalidity of Guarantees. Any guarantee issued under any Loan Document ceases to be in full force and effect; or any Loan Party contests, in writing, in any manner the validity or enforceability of any guarantee issued under any Loan Document for any reason other than as expressly permitted hereunder or thereunder prior to the satisfaction in full of all the Obligations; or
(k) Exchange Controls. There occurs any Transfer and Inconvertibility Event and shall continue for 60 or more consecutive days; or
(l) Condemnation; Nationalization. Any Governmental Authority asserting or exercising governmental or police powers or any Person acting or purporting to act under such Governmental Authority shall condemn, seize or appropriate, or shall assume custody or control of, all or a substantial portion of the property of the Loan Parties, taken as a whole, such that, based on the value of the asset attached, expropriated or seized, such action would reasonably be expected to have a Material Adverse Effect; or
(m) Moratorium. Any Governmental Authority shall, by moratorium laws or other similar laws (except for any such law relating to matters of public health or national emergency), cancel, suspend or defer any material payment Obligation when the same becomes due and payable and such cancellation, suspension or deferral shall continue for 60 or more consecutive days.
For the avoidance of doubt, no Default or Event of Default shall occur solely by reason of a failure by the Borrower to comply with its obligations under clause (a) of Section 6.14 (Sustainability Reporting).
Section 8.2 Remedies Upon Event of Default.
If any Event of Default occurs and is continuing, the Administrative Agent upon the request of the Required Lenders, shall, by notice to the Borrower, (a) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable and (b) terminate the Revolving Commitments (and thereupon the Revolving Commitments shall
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terminate immediately), in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of an event described in Section 8.1(f), the obligation of each Lender to make Loans and any obligation shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable and exercise any other remedy available under the Loan Documents, in each case without further act of the Administrative Agent or any Lender.
Section 8.3 Application of Funds.
After the exercise of remedies provided for in Section 8.2 (or after the Loans have automatically become immediately due and payable), any amounts received on account of the Obligations shall, subject to the provisions of Section 2.12, be applied by the Administrative Agent in the following order:
First. to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second. to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders and (including fees, charges and disbursements of counsel to the respective Lenders and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third. to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
Fourth. payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
ARTICLE IX ADMINISTRATIVE AGENT
Section 9.1 Appointment and Authority. Each of the Lenders hereby irrevocably appoints BBVA México, S.A., Institución de Banca Múltiple, Grupo Financiero BBVA México to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party and authorizes the Administrative Agent to take such actions on its behalf and to exercise such rights, powers, authorities and privileges as are expressly delegated to the Administrative Agent by the terms hereof or thereof. For such purposes, each Lender hereby appoints and authorizes the Administrative Agent as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, and authorities specifically given to the Administrative Agent under or in
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connection with the Loan Documents. The provisions of this Article IX are solely for the benefit of the Administrative Agent, the Lenders and neither the Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
Section 9.2 Rights as a Lender. If any Person serving as the Administrative Agent hereunder is or becomes a Lender, it shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
Section 9.3 Exculpatory Provisions. The Administrative Agent and the Sustainability Structuring Agent, as applicable, shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents to which it is a party, and its duties hereunder shall be administrative in nature.
(a) Without limiting the generality of the foregoing, the Administrative Agent and the Sustainability Structuring Agent, as applicable:
(i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(ii) shall not have any duty to take any discretionary action or exercise any discretionary powers (including providing any request, consent, approval, waiver or authorization), except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or Applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law;
(iii) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness
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of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent, Bookrunners or any of their Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein;
(iv) shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final non-appealable judgment. In no event shall the Administrative Agent be liable under or in connection with this Agreement or any other Loan Document for indirect, special, incidental, punitive, or consequential losses or damages of any kind whatsoever, including, but not limited to, lost profits, whether or not foreseeable, even if the Administrative Agent has been advised of the possibility thereof and regardless of the form of action. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender; and
(v) shall not be responsible for or have any duty to ascertain or inquire into (i) any recital, statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents or accuracy of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith (including recalculating or determining, confirming or verifying any calculation or information set forth therein), (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the legality, validity, enforceability, effectiveness, genuineness or sufficiency of this Agreement, any other Loan Document or any other agreement, instrument or document, (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or (vi) the properties, books or records of the Borrower.
(b) The Administrative Agent shall not be required to expend or risk any of its own funds or otherwise incur any liability, financial or otherwise, in the performance of any of its duties hereunder or under any Loan Document to which it is a party, or be required to take any action that is contrary to this Agreement or Applicable Law.
(c) The Administrative Agent shall not incur any liability for not performing any act or fulfilling any duty, obligation or responsibility hereunder by reason of any occurrence beyond the control of the Administrative Agent (including but not limited to any act or provision of any present or future law or regulation or governmental authority, any act of God or war, civil unrest, local or national disturbance or disaster, any act of terrorism, or the unavailability of the Federal Reserve Bank wire or facsimile or other wire or communication facility).
(d) The authorizations, rights, privileges, protections and benefits given to the Administrative Agent are extended to, and shall be enforceable by, the Administrative Agent, under any Loan Document to which it is a party. In the event any claim of inconsistency between
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this Agreement and the terms of any Loan Document arises with respect to the duties, liabilities and rights of the Administrative Agent, the terms of this Agreement shall control.
(e) In no event shall the Administrative Agent be responsible or liable for the actions or omissions of the Sustainability Structuring Agent or the Custodian.
Section 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may (but shall not be obligated to) rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Whenever reference is made in this Agreement or any other Loan Document to any discretionary action by consent, designation, specification, requirement or approval of, notice, request or other communication from, or other direction given or action to be undertaken or to be (or not to be) suffered or omitted by the Administrative Agent or to any election, decision, opinion, acceptance, use of judgment, expression of satisfaction or other exercise of discretion, rights or remedies to be made (or not to be made) by the Administrative Agent, it is understood that in all cases that the Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such written instruction, advice or concurrence from the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents to which the Administrative Agent is a party), in each case as it deems appropriate. Notwithstanding anything else to the contrary herein, the Administrative Agent may refrain from acting in accordance with any instructions or requests unless it shall first be indemnified to its satisfaction by the Lenders against any and all liability, cost and expense that may be incurred by it by reason of taking or continuing to take any such action in compliance with the instruction or request. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future Lenders.
Section 9.5 Erroneous Payments.
(a) If the Administrative Agent (x) notifies a Lender or any Person who has received funds on behalf of a Lender (any such Lender or other recipient (and each of their respective successors and assigns), a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds (as set forth in such notice from the Administrative Agent) received by such
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Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously or mistakenly transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender or other Payment Recipient on its behalf) (any such funds, whether transmitted or received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and (y) demands in writing the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent pending its return or repayment as contemplated below in this Section 9.5 and held in trust for the benefit of the Administrative Agent, and such Lender shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter (or such later date as the Administrative Agent may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the applicable Interest Rate. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or any Person who has received funds on behalf of a Lender (and each of their respective successors and assigns), agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in this Agreement or in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part), then in each such case:
(i) it acknowledges and agrees that (A) in the case of immediately preceding clauses (x) or (y), an error and mistake shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error and mistake has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender shall (and shall use commercially reasonable efforts to cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one (1) Business Day of its knowledge of the occurrence of any of the circumstances described in immediately preceding clauses (x), (y) and (z)) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 9.5(b).
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For the avoidance of doubt, the failure to deliver a notice to the Administrative Agent pursuant to this Section 9.5(b) shall not have any effect on a Payment Recipient’s obligations pursuant to Section 9.5(a) or on whether or not an Erroneous Payment has been made.
(c) Each Payment Recipient hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Payment Recipient under any Loan Document, or otherwise payable or distributable by the Administrative Agent to such Payment Recipient under any Loan Document with respect to any payment of principal, interest, fees or other amounts, against any amount that the Administrative Agent has demanded to be returned.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Loans (but not its Commitments) with respect to which such Erroneous Payment was made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to the Platform as to which the Administrative Agent and such parties are participants) with respect to such Erroneous Payment Deficiency Assignment, and such Lender shall deliver any Notes evidencing such Loans to the Borrower or the Custodian, at the Lender’s election, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender, as applicable, hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender, (iv) the Administrative Agent will reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment and, (v) the Administrative Agent may request to the Borrower the execution and delivery of a Note evidencing the Loans subject to such Erroneous Payment Deficiency Assignment pursuant to the terms of Section 6.13. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan
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(or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender under the Loan Documents with respect to each Erroneous Payment Return Deficiency.
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Borrower or any other Loan Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including, without limitation, any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 9.5 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Loan Document.
Section 9.6 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article IX shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final non-appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
Section 9.7 Resignation of Administrative Agent.
(a) The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set
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forth above; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Date.
(b) If the Person serving as Administrative Agent
is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by Applicable Law, by notice in writing to the Borrower and such Person remove
such Person as Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day
as shall be agreed by the Required Lenders) (the “Removal Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Date.
(c) With effect from the Resignation Date or the Removal Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.1(e) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Date or the Removal Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 9.6). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article IX and Section 10.5 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent. Any corporation or entity into which the Administrative Agent may be merged or converted or with which it may be consolidated or any corporation or entity resulting from any merger, conversion or consolidation to which the Administrative Agent shall be a party, or any corporation or entity succeeding to the business of the Administrative Agent or its corporate trust operations shall be the successor of the Administrative Agent hereunder and under the other Loan Documents to which the Administrative Agent is a party without the execution or filing of any paper with any party hereto or thereto or any further act on the part of any of the parties hereto or thereto, anything herein or in any other Loan Document to the contrary notwithstanding.
Section 9.8 Non-Reliance on the Administrative Agent, the Bookrunners and the Other Lenders. Each Lender expressly acknowledges that none of the Administrative Agent nor the Bookrunners has made any representation or warranty to it, and that no act by the Administrative Agent or the Bookrunners hereafter taken, including any consent to, and
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acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent or the Bookrunners to any Lender as to any matter, including whether the Administrative Agent or the Bookrunners have disclosed material information in their (or their Related Parties’) possession. Each Lender represents to the Administrative Agent and the Bookrunners that it has, independently and without reliance upon the Administrative Agent, the Bookrunners, any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Bookrunners, any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
Section 9.9 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or the Sustainability Structuring Agent shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
Section 9.10 Guaranty Matters. The Administrative Agent shall, upon the written instructions of the Required Lenders and subject to Section 10.1(g), release any Guarantor from its obligations under the Guaranty. If any Guarantor ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents, then such Guarantor shall automatically be released from its obligations under the Guaranty. The Administrative Agent shall, promptly upon the written request of the Borrower and at the Borrower’s sole cost, execute all such documentation as may reasonably requested to evidence or confirm such release.
Section 9.11 Certain ERISA Matters.
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(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent (acting at the direction of the Required Lenders), and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any
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rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
Section 9.12 Administrative Agent May File Proofs of Claim.
(a) In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Loan Party) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:
(1) (i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other obligations of the Loan Parties under any Loan Document that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 10.5) allowed in such judicial proceeding; and
(2) (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same.
(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 10.5.
ARTICLE X MISCELLANEOUS
Section 10.1 Amendments, Etc. Subject to Section 3.8, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders (or by the Administrative Agent on behalf and at the written direction of the Required Lenders) and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.2 (other than clause (d) thereof) without the written consent of each Lender with a Revolving Commitment;
(b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.2) without the written consent of such Lender;
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(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;
(d) reduce the principal of, or the rate of interest specified herein on, any Loan or any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Margin that would result in a reduction of any interest rate on any Loan or any fee payable hereunder without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to (i) amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default Rate or (ii) amend the definition of “KPI Metrics” or any related provision of this Agreement;
(e) change Section 8.3 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;
(f) change any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender; or
(g) release all or substantially all of the value of the Guaranty without the written consent of each Lender, except to the extent the release of any Guarantor is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone);
provided, further, no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent, amend, modify or otherwise affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document (including any fees, expenses, indemnities or other amounts payable to, or any other provisions expressly for the benefit of Administrative Agent); and any Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended or the maturity of any of its Loans may not be extended, the rate of interest on any of its Loans may not be reduced and the principal amount of any of its Loans may not be forgiven, in each case without the consent of such Defaulting Lender and (y) any waiver, amendment, consent or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender more adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Section 10.2 Notices; Effectiveness; Electronic Communication.
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(a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic mail as follows:
(i) if to the Borrower or any other Loan Party, or the Administrative Agent, to the address or electronic mail address specified for such Person on Schedule 10.2; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in clause (b) below, shall be effective as provided in such clause (b). All notices from or to a Loan Party shall be sent through the Administrative Agent. The Borrower may make and/or deliver as agent of each Loan Party notices and/or requests on behalf of each Loan Party.
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications; provided, further, that any notice or other communication delivered by e-mail to the Administrative Agent shall include and contain a scanned or imaged attachment (such as .pdf or similar widely used format). Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgment from the intended recipient (such as by the “return receipt requested” function, as available return e-mail or other written acknowledgment), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR
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ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the Platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc. Each of the Borrower and the Administrative Agent may change its address or email address (and the department or officer, if any, for whose attention a communication is to be made) for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address or telecopy number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States Federal or state securities laws.
(e) Guarantor Agent. Each Guarantor by its execution of any Loan Document (as the case may be) irrevocably appoints the Borrower to act on its behalf as its agent in relation to the Loan Documents and irrevocably authorizes:
(i) the Borrower on its behalf to supply all information concerning itself contemplated by any Loan Document to the Administrative Agent and the Lenders and to give all notices and instructions, to execute on its behalf any documents required hereunder and to make such agreements capable of being given or made by any Guarantor notwithstanding that they may affect such Guarantor, without further reference to or consent of such Guarantor;
(ii) the Borrower on its behalf as its agent (comisionista) pursuant to articles 273 and 274 of the Mexican Commerce Code (Código de Comercio) to exercise the rights, powers, authorities and discretions specifically given to it under or in connection with the Loan Documents; and
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(iii) each of the Administrative Agent and the Lenders to give any notice, demand or other communication to such Guarantor pursuant to the Loan Documents to the Borrower on its behalf,
and in each case such Guarantor shall be bound thereby as though such Guarantor itself had given such notices and instructions or executed or made such agreements or received any notice, demand or other communication.
Every act, agreement, undertaking, settlement, waiver, notice or other communication given or made by the Borrower, or given to the Borrower, in its capacity as agent in accordance with paragraph this clause (e), in connection with any Loan Document shall be binding for all purposes on such Guarantor as if such Guarantor had expressly made, given or concurred with the same. In the event of any conflict between any notices or other communications of the Borrower and any Guarantor, those of the Borrower shall prevail.
Section 10.3 Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including Committed Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.
Section 10.4 No Waiver; Cumulative Remedies; Enforcement. No failure by any party hereto to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.2 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 10.9 (subject to the terms of Section 2.11), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.2 and (ii) in addition to the matters set forth in clause (b) of the preceding proviso and subject to Section 2.11, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
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Section 10.5 Expenses; Indemnity; Damage Waiver.
(a) Costs and Expenses. Each Loan Party agrees, jointly and severally, to pay (i) (1) all reasonable and documented out-of-pocket expenses of the Administrative Agent (including the reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of United Stated legal counsel) associated with the preparation, execution, delivery and administration of this Agreement and the other Loan Documents and any amendment, modification or waiver with respect thereto (whether or not the transactions contemplated hereby or thereby shall be consummated); provided that, except with respect to any fees, disbursements and other charges of one firm of United States legal counsel to the Administrative Agent, such expenses incurred prior to the Restatement Date will be limited to U.S.$25,000 plus VAT, as applicable, taken together with any such expenses incurred in the Administrative Agent’s (or its Affiliate’s) capacity as a Bookrunner for the Facilities, and (2) all reasonable and documented out-of-pocket fees, disbursements and other charges of one firm of United States legal counsel and one firm of Mexican legal counsel to the Lenders, taken as a whole, as applicable, and (ii) all out-of-pocket costs and expenses of the Administrative Agent and the Lenders (including the fees, disbursements and other charges of one firm of counsel to each of (1) the Lenders, taken as a whole, (2) the Administrative Agent, in each relevant jurisdiction) and (3) the Sustainability Structuring Agent in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Documents, including its rights under this Section 10.5, or in connection with the Loans hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans.
(b) Indemnification by the Borrower. Each Loan Party shall jointly and severally indemnify the Administrative Agent (and any sub-agent thereof), the Sustainability Structuring Agent, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable and documented out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee), of any kind or nature whatsoever which may at any time be imposed on, incurred by, or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.1), (ii) any Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final non-appealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim not involving an
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act or omission of the Borrower or any Subsidiary and that is solely among Indemnitees (other than against the Administrative Agent in its capacity as such). Without limiting the provisions of Section 3.1(d), this Section 10.5(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required under clauses (a) or (b) of this Section 10.5 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Sustainability Structuring Agent or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this clause (c) are subject to the provisions of Section 2.10(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by Applicable Law, no party hereto shall assert, and each party hereto hereby waives, and acknowledges that no other Person shall have, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof; provided, however, that this provision shall not apply to any damages in respect of any indemnity obligations to the Administrative Agent under the terms of this Agreement. No Indemnitee referred to in clause (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(e) Payments. All amounts due under this Section 10.5 shall be payable not later than ten (10) Business Days after demand therefor. To the extent that any undertaking in paragraph (b) of this Section 10.5 may be unenforceable because it contravenes any Applicable Law or public policy, the Loan Parties shall contribute the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of such undertaking.
(f) Survival. The agreements in this Section 10.5 and the indemnity provisions of Section 10.5 shall survive the resignation or removal of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
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(g) No Personal Liability. If an individual signs a certificate on behalf of the Borrower or any of its Subsidiaries and the certificate proves to be incorrect, the individual will incur no personal liability as a result, unless the individual acted fraudulently in giving the certificate.
Section 10.6 Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Interest Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the resignation or removal of the Administrative Agent and the payment in full of the Obligations and the termination of this Agreement.
Section 10.7 Successors and Assigns.
(a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (except as otherwise permitted pursuant to Section 7.3) and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section 10.7 and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), subject to the consent of the Borrower (not to be unreasonably withheld or delayed; it being understood that withholding or delaying consent with respect to an assignment to any Disqualified Lender or any Sanctioned Lender shall not be deemed unreasonable) unless (a) an event of default has occurred and is continuing, in which case such assignment may be made to any Person other than a Disqualified Lender or a Sanctioned Lender, or (b) the assignment is to a Lender, an Affiliate of a Lender or an
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Approved Fund in each case that is not a Disqualified Lender. Each such assignment (other than an assignment to a Lender, Affiliate of a Lender or an Approved Fund) shall (i) not be less than €5.0 million in respect of loans and commitments under the Revolving Facility and (ii) €1.0 million in respect of loans and commitments under the Term Facility. For any assignments for which the Borrower’s consent is required, such consent shall be deemed to have been given if the Borrower shall not have responded within ten (10) Business Days of a written request for such consent.
Neither the Administrative Agent nor any Bookrunner shall be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Lenders or Sanctioned Lenders. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or prospective Lender is a Disqualified Lender or Sanctioned Lender or (y) have any liability with respect to or arising out of any assignment, or disclosure of confidential information, to any Disqualified Lender or Sanctioned Lender.
The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of €3,500 plus VAT; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
No such assignment shall be made to (i) any Loan Party or any Loan Party’s Affiliates or Subsidiaries or (ii) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof.
No such assignment shall be made to a natural Person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural Person).
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for Tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of one or more natural Persons, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender’s obligations shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties for the performance of such
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obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations. A participant shall have the same benefits as the Lender granting such participation with respect to (a) yield protection and increased cost (but not requiring payments in excess of those payable to such Lender in the absence of such participation), (b) with respect to pro rata treatment provisions and (c) Section 3.1, except such Participant shall not be entitled to receive any greater payment under Section 3.1, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Voting rights of participants shall be limited to those matters with respect to which the affirmative vote of each affected Lender or all Lenders are required as described in Section 10.1. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent shall have no responsibility for maintaining a Participant Register.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central banks; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
Section 10.8 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties on a need-to-know basis (it being understood that (i) the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof and (ii) the Borrower’s prior written consent shall be required prior to providing any such Information to any controlling persons or equity holders of any Bookrunner or Lender), (b) to the extent required or requested by any regulatory authority having jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), in which case the disclosing Person agrees to inform the Borrower promptly thereof prior to such disclosure, unless such Person is prohibited by Applicable Law from so informing the Borrower, or except in connection with any request as part of any audit or regulatory examination, (c) to the extent required by Applicable Laws or regulations, self-regulatory authorities having jurisdiction over
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the disclosing Person or by any subpoena or similar legal process, in which case the disclosing Person (except in connection with any order or request as part of any routine audit or examination conducted by bank accountants or any regulatory examination or audit) agrees to inform the Borrower promptly thereof prior to disclosure, (d) to any other party hereto, (e) to the extent necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 10.8, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, (ii) potential investors, insurers, reinsurers, re-insurance and insurance brokers, or other credit risk support providers of any Bookrunner or any Lender, or (iii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the application, issuance, publishing and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the prior written consent of the Borrower or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 10.8, (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates from a source other than the Borrower that is not to the recipient’s (or any of its Related Party’s) knowledge subject to confidentiality obligations to the Borrower or any of its Related Parties or (z) is independently discovered or developed by a party hereto without utilizing any Information received from the Borrower or violating the terms of this Section 10.8. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information limited solely to economic and structural terms of the Loans to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section 10.8, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the applicable disclosing party on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section 10.8 shall be principally liable on a several basis to the extent any confidentiality restrictions set forth herein are violated by one or more of its Related Parties.
Section 10.9 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or their respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such
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Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.12 and, pending such payment, shall be segregated on its books and records by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and their respective Affiliates under this Section 10.9 are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.
Section 10.10 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by Applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by Applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
Section 10.11 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.1, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g., “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 10.12 Survival of Representations and Warranties. All covenants, agreements, representations and warranties of the Loan Parties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof and the making of any Loans. Such representations and warranties have been or will be relied upon by the Administrative Agent
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and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Loan, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied. The provisions of Section 3.1, Section 10.5, Section 10.8, this Section 10.12, Section 10.15, Section 10.16, Section 10.17, Section 10.18 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof or the resignation or removal of the Administrative Agent.
Section 10.13 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.13, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined by the Administrative Agent (acting at the direction of the Required Lenders, acting in good faith), then such provisions shall be deemed to be in effect only to the extent not so limited.
Section 10.14 Replacement of Lenders. If the Borrower is entitled to replace a Lender pursuant to the provisions of Section 3.6, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.7), all of its interests, rights (other than its existing rights to payments pursuant to Section 3.1 and Section 3.4) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:
(a) the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.7(b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.5) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.4 or payments required to be made pursuant to Section 3.1, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with Applicable Laws; and
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(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.14 may be effected pursuant to an Assignment and Assumption executed by the Borrower and the assignee, and acknowledged by the Administrative Agent and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided, further, that any such documents shall be without recourse to or warranty by the parties thereto.
Notwithstanding anything in this Section 10.14 to the contrary, the Lender that acts as the Administrative Agent may not be replaced hereunder except in accordance with the terms of Section 9.7.
Section 10.15 Governing Law; Jurisdiction; Etc.
(a) Governing Law. This Agreement and the other Loan Documents (except, as to any Note, as expressly set forth therein) and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York.
(b) SUBMISSION TO JURISDICTION. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST ANOTHER PARTY TO THIS AGREEMENT IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT AND EXPRESSLY AND IRREVOCABLY WAIVES ANY RIGHT TO ANY
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OTHER JURISDICTION TO WHICH IT MAY BE ENTITLED ON ACCOUNT OF PLACE OF RESIDENCE OR DOMICILE OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
(c) WAIVER OF VENUE. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN CLAUSE (b) OF THIS SECTION 10.15. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.2. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. THE BORROWER (I) IRREVOCABLY APPOINTS THE PROCESS AGENT FOR A PERIOD ENDING TWELVE (12) MONTHS AFTER THE TERM FACILITY MATURITY DATE, HAVING OFFICES ON THE RESTATEMENT DATE AT 590 MADISON AVENUE, 27TH FLOOR, NEW YORK, NY 10022 AS ITS AGENT TO RECEIVE ON BEHALF OF SUCH LOAN PARTY SERVICE OF PROCESS IN ANY PROCEEDINGS (WITH RESPECT TO THIS AGREEMENT AND THE LOAN DOCUMENTS GOVERNED BY NEW YORK LAW) IN NEW YORK, NEW YORK; AND (II) DESIGNATES AS ITS CONVENTIONAL ADDRESS THE ADDRESS OF THE PROCESS AGENT REFERRED TO ABOVE OR ANY OTHER ADDRESS NOTIFIED IN THE FUTURE BY THE PROCESS AGENT TO THE BORROWER. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS TO THE BORROWER, IN CASE OF THE PROCESS AGENT AT THE ADDRESS SPECIFIED ABOVE, AND THE BORROWER HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF.
Section 10.16 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
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OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.16.
Section 10.17 Waiver of Immunities. To the extent permitted by Applicable Law, if any Loan Party has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) with respect to itself or any of its property, such Loan Party hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement and the Notes. Each Loan Party agrees that the waivers set forth above shall have the fullest extent permitted under the Foreign Sovereign Immunities Act of 1976 of the United States of America and are intended to be irrevocable and not subject to withdrawal for purposes of such Act.
Section 10.18 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Loan Party in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Loan Party in the Agreement Currency, such Loan Party agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such Currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Loan Party (or to any other Person who may be entitled thereto under Applicable Law).
Section 10.19 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Bookrunners, the Sustainability Structuring Agent and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Bookrunners and the Lenders, on the other hand, (B)
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each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Bookrunners and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Bookrunners nor any Lender has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Bookrunners and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Bookrunners nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, each of the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, the Bookrunners or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
Section 10.20 Electronic Execution of Assignments and Certain Other Documents. The words “execute,” “execution,” “signed,” “signature,” and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation Assignment and Assumptions, amendments or other modifications, Committed Loan Notices, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act; provided that notwithstanding anything contained herein to the contrary the Administrative Agent is under no obligation to agree to accept electronic signatures in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it.
Section 10.21 USA PATRIOT Act. Each Lender that is subject to the PATRIOT Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “PATRIOT Act”), it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each other Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and each other Loan Party in accordance with the PATRIOT Act. The Borrower and each other Loan Party shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such
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Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.
Section 10.22 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(c) a reduction in full or in part or cancellation of any such liability;
(d) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(e) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.
Section 10.23 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Contract or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in
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property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.23, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
Section 10.24 Use of English Language. This Agreement has been negotiated and executed in the English language, which such English language version shall be the original instrument and shall govern among the parties hereto. Except for any Notes and such documents required to be delivered in connection with the Restatement Date in a different language, all certificates, reports, notices and other documents and communications given or delivered pursuant to this Agreement (including any modifications or supplements hereto) shall be in the English language, or accompanied by an English translation thereof. Except in the case of (i) laws or official communications of Mexico, (ii) documents filed with any Governmental Authority in Mexico or (iii) corporate documents of the Borrower or any Guarantor, and (iv) any other document originally issued in a language other than English, the English language version of any such document shall for purposes of this Agreement, and absent manifest error, control the meaning of the matters set out therein; provided that, the Administrative Agent’s sole obligation in respect of any documents delivered in a language other than English (without limiting its obligations under any corresponding document in the English language) shall be to make such documents available to the Lenders on the Platform, and the Administrative Agent shall have no duties or obligations in respect of such documents.
Section 10.25 Swiss Guarantee Limitation. Any guarantee, indemnity or other obligation provided under this Agreement or any other Loan Document by a Swiss Guarantor shall be deemed not to be provided by such Swiss Guarantor to the extent that the same would constitute
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a breach of the financial assistance prohibitions under Swiss law. Under Swiss law, the following restrictions shall be applicable to each Swiss Guarantor:
(a) Any guarantee, indemnity or other obligation and liability by a Swiss Guarantor under this Agreement or any Loan Documents in relation to the obligations, undertakings, indemnities or liabilities of a Guarantor other than that Swiss Guarantor or any of its fully owned or controlled subsidiaries (the “Restricted Obligations”) shall be limited to the amount of that Swiss Guarantor’s Free Reserves Available for Distribution at the time payment is requested or the maximum amount permitted by Swiss law applicable at such time. Such limitations shall only apply to the extent it is a requirement under Applicable Law (including any case law) at the point in time payment is requested. Such limitation (as may apply from time to time or not) shall not free such Swiss Guarantor from payment obligations under this Agreement or any other Loan Documents in excess thereof, but merely postpone the payment date therefor until such times as payment is again permitted notwithstanding such limitation.
(b) For the purpose of this Section 10.25, “Free Reserves Available for Distribution” means an amount equal to the maximum amount in which the relevant Swiss Guarantor can make a dividend payment to its shareholder(s) (being the year to date balance sheet profit and any freely disposable equity available for this purpose, in each case in accordance with applicable Swiss law). The freely disposable equity represents, inter alia, but not by way of limitation, the total shareholder equity less the total of: (i) the aggregate share capital, (ii) the statutory reserves (including reserves for own shares and revaluations), to the extent such reserves cannot be transferred into unrestricted, distributable reserves, and (iii) any freely disposable equity that has to be blocked for any loans granted by the Swiss Guarantor to a direct or indirect shareholder or a direct or indirect subsidiary of such shareholder.
(c) As soon as reasonably practicable after having been requested to discharge a Restricted Obligation, the respective Swiss Guarantor shall provide the Administrative Agent with an interim statutory balance sheet audited by the statutory auditors of such Swiss Guarantor setting out the Free Reserves Available for Distribution and, promptly thereafter, pay the lesser of (i) the Restricted Obligation and (ii) the amount corresponding to the Free Reserves Available for Distribution or the maximum amount permitted by Swiss law applicable at the time payment is requested to the Administrative Agent (acting at the written direction of the Required Lenders) (save to the extent provided below).
(d) In case a Swiss Guarantor who must make a payment in respect of the Restricted Obligations under this Agreement or any other Loan Document is obliged to withhold Swiss withholding tax in respect of such payment, such Swiss Guarantor shall:
(i) if and to the extent required by Applicable Law in force at the relevant time:
| (1) | procure that such payments can be made without deduction of Swiss withholding tax, or with deduction of Swiss withholding tax at a reduced rate, by discharging the liability to such tax by notification (Meldeverfahren) pursuant to Applicable Law (including double tax treaties) rather than payment of the Tax; |
134
| (2) | if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above does not apply, deduct Swiss withholding tax at the rate of 35% (or such other rate as in force from time to time), or if the notification procedure (Meldeverfahren) pursuant to paragraph (1) above applies for a part of the Swiss withholding tax only, deduct Swiss withholding tax at the reduced rate resulting after the discharge of part of such Tax by notification under Applicable Law, from any payment made by it in respect of Restricted Obligations and promptly pay any such Taxes to the Swiss Federal Tax Administration; and |
| (3) | notify the Administrative Agent that such notification or, as the case may be, deduction has been made and provide evidence to the Administrative Agent that such a notification of the Swiss Federal Tax Administration has been made, or, as the case may be, that such Swiss withholding tax has been paid to the Swiss Federal Tax Administration; |
(ii) to the extent such deduction is made, not be required to make a gross-up, indemnify or otherwise hold harmless the Lenders for the deduction of the Swiss withholding tax notwithstanding anything to the contrary contained in the Loan Documents, unless grossing-up is permitted under the laws of Switzerland then in force and provided that this should not in any way limit any obligations of any non-Swiss Guarantors under the Loan Documents to indemnify the Lenders in respect of the deduction of the Swiss withholding tax.
(e) The Swiss Guarantor shall use all reasonable efforts to procure that any person which is entitled to a full or partial refund of any Swiss withholding tax paid pursuant to paragraph (d) above will, as soon as possible after the deduction of the Swiss withholding tax: (i) request a refund of the Swiss withholding tax under any Applicable Law (including double taxation treaties) and (ii) pay to the Administrative Agent upon receipt any amount so refunded. The Administrative Agent (acting at the written direction of the Required Lenders) shall take all reasonable steps to cooperate with the Swiss Guarantor to secure such refund.
(f) In case the proceeds irrevocably received by the Administrative Agent and any Lender pursuant to paragraph (e)(ii) above have the effect that the proceeds received by the Administrative Agent and any Lender exceed the amount of obligations guaranteed by the relevant Swiss Guarantor, then the Administrative Agent (acting at the written direction of the Required Lenders) or the relevant Lender, as the case may be, shall promptly return such overcompensation to the relevant Swiss Guarantor.
(g) The Swiss Guarantor will take, and cause to be taken, as soon as reasonably practicable, all and any other action, including, without limitation, the passing of any shareholders’ resolutions to approve any payment or other performance under this Agreement or any other Loan Document and the receipt of any confirmations from the Swiss Guarantor’s auditors, whether following a request to discharge a Restricted Obligation or which may be required as a matter of mandatory Swiss law in force at the time it is required to make a payment or perform other
135
obligations under this Agreement or any other Loan Document in order to allow a prompt payment of amounts owed by the Swiss Guarantor or the prompt performance of other obligations under this Agreement or any other Loan Document.
(h) If the enforcement of the Restricted Obligations would be limited due to the effects referred to in this Section 10.25 and if any asset of the Swiss Guarantor has a book value that is less than its market value (an “Undervalued Asset”), the Swiss Guarantor shall, to the extent permitted by Applicable Law and its accounting standards, (i) write up the book value of such Undervalued Asset such that its balance sheet reflects a book value that is equal to the market value of such Undervalued Asset, and (ii) make reasonable efforts to realize the Undervalued Asset for a sum which is at least equal to the market value of such asset. Without prejudice to the rights of the Administrative Agent under this Agreement or any other Loan Document, the Swiss Guarantor will only be required to realize an Undervalued Asset if such asset is not necessary for the Swiss Guarantor’s business (nicht betriebsnotwendig).
Section 10.26 EU Blocking Regulations. No representation, warranty or covenant herein in connection with Sanctions shall apply to any party hereto to which the section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung - AWV) and/or EU Blocking Regulation, as amended (or any applicable implementing law or regulation in any member state of the European Union or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom) applies, if and to the extent that such representation, warranty or covenant would constitute a breach of section 7 of the German Foreign Trade Regulation (Außenwirtschaftsverordnung - AWV) and/or the EU Blocking Regulation (or any applicable implementing law or regulation in any member state of the European Union or any similar applicable blocking or anti-boycott law or regulation in the United Kingdom).
[REMAINDER OF PAGE INTENTIONALLY BLANK]
136
Exhibit 8.1
The following is a list of subsidiaries of Cemex, S.A.B. de C.V. as of December 31, 2023, including the name of each subsidiary and its country of incorporation.
| 1 | Alliera, S.A. de C.V. | Mexico | ||
| 2 | BIM Infraestructura, S.A. de C.V. | Mexico | ||
| 3 | Cemex Concretos, S.A. de C.V. | Mexico | ||
| 4 | Cemex Energía S.A.P.I. de C.V. | Mexico | ||
| 5 | Cemex Internacional, S.A. de C.V. | Mexico | ||
| 6 | Cemex Operaciones México, S.A. de C.V. | Mexico | ||
| 7 | Cemex Transporte, S.A. de C.V. | Mexico | ||
| 8 | Cemex Vivienda, S.A. de C.V. | Mexico | ||
| 9 | Comercializadora Construrama, S.A. de C.V. | Mexico | ||
| 10 | Construrama Supply, S.A. de C.V. | Mexico | ||
| 11 | Inmobiliaria Ferri, S.A. de C.V. | Mexico | ||
| 12 | Menkent, S. de R.L. de C.V. | Mexico | ||
| 13 | Mercis, S.A. de C.V. | Mexico | ||
| 14 | Pro Ambiente, S.A. de C.V. | Mexico | ||
| 15 | Proveedora Mexicana de Materiales, S.A. de C.V. | Mexico | ||
| 16 | Servicios Para La Autoconstrucción, S.A. de C.V. | Mexico | ||
| 17 | Servicios Profesionales Cemex, S.A. de C.V. | Mexico | ||
| 18 | Servicios Promexma, S.A. de C.V. | Mexico | ||
| 19 | Sinergia Deportiva, S.A. de C.V. | Mexico | ||
| 20 | Teg Energía, S.A. de C.V. | Mexico | ||
| 21 | ALC Las Vegas Mining Claims, LLC | USA | ||
| 22 | Arkik USA Inc. | USA | ||
| 23 | Cement Transit Company | USA | ||
| 24 | Cemex Admix USA, LLC | USA | ||
| 25 | Cemex AM Holdings, LLC | USA | ||
| 26 | Cemex Caribbean, LLC | USA | ||
| 27 | Cemex Cement of Louisiana, Inc. | USA | ||
| 28 | Cemex Construction Materials Atlantic, LLC | USA | ||
| 29 | Cemex Construction Materials Florida, LLC | USA | ||
| 30 | Cemex Construction Materials Houston, LLC | USA | ||
| 31 | Cemex Construction Materials Pacific, LLC | USA | ||
| 32 | Cemex Construction Materials South, LLC | USA | ||
| 33 | Cemex Corp. | USA | ||
| 34 | Cemex Global Sourcing, Inc. | USA | ||
| 35 | Cemex Holdings, Inc. | USA | ||
| 36 | Cemex International Trading LLC | USA | ||
| 37 | Cemex Leasing LLC | USA | ||
| 38 | Cemex Materials, LLC | USA | ||
| 39 | Cemex Nevada, LLC | USA | ||
| 40 | Cemex NY Corporation | USA | ||
| 41 | Cemex Southeast Holdings LLC | USA | ||
| 42 | Cemex Southeast LLC | USA | ||
| 43 | Cemex Steel Framing, Inc. | USA | ||
| 44 | Cemex SW Florida Limestone Holdings, LLC | USA | ||
| 45 | Cemex SW Florida Sand Holdings, LLC | USA | ||
| 46 | Cemex, Inc. | USA | ||
| 47 | Guernsey Stone Company | USA | ||
| 48 | Hogan Island Limestone, LLC | USA | ||
| 49 | Immokalee Sand, LLC | USA | ||
| 50 | Interamerican Investments, Inc. | USA | ||
| 51 | Louisville Cement Assets Transition Company | USA | ||
| 52 | LV Western Mining Claims, LLC | USA | ||
| 53 | MILI, L.L.C. | USA | ||
| 54 | Mineral Resource Technologies, Inc. | USA | ||
| 55 | New Line Transport, LLC | USA | ||
| 56 | OXI, L.L.C. | USA | ||
| 57 | Ready Mix USA, LLC | USA | ||
| 58 | Readymix Materials Holdings, LLC | USA | ||
| 59 | RMC Pacific Materials, LLC | USA | ||
| 60 | Sunbelt Investments Inc. | USA | ||
| 61 | Twin Mountain Rock Company | USA | ||
| 62 | VAPPS, LLC | USA | ||
| 63 | Western Equipment Co. | USA | ||
| 64 | Sunbulk Shipping Limited | Barbados | ||
| 65 | Apollo Re Ltd. | Barbados | ||
| 66 | Arawak Cement Company Limited | Barbados | ||
| 67 | Falcon Re Ltd. | Barbados | ||
| 68 | Torino Re Ltd. | Barbados | ||
| 69 | Cemex Materials Newfoundland, Inc. | Canada | ||
| 70 | Cemex Colombia S.A. | Colombia | ||
| 71 | Cemex Premezclados de Colombia S.A. | Colombia | ||
| 72 | Cemex Transportes de Colombia S.A. | Colombia | ||
| 73 | Central de Mezclas S.A. | Colombia | ||
| 74 | ZONA FRANCA ESPECIAL CEMENTERA DEL MAGDALENA MEDIO S.A.S. (ZOMAM S.A.S.) | Colombia | ||
| 75 | Cemex Dominicana, S.A. | Dominican Republic | ||
| 76 | Cementos de Centroamérica, S.A. | Guatemala | ||
| 77 | Cemex Guatemala, S.A. | Guatemala | ||
| 78 | TCL Guyana Inc. | Guyana | ||
| 79 | Cemex Haití, S.A. | Haiti | ||
| 80 | Cemex Jamaica Limited | Jamaica | ||
| 81 | Caribbean Cement Company Limited | Jamaica | ||
| 82 | Cemex Nicaragua, S.A. | Nicaragua | ||
| 83 | Inversiones Secoya, Sociedad Anónima | Nicaragua | ||
| 84 | Cemento Bayano, S.A. | Panama | ||
| 85 | SUPERQUIMICOS DE CENTROAMERICA, S. A. | Panama | ||
| 86 | Cemex Perú, S.A. | Peru | ||
| 87 | Cemex de Puerto Rico Inc. | Puerto Rico | ||
| 88 | Trinidad Cement Limited | Trinidad and Tobago | ||
| 89 | Cemex Hrvatska d.d. | Croatia | ||
| 90 | Cemex Czech Republic, s.r.o. | Czech Republic | ||
| 91 | Cemex Denmark ApS | Denmark | ||
| 92 | Cemex France (Société à Mission) | France | ||
| 93 | Cemex Deutschland AG | Germany | ||
| 94 | Cemex Luxembourg Holdings S.a.r.l. | Luxembourg | ||
| 95 | Cemex Polska Sp. z.o.o. | Poland | ||
| 96 | Cemex España, S.A. | Spain | ||
| 97 | Cemex ESPAÑA OPERACIONES, S.L.U. | Spain | ||
| 98 | Cemex Latam Holdings, S.A. | Spain | ||
| 99 | CCL BUSINESS HOLDINGS, S.L.U. (Sociedad Unipersonal) | Spain | ||
| 100 | Roble Re S.L.U. | Spain | ||
| 101 | Cemex Admixtures Global Holding AG | Switzerland | ||
| 102 | Cemex Innovation Holding Ltd. | Switzerland | ||
| 103 | Cemex Africa & Middle East Investments B.V. | The Netherlands | ||
| 104 | Cemex Asia B.V. | The Netherlands | ||
| 105 | Cemex Finance Latam B.V. | The Netherlands | ||
| 106 | Cemex Ventures BV | The Netherlands | ||
| 107 | CxNetworks N.V. | The Netherlands | ||
| 108 | Lomez International B.V. | The Netherlands | ||
| 109 | RMC Holdings B.V. | The Netherlands | ||
| 110 | Cemex UK | UK | ||
| 111 | Cemex Investments Limited | UK | ||
| 112 | Cemex Paving Solutions Limited | UK | ||
| 113 | Cemex UK Cement Limited | UK | ||
| 114 | Cemex UK Marine Limited | UK | ||
| 115 | Cemex UK Materials Limited | UK | ||
| 116 | Cemex UK Operations Limited | UK | ||
| 117 | Cemex UK Properties Limited | UK | ||
| 118 | Cemex UK Services Limited | UK | ||
| 119 | Mineral And Energy Resources (UK) Limited | UK | ||
| 120 | RMC Explorations Limited | UK | ||
| 121 | RMC Russell Ltd | UK | ||
| 122 | The Rugby Group Limited | UK | ||
| 123 | APO Cement Corporation | The Philippines | ||
| 124 | Cemex Holdings Philippines, Inc. | The Philippines | ||
| 125 | Solid Cement Corporation | The Philippines | ||
| 126 | Cemex ASIAN SOUTH EAST CORPORATION | The Philippines | ||
| 127 | Cemex Asia Holdings Ltd. | Singapore | ||
| 128 | Assiut Cement S.A.E. | Egypt | ||
| 129 | Cemex Holdings (Israel) Ltd. | Israel | ||
| 130 | Chemocrete Ltd. | Israel | ||
| 131 | Lime & Stone Production Company Ltd. | Israel | ||
| 132 | Readymix Industries (Israel) Ltd. | Israel | ||
| 133 | Kadmani Readymix Concrete Ltd. | Israel | ||
| 134 | Cemex Supermix L.L.C. | United Arab Emirates | ||
| 135 | Cemex Topmix L.L.C. | United Arab Emirates | ||
| 136 | Cemex Falcon L.L.C. | United Arab Emirates | ||
Exhibit 12.1
Certification of the Principal Executive Officer of
Cemex, S.A.B. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Fernando Ángel González Olivieri, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Cemex, S.A.B. de C.V. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”); |
| 2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
| (d) | Disclosed in this Report any change in the Company’s internal control over financial reporting that occurred during the period covered by the Report that has |
| materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: April 26, 2024
| By: | /s/ Fernando Ángel González Olivieri | |
| Fernando Ángel González Olivieri | ||
| Chief Executive Officer | ||
| Cemex, S.A.B. de C.V. |
2
Exhibit 12.2
Certification of the Principal Financial Officer of
Cemex, S.A.B. de C.V.
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
CERTIFICATIONS
I, Maher Al-Haffar, certify that:
| 1. | I have reviewed this Annual Report on Form 20-F of Cemex, S.A.B. de C.V. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”); |
| 2. | Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Report; |
| 4. | The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and |
| (d) | Disclosed in this Report any change in the Company’s internal control over financial reporting that occurred during the period covered by the Report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and |
| 5. | The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. |
Date: April 26, 2024
| By: | /s/ Maher Al-Haffar | |
| Maher Al-Haffar, | ||
| Executive Vice President of Finance and Administration and Chief Financial Officer Cemex, S.A.B. de C.V. |
2
Exhibit 13.1
Certification of the Principal Executive and Financial Officers of
Cemex, S.A.B. de C.V.
Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 20-F of Cemex, S.A.B. de C.V. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Fernando Ángel González Olivieri, as Chief Executive Officer of the Company, and Maher Al-Haffar, as Executive Vice President of Finance and Administration and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and periods set forth therein.
| By: | /s/ Fernando Ángel González Olivieri |
| Name: | Fernando Ángel González Olivieri | |
| Title: | Chief Executive Officer | |
| Date: | April 26, 2024 | |
| By: | /s/ Maher Al-Haffar | |
| Name: | Maher Al-Haffar | |
| Title: | Executive Vice President of Finance and Administration and Chief Financial Officer | |
| Date: | April 26, 2024 | |
This certification is furnished as an exhibit to the Report and accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 14.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the registration statements (Nos. 333-83962, 333-86090, 333-128657, and 333-275529) on Form S-8 of our reports dated April 26, 2024, with respect to the consolidated financial statements of Cemex, S.A.B. de C.V. and subsidiaries and the effectiveness of internal control over financial reporting.
/s/ KPMG Cárdenas Dosal, S.C.
Monterrey, Nuevo León, México
April 26, 2024
Exhibit 15.1
Disclosure of Mine Safety and Health Administration (“MSHA”) Safety Data
Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires certain disclosures by companies required to file periodic reports under the Securities Exchange Act of 1934 that operate mines regulated under the Mine Act. CEMEX’s U.S. quarry and mining operations are subject to MSHA regulation under the U.S. Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects the Company’s quarries and mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Whenever MSHA issues a citation or order, it also generally proposes a civil penalty, or fine, related to the alleged violation. Citations or orders can be contested and appealed, and as part of that process, are often reduced in severity and amount, and are sometimes dismissed or vacated.
In January 2012, the SEC issued final rules and regulations implementing the mine safety disclosure requirements of Section 1503(a) of the Dodd-Frank Act. Pursuant to those rules and regulations, we have provided the information below for mining operations in the United States only. The Dodd-Frank Act and the implementing rules and regulations thereunder do not apply to mining and quarry operations outside the U.S.
The information in the table below reflects citations and orders MSHA issued to various U.S. subsidiaries of the Company during the year ended December 31, 2023. The data was compiled primarily from the data maintained on MSHA’s public website, the Mine Data Retrieval System (“MDRS”), as of January 30, 2024. In evaluating this information, consideration should also be given to factors such as: (i) the number of citations and orders may vary depending on the size and operation of the mine, (ii) the number of citations issued may vary from inspector to inspector and mine to mine, and (iii) citations and orders may be contested and appealed, and in that process, may be reduced in severity and amount, and may be dismissed or vacated.
| Mine ID number(1) |
Mine or Operating Name | Section 104 Significant and Substantial Citations (2) |
Section 104(b) Orders (3) |
Section 104(d) Citations and Orders (4) |
Section 110(b)(2) Violations(5) |
Section 107(a) Orders(6) |
Total dollar value of MSHA assessments proposed(7) |
Total number of Mining Related Fatalities |
Received Notice of Pattern of Violations Under Section 104(e) yes/no |
Received Notice of Potential to Have Pattern under section 104(e) yes/no | ||||||||||
| 4102885 | Balcones Plant | 11 | 0 | 0 | 0 | 0 | 51040 | 0 | no | no | ||||||||||
| 4100994 | Balcones Quarry | 2 | 0 | 0 | 0 | 0 | 27,205 | 0 | no | no | ||||||||||
| 0405701 | Black Mountain Quarry | 12 | 0 | 0 | 0 | 0 | 58,462 | 0 | no | no | ||||||||||
| 0800800 | Brooksville Cement Plant | 0 | 0 | 0 | 0 | 0 | 906 | 0 | no | no | ||||||||||
| 0800024 | Brooksville Quarry | 2 | 0 | 0 | 0 | 0 | 1520 | 0 | no | no | ||||||||||
| 0801287 | Brooksville South Cement Plant | 23 | 1 | 2 | 0 | 1 | 353,345 | 0 | no | no | ||||||||||
| 0103539 | Brierfield | 0 | 0 | 0 | 0 | 0 | 693 | 0 | no | no | ||||||||||
| 0402763 | Cache Creek Quarry | 0 | 0 | 0 | 0 | 0 | 3394 | 0 | no | no | ||||||||||
| 0200988 | CEMEX - 19th Ave | 0 | 0 | 0 | 0 | 0 | 286 | 0 | no | no | ||||||||||
| 0200758 | CEMEX - Bullhead | 0 | 0 | 0 | 0 | 0 | 752 | 0 | no | no | ||||||||||
| 0202606 | CEMEX - Camp Verde | 0 | 0 | 0 | 0 | 0 | 429 | 0 | no | no | ||||||||||
| 0200717 | CEMEX - Casa Grande | 0 | 0 | 0 | 0 | 0 | 501 | 0 | no | no | ||||||||||
| 0202896 | CEMEX - Coolidge | 0 | 0 | 0 | 0 | 0 | 429 | 0 | no | no | ||||||||||
| 0201249 | CEMEX - Globe / Bixby | 1 | 0 | 0 | 0 | 0 | 673 | 0 | no | no | ||||||||||
| 0202851 | CEMEX -Gray Mountain | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 2600789 | CEMEX - Paiute Pit | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 0202849 | CEMEX - Prescott / Fain | 1 | 0 | 0 | 0 | 0 | 2936 | 0 | no | no | ||||||||||
| Mine ID number(1) |
Mine or Operating Name | Section 104 Significant and Substantial Citations (2) |
Section 104(b) Orders (3) |
Section 104(d) Citations and Orders (4) |
Section 110(b)(2) Violations(5) |
Section 107(a) Orders(6) |
Total dollar value of MSHA assessments proposed(7) |
Total number of Mining Related Fatalities |
Received Notice of Pattern of Violations Under Section 104(e) yes/ no |
Received Notice of Potential to Have Pattern under section 104(e) yes/no | ||||||||||
| 0202062 | CEMEX - Sierra Vista | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 0202753 | CEMEX - West Valley | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 0800750 | Center Hill Mine | 2 | 0 | 0 | 0 | 0 | 788 | 0 | no | no | ||||||||||
| 0400173 | Clayton Plant | 0 | 0 | 0 | 0 | 0 | 1199 | 0 | no | no | ||||||||||
| 0900053 | Clinchfield Plant | 16 | 0 | 1 | 0 | 0 | 77,374 | 0 | no | no | ||||||||||
| 0801271 | Davenport Sand Mine | 0 | 0 | 0 | 0 | 0 | 857 | 0 | no | no | ||||||||||
| 0100016 | Demopolis Plant Cemex Inc | 20 | 0 | 0 | 0 | 0 | 169,349 | 0 | no | no | ||||||||||
| 0401891 | Eliot Plant | 0 | 0 | 0 | 0 | 0 | 835 | 0 | no | no | ||||||||||
| 0800519 | FEC Quarry | 2 | 0 | 0 | 0 | 0 | 1013 | 0 | no | no | ||||||||||
| 0801035 | Inglis Quarry | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 4000840 | Knoxville Cement Plant | 8 | 0 | 1 | 0 | 0 | 54,604 | 0 | no | no | ||||||||||
| 0801015 | Krome Quarry | 0 | 0 | 0 | 0 | 0 | 143 | 0 | no | no | ||||||||||
| 0402843 | Lapis Plant | 0 | 0 | 0 | 0 | 0 | 2830 | 0 | no | no | ||||||||||
| 0500344 | Lyons Cement Plant Cemex Inc | 3 | 0 | 0 | 0 | 0 | 61,011 | 0 | no | no | ||||||||||
| 0800046 | Miami Cement Plant | 29 | 0 | 0 | 0 | 0 | 121,808 | 0 | no | no | ||||||||||
| 0404140 | Moorpark Quarry | 4 | 0 | 0 | 0 | 0 | 2191 | 0 | no | no | ||||||||||
| 0400281 | Victorville Cement Plant | 12 | 0 | 0 | 0 | 0 | 17,359 | 0 | no | no | ||||||||||
| (1) | The definition of a mine under section 3 of the Mine Act includes the mine, as well as other items used in, or to be used in, or resulting from, the work of extracting minerals, such as land, structures, facilities, equipment, machines, and tools. MSHA assigns an identification number to each mine or operation and may or may not assign a separate identification number to related facilities. The information provided in this table is presented by mine identification number. |
| (2) | Represents the total number of citations issued by MSHA for violation of health or safety standards that could significantly and substantially contribute to a serious injury if left unabated. It should be noted that for purposes of this table, S&S citations that are included in another column, such as Section 104(b) citations, are not also included as Section 104 S&S citations in this column. |
| (3) | Represents the total number of orders issued, which represents a failure to abate a citation under section 104(a) within the period prescribed by MSHA. This results in an order of immediate withdrawal from the area of the mine affected by the condition until MSHA determines that the violation has been abated. |
| (4) | Represents the total number of citation and orders issued by MSHA for unwarrantable failure to comply with mandatory health or safety standards. |
| (5) | Represents the total number of flagrant violations identified. |
| (6) | Represents the total number of imminent danger orders issued under section 107(a) of the Mine Act. |
| (7) | Amounts represent the total dollar value of proposed assessments received from MSHA on the MDRS and do |
| not necessarily relate to the citations or orders issued by MSHA during the period or to the pending or resolved legal actions reported below. Specific orders or citations may not have had proposed assessments on the MDRS as of the date identified above, and as a result, those citations or orders not yet assessed are not included in this column. |
The table below sets forth the total number of reportable legal actions for the twelve months ended December 31, 2023.
| Mine ID Number |
Mine or Operating Name |
Legal Actions Pending as of Last Day of Period (#)(8) |
Legal (#) |
Legal Actions Resolved During Period (#) | ||||||||||||||
|
Contests of Citations / Orders (9) |
Contests of Proposed Penalties (9) |
Complaints Compensation |
Complaints of Discharge / Discrimination / Interference |
Application for Temporary Relief |
Appeals to FMSHRC | |||||||||||||
| 4100994 | Balcones Quarry | 7 | 7 | 0 | 0 | 0 | 0 | 7 | 0 | |||||||||
| 0103539 | Brierfield | 0 | 0 | 0 | 0 | 0 | 0 | 1 | 1 | |||||||||
| 0801287 | Brooksville South Cement Plant | 61 | 61 | 0 | 1 | 0 | 0 | 61 | 62 | |||||||||
| 0800024 | Brooksville Quarry | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 | |||||||||
| 4104827 | Chico Quarry | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 7 | |||||||||
| 4000840 | Knoxville Cement Plant | 2 | 2 | 0 | 0 | 0 | 0 | 2 | 0 | |||||||||
| 0800046 | Miami Cement Plant | 0 | 0 | 0 | 0 | 0 | 0 | 3 | 3 | |||||||||
| (8) | Pending legal actions before the Federal Mine Safety and Health Review Commission (the “Commission”) as required to be reported by Section 1503(a)(3) of the Dodd-Frank Act. This data represents legal action activity as derived from the MDRS on the date identified above |
The following provides additional information regarding the types or categories of proceedings that may be brought before the Commission.
| A | Contest Proceedings - a contest proceeding may be filed with the Commission by an operator to challenge the issuance of a citation or order issued by MSHA; |
| B | Civil Penalty Proceedings - a civil penalty proceeding may be filed with the Commission by an operator to challenge a civil penalty MSHA has proposed for a violation contained in a citation or order; |
| C | Compensation Proceedings - a compensation proceeding may be filed with the Commission by miners entitled to compensation when a mine is closed by certain closure orders issued by MSHA. The purpose of the proceeding is to determine the amount of compensation if any, due to miners idled by the orders; |
| D (i) | Discrimination Proceedings – a discrimination proceeding involves a miner’s allegation that he or she has suffered adverse employment action because he or she engaged in activity protected under the Mine Act, such as making a safety complaint; |
| (ii) | Temporary Reinstatement Proceedings – a temporary reinstatement proceeding involves a case in which a miner has filed a complaint with MSHA stating that he or she has suffered discrimination and the miner has lost his or her position; |
| E | Applications for Temporary Relief-applications for temporary relief of any order issued under Section 104; and |
| F | Appeals of judges’ decisions or orders to the FMSHRC. |
| (9) | Contests pending as of year-end on the MDRS, but which are subsequently vacated, are not included in any reports on the MDRS. Citations that are final and then reopened are also not included in reports on the MDRS. As a result, discrepancies may appear between the prior reporting year’s “Legal Actions Pending as of Last Day of Period” and “Legal Actions Resolved During Year” for current reporting period. |
Exhibit 97
Global Policy effective as of November 1, 2023
© 2023. Cemex, S.A.B. de C.V. All rights reserved.
INDEX
| 1. POLICY STATEMENT |
1 | |||||
| 2. POLICY INTERPRETATION, ENFORCEMENT AND ADMINISTRATION |
1 | |||||
| 3. GENERAL PROVISIONS |
1 | |||||
| 3.1. | DEFINITIONS | 1 | ||||
| 3.2. | RECOUPMENT OF ERRONEAOUSLY AWARDED COMPENSATION | 5 | ||||
| 3.3. | MEANS OF REPAYMENT | 5 | ||||
| 3.4. | CALCULATION AND RECOVERY OF RECOVERABLE AMOUNT | 6 | ||||
| 3.5. | NO INDEMNIFICATION | 7 | ||||
| 3.6. | AMENDMENTS | 7 | ||||
| 3.7. | NON-COMPLIANCE PROCESS AND REPORTING | 7 | ||||
| 3.8. | NO RETALIATION | 8 | ||||
| 3.9. | TRAININGS AND AUDITS | 8 | ||||
1. POLICY STATEMENT
This Policy provides guidance to ensure that Covered Compensation paid by the Cemex Group is based upon accurate financial data. This Policy is applicable to the Cemex Group and Employees regardless of where they reside or conduct business. Compliance with this Policy is mandatory for all Employees. Additionally, this Policy is adopted in accordance with Section 303A.14 of the New York Stock Exchange Listed Company Manual, Section 10D and Rule 10D-1 of the Securities Exchange Act of 1934, as amended.
The Cemex Group and its Executive Officers must comply with this Policy in a manner that is consistent with the exercise of their fiduciary duty to safeguard the Cemex Group’s assets, including the time value of any potentially recoverable compensation.
2. POLICY INTERPRETATION, ENFORCEMENT AND ADMINISTRATION
This Policy was reviewed and recommended by the Corporate Practices and Finance Committee and approved by the Cemex Board of Directors.
The Cemex Global Legal and Organization & Human Resources Departments are responsible for the interpretation, administration, and enforcement of this Policy, as required. The Board of Directors and the Corporate Practices and Finance Committee, may, at their discretion, delegate the recoupment preparations, calculations, and processes’ responsibilities under this Policy to the Cemex Corporate Legal Compliance Department and the Cemex Organization & Human Resources Department. The Cemex Global Legal Department and Cemex Organization & Human Resources Department may request any necessary support from other areas of the Cemex Group in order to administer, implement and oversee this Policy. This Policy should be observed in strict compliance with any applicable General Framework. However, if any provisions of this Policy are determined to be unenforceable, invalid under or in conflict with any applicable law, those provisions will be applied to the maximum extent allowed and will be modified to align with their intended goals, as necessary to comply with any legal limitations.
When in doubt as to the content or application of this Policy, or when there is a conflict with any applicable local laws, regulations and rules of any Cemex’s Business Unit, any Employees who have any responsibility pursuant to this Policy have the obligation to contact the Cemex Global Legal Department and the Cemex Organization & Human Resources Department for guidance.
The Cemex Group’s rights to pursue any forfeiture or reimbursement as established in this Policy are not a substitute for any other recoupment rights, remedies, or rights, apart from recoupment, that the Cemex Group may have under the provisions of any law, government regulation, stock exchange listing requirement, or any other policy, employment agreement, equity award agreement, or any other plan or agreement of the Cemex Group.
3. GENERAL PROVISIONS
3.1. DEFINITIONS
| ∎ | “Affiliate” means, with respect to any corporation, limited liability company, trust, joint venture, association, company, partnership, or other entity, another corporation, limited liability company, trust, joint venture, association, company, partnership, or other entity that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with |
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| the corporation, limited liability company, trust, joint venture, association, company, partnership, or other entity specified. |
| ∎ | “Audit Committee” means Cemex, S.A.B. de C.V.’s Board of Directors’ Audit Committee, or such other committee as the Board of Directors may, from time to time, appoint to undertake such functions. |
| ∎ | “Big R Restatement” means restatements where there is a correction in an error in previously issued financial statements that is material to the previously issued financial statements. |
| ∎ | “Business Unit” means any area within the Cemex Group with personnel, resources, or assets. The term “Business Unit” also includes countries, regions, departments, divisions, functional areas (including global initiatives within the Cemex Group), companies or specific facilities (ready-mix plants, quarries, etc.) and their Presidents, Executive Vice-presidents, Vice-presidents, Directors, or Business Unit Leaders (or equivalent positions). |
| ∎ | “Business Unit Leader” means the head of any Business Unit. |
| ∎ | “Board of Directors” means Cemex, S.A.B. de C.V.’s Board of Directors. |
| ∎ | “Cemex” means Cemex, S.A.B. de C.V. |
| ∎ | “Cemex Corporate Legal Compliance Department” means the Cemex Corporate Legal Compliance Department of Cemex’s Global Legal Department or any other department which may in the future exercise similar functions in relation to the matters covered herein. |
| ∎ | “Cemex Global Legal Department” means the Cemex Global Legal Department or any other department which may in the future exercise similar functions in relation to the matters covered herein. |
| ∎ | “Cemex Group” means Cemex and its Affiliates. |
| ∎ | “Cemex Local Legal Department” means any Cemex Local Legal Department that supervises a specific country, region or Business Unit or any other local department which may in the future exercise similar functions in relation to the matters covered herein. For Business Units that have a Cemex Local Legal Department, it is the Cemex Local Legal Department who will perform the functions established in this Policy and not the corresponding Cemex Regional Legal Department. |
| ∎ | “Cemex Internal Audit Department” means the Cemex Corporate Process Assessment Department or any other department within the Cemex Group which may in the future exercise similar functions in relation to the matters covered herein. |
| ∎ | “Cemex Internal Control Department” means the Cemex Internal Control Department or any other department within the Cemex Group which may in the future exercise similar functions in relation to the matters covered herein. |
| ∎ | “Cemex Organization & Human Resources Department” means the Cemex Organization & Human Resources Department or any other department within the Cemex Group which may in the future exercise similar human resources functions in relation to the matters covered herein. |
| ∎ | “Cemex Regional Legal Department” means any Cemex Regional Legal Department that supervises a specific region or any other regional department which may in the future exercise similar functions in relation to the matters covered herein. For Business Units that do not have a |
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| Cemex Local Legal Department, it is the Cemex Regional Legal Department who will perform the functions established in this Policy. |
| ∎ | “Cemex Senior Vice-President of Legal” means the senior vice-president of legal of the Cemex Group or any equivalent position within the Cemex Group which may in the future exercise similar functions in relation to the matters contained herein. |
| ∎ | “Code” means the US Internal Revenue Code of 1986, as amended. |
| ∎ | “Corporate Practices and Finance Committee” means Cemex, S.A.B. de C.V.’s Board of Directors’ Corporate Practices and Finance Committee, or such other committee as the Board of Directors may, from time to time, appoint to oversee the application of Cemex’s executive compensation policies. |
| ∎ | “Covered Compensation” means any Incentive-Based Compensation granted, vested or paid to a person who served as an Executive Officer at any time during the performance period for the Incentive-Based Compensation and that was received: (i) after beginning service as an Executive Officer; (ii) by someone who served as an Executive Officer at any time during the performance period for that Incentive-Based Compensation; (iii) while Cemex had a class of securities listed on a U.S. national securities exchange; and (iv) during the three completed fiscal years immediately preceding the date that Cemex is required to prepare an accounting restatement. In addition to these last three completed fiscal years, the Policy must apply to, if any, the transition period that results from a change in the Cemex’s fiscal year within or immediately following those three completed fiscal years. A transition period between the last day of Cemex’s previous fiscal year end and the first day of its new fiscal year that comprises a period of nine to 12 months would be deemed a completed fiscal year. |
| ∎ | “Employees” means the individuals who occupy and/or occupied during the Lookback Period a position in or are directly or indirectly employed by any company of the Cemex Group. |
| ∎ | “Erroneously Awarded Compensation” means the amount of Covered Compensation received during the fiscal period when the applicable Financial Reporting Measures relating to such Covered Compensation was attained that exceeds the amount of Covered Compensation that otherwise would have been received by the Executive Officer had such amount been determined based on the applicable Restatement, computed without regard to any taxes paid. |
| ∎ | “Exchange” means the New York Stock Exchange or any other national securities exchange (as defined in the 15 U.S. Code § 78f) on which Cemex’s securities may be listed. |
| ∎ | “Executive Officer” means (i) Cemex’s president of the Board of Directors (only when Cemex’s president of the Board of Directors is an executive-president of the Board of Directors), Cemex’s chief executive officer, Cemex’s principal financial officer, Cemex’s principal accounting officer (or if there is no such accounting officer, Cemex’s main controller); (ii) any Cemex Employee identified as part of the Cemex Group’s senior management in its annual report filed with securities authorities in Mexico and/or in the United States of America; (iii) any other officer of the Cemex Group who performs a policy-making function as determined by the Cemex Corporate Legal Compliance Department; or (iv) any other person who performs similar policy-making functions for the Cemex Group as determined by the Cemex Corporate Legal Compliance Department. |
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| ∎ | “Executive Vice President of Digital and Organization Development” means the executive vice president of digital and organizational development of the Cemex Group or any equivalent position within the Cemex Group which may in the future exercise similar functions in relation to the matters contained herein. |
| ∎ | “Financial Reporting Measures” means any measure that is a) determined and presented in accordance with the accounting principles used in preparing Cemex’s financial statements, and any measures that are derived wholly or in part from such measures, b) stock price, and c) total shareholder return. A financial reporting measure does not need to be presented within the financial statements or included in a filing with the U.S. Securities and Exchange Commission or any other securities commission in which Cemex has any security registered. |
| ∎ | “General Framework” means (i) the terms and conditions set forth in this Policy; (ii) applicable local laws and regulations to which each Employee and Business Unit is subject to; (iii) charter documents (i.e., by-laws, articles of incorporation, etc.) of the pertinent entity of the Cemex Group; and (iv) other applicable Cemex Group internal policies. |
| ∎ | “Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial or non-financial reporting measure. |
| ∎ | “Little R Restatement” means restatements where there is a correction to an error in previously issued financial statements that is not material to the previously issued financial statements but would result in a material misstatement if the error was corrected in the current period or left uncorrected in the current period. |
| ∎ | “Lookback Period” means the three completed fiscal years immediately preceding the date on which Cemex is required to prepare a Restatement for a given reporting period, with such date being the earlier of a) the date the Board of Directors, Audit Committee, or any Employee authorized to take such action if the Board of Directors’ action is not required, concludes, or it reasonably should have concluded, that Cemex is required to prepare a Restatement, or (b) the date a court, regulator or other legally authorized body directs Cemex to prepare a Restatement. Recovery of any Erroneously Awarded Compensation under the Policy is not dependent on if or when the Restatement is filed. |
| ∎ | “Our Code” means Cemex’s Code of Ethics and Business Conduct, as may from time to time be changed, amended, restated, supplemented and/or replaced. |
| ∎ | “Policy” means this clawback policy as may from time to time be changed, amended, restated, supplemented and/or replaced. |
| ∎ | “Received” wherein Covered Compensation is deemed received in Cemex’s fiscal period during which the financial reporting measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Covered Compensation occurs after the end of that period. |
| ∎ | “Restatement” means a required accounting restatement of any Cemex financial statement due to the material noncompliance of Cemex with any financial reporting requirement, including any such requirement under securities laws, including Big R Restatements or Little R Restatements. |
| ∎ | “Underlying Shares” means the shares representing the exercised equity award. |
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3.2. RECOUPMENT OF ERRONEAOUSLY AWARDED COMPENSATION
If a Restatement occurs, any Erroneously Awarded Compensation received during the Lookback Period prior to the Restatement will be handled as follows:
| a. | Outstanding but unpaid Erroneously Awarded Compensation will be automatically and immediately forfeited. |
| b. | Erroneously Awarded Compensation that has already been paid to an Executive Officer will be promptly repaid to the Cemex Group in accordance with Section 3.3 of this Policy. |
The Board of Directors, considering the recommendation of the Corporate Practices and Finance Committee, is required to resolve the forfeiture and/or repayment of such Erroneously Awarded Compensation in accordance with Section 3.3 of this Policy. The Corporate Practices and Finance Committee shall be responsible for executing the decision made by the Board of Directors. Notwithstanding the above, the Board of Directors, also following the recommendation of the Corporate Practices and Finance Committee, is only permitted to waive such requirement for the Erroneously Awarded Compensation within the following circumstances:
| ∎ | Expense of enforcement. The direct expenses incurred in engaging a third party to assist in enforcing the Policy would exceed the amount to be recovered. Prior to concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement, the Cemex Group’s corresponding company(ies) must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, and provide such documentation to the Exchange or any other authority to which Cemex may have the obligation to deliver such documentation in order to comply with this Policy. |
| ∎ | Home country law violations. Pursuing the recovery would violate the corresponding Cemex Group’s company home country laws that were adopted prior to November 28, 2022. Prior to concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country laws, Cemex must obtain an opinion of home country legal counsel, acceptable to the Exchange or any other authority to which Cemex may have the obligation to deliver such documentation in order to comply with this Policy, that recovery would result in such a violation, and must provide such opinion to the Exchange or any other authority to which Cemex may have the obligation to deliver such documentation in order to comply with this Policy. |
| ∎ | Tax-qualified retirement plan. Recovery would likely cause a plan otherwise qualified under Section 401(a) of the Code to fail to meet the requirements of Section 401(a)(13) of the Code or Section 411(a) of the Code and the regulations promulgated thereunder. |
Cemex’s obligation to recover Erroneously Awarded Compensation is not dependent on if or when the Restatement is filed.
3.3. MEANS OF REPAYMENT
If the Corporate Practices and Finance Committee determines that an Executive Officer must repay any Erroneously Awarded Compensation, then they should present this matter for the approval of the Board of Directors and if the Board of Directors approves it, the Corporate Practices and Finance Committee (through the President or Secretary of such committee) will send a written notice to that person via email. The Executive Officer is obligated to fulfill the repayment in a manner and according to the terms set by the Corporate Practices and Finance Committee in the written notice. The Cemex
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Group has the right to offset the repayment amount against any outstanding amounts owed to the Executive Officer, demand the forfeiture of any past or future award granted or to be granted by the Cemex Group to the Executive Officer, or take any necessary actions to promptly recoup the repayment amount from the Executive Officer, within the limits permitted by applicable law.
If the Corporate Practices and Finance Committee does not specify a repayment deadline in the aforementioned written notice, the Executive Officer in question must repay the Erroneously Awarded Compensation to the Cemex Group via wire transfer, cash, or cashier’s check or any means as specified in the notice, reasonably promptly after receiving the notice.
The determinations and decisions made by the Board of Directors and the Corporate Practices and Finance Committee in accordance with this Policy will be considered final and obligatory to the Cemex Group and the Executive Officers to whom this Policy applies. Similarly, any determinations made by the Board of Directors and the Corporate Practices and Finance Committee regarding this Policy will be deemed final, conclusive, and binding on all parties involved.
3.4. CALCULATION AND RECOVERY OF RECOVERABLE AMOUNT
Following a Restatement, the Corporate Practices and Finance Committee will recalculate the relevant Financial Reporting Measures and the corresponding Covered Compensation. Cemex will assess whether an Executive Officer or former Executive Officer received a higher amount of Covered Compensation based on the original financial statements compared to what would have been received based on the recalculated Financial Reporting Measures. If the Covered Compensation is partially tied to the achievement of a Financial Reporting Measure, the Corporate Practices and Finance Committee will determine the portion of the original Covered Compensation linked to the restated Financial Reporting Measure and recalculate the affected portion based on the Restatement. The Erroneously Awarded Compensation will be calculated on a pre-tax basis to ensure its full recovery.
|
EQUITY |
Regarding recoverable equity compensation, granted or vested to the Executive Officer based on accounting results during the Lookback Period, the Cemex Group will recover the excess portion of the equity award that would not have been granted or vested based on the Restatement. The recovery process is as follows:
| ∎ | If the equity award is still outstanding, the Executive Officer will forfeit the excess portion of the award. |
| ∎ | If the equity award has been exercised or settled into shares the Underlying Shares and the Executive Officer still holds the Underlying Shares, the Cemex Group will recover the number of Underlying Shares corresponding to the excess portion of the award (minus any exercise price paid for the Underlying Shares). |
| ∎ | If the Executive Officer has sold the Underlying Shares, the Cemex Group will recover the proceeds received by the Executive Officer from the sale of the Underlying Shares relating to the excess portion of the award (minus any exercise price paid for the Underlying Shares). |
|
|
STOCK PRICE OR TOTAL SHAREHOLDER RETURN |
For Covered Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the
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information in the Restatement, the Corporate Practices and Finance Committee will determine the amount of such Covered Compensation that constitutes Erroneously Awarded Compensation, if any, based on a reasonable estimate of the effect of the Restatement on the stock price or total shareholder return upon which the Covered Compensation was received and the Corporate Practices and Finance Committee shall maintain documentation of such determination and provide such documentation to the Exchange or any other authority to which Cemex may have the obligation to deliver such documentation in order to comply with this Policy.
3.5. NO INDEMNIFICATION
No former or current Executive Officer shall be indemnified, insured, or reimbursed by the Cemex Group with respect to any loss of Received Covered Compensation deemed as Erroneously Awarded Compensation in accordance with this Policy.
Under no circumstances is the Cemex Group obligated to award Executive Officers with an additional payment if the restated or accurate financial results would have led to a higher incentive compensation payment.
3.6. AMENDMENTS
Cemex’s Board of Directors delegates the authority to amend and update this Policy to the Cemex Senior Vice President of Legal and the Executive Vice President of Digital and Organization Development, only when such amendment or update is required to clarify any interpretations of this Policy, reflect changes in the process and methodology to comply with this Policy, and to incorporate any updates required by changes in applicable laws or regulations, provided that any such amendment or update is not contrary to the current terms of this Policy.
3.7. NON-COMPLIANCE PROCESS AND REPORTING
Strict compliance with this Policy is expected and required from all Employees and Business Units. Any violation of this Policy may result in disciplinary action including but not limited to employment suspension or termination, as well as any other sanctions set forth and applicable pursuant to the General Framework.
Employees have a duty to report, through any of the official reporting channels set out in Our Code, if they have knowledge of or suspect that a misconduct has occurred, is occurring or will occur, with regards to this Policy.
The Cemex Group encourages all Employees to report, in good faith, any potential violation regarding this Policy or applicable laws through any internal or external channels (i.e. corresponding authorities). The official internal channels for reporting any actual or suspected breaches to this Policy are the following:
| • | ETHOSline, via online, phone, or e-mail; |
| • | Cemex Internal Audit Department; |
| • | Any Cemex Local ETHOS Committee, via phone, e-mail or in person; |
| • | The corresponding Cemex Regional Legal Department or Cemex Local Legal Department; and/or |
| • | Cemex Corporate Legal Compliance Department. |
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Subject to the applicable General Framework, complaints should be kept strictly confidential.
3.8. NO RETALIATION
The Cemex Group strictly prohibits retaliation or any form of discrimination against any individual who reports in good faith any possible non-compliance with this Policy or applicable laws. Such retaliation would be grounds for discipline, including potential termination of employment. No Employee shall be directly or indirectly terminated, demoted, suspended, threatened, blacklisted, harassed, or in any other manner discriminated in the terms and conditions of employment or post-employment solely because they reported in good faith an actual or suspected violation of this Policy or applicable laws.
Additionally, the Cemex Group shall not undertake adverse action against any party that could be viewed as retaliatory, including but not limited to, the non-renewal or early termination of a contract, placing said third party in blacklists or damaging their reputation.
3.9. TRAININGS AND AUDITS
If and when required by the Cemex Corporate Legal Compliance Department, Employees could be required to attend necessary trainings regarding this Policy. Employees that receive training on this Policy can be asked to provide written confirmation that they have received the corresponding training. The Employees that require any training shall be identified by the Cemex Corporate Legal Compliance Department, at their discretion.
Additionally, the Cemex Corporate Legal Compliance Department has the authority to carry out audits to evaluate compliance with this Policy. The Cemex Corporate Legal Compliance Department shall also have full authority, oversight and supervision over, and discretion to audit the Cemex Regional Legal Departments and the Cemex Local Legal Departments with regards to compliance with this Policy. Such auditing discretion shall also be applicable to the corporate Cemex Internal Audit Department and Cemex Internal Control Department. Any refusal to cooperate with such audits may result in disciplinary action including but not limited to employment suspension or termination, as well as any other sanctions set forth and applicable pursuant to the General Framework.
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