Fitch Places CEMEX & Rinker on Rating Watch Negative Following Takeover Bid.

NEW YORK -- Fitch Ratings has placed Cemex's 'BBB' foreign currency and local currency Issuer Default Ratings (IDR), the 'AA+(mex)' national long term, and the 'F1+(mex)' national short-term ratings of CEMEX, S.A.B. de C.V. (CEMEX), as well as the 'BBB' long term IDR of CEMEX's wholly owned subsidiary CEMEX Espana S.A., on Rating Watch Negative following the announcement that CEMEX intends to make a tender offer to acquire all of the outstanding shares of Australia-based Rinker Group Limited (Rinker) for US$12.8 billion in cash and the assumption of debt. Fitch has also placed Rinker's long-term IDR of 'A-' and short-term 'F2' rating, as well as the issue rating of 'A-' on its U.S. subsidiary Rinker Materials Corporation's US$150 million senior unsecured notes due 2025, on Rating Watch Negative.

The acquisition as contemplated is expected to be entirely debt-financed and would result in significant leverage and the deterioration of credit fundamentals for both companies. CEMEX intends to fund its bid offer with committed bank credit facilities. On a pro forma basis, the transaction would increase CEMEX's gross debt to approximately US$20.9 billion from US$8.1 billion at Sept. 30, 2006. Proforma leverage as measured by total debt/EBITDA is expected to reach approximately 3.8 times (x) and 3.6x on a net debt basis, well outside CEMEX's current financial target of 2.7x net debt/EBITDA or less. At Sept. 30, 2006, CEMEX had total debt of US$8.1 billion and estimated 2006 EBITDA of US$4.1 million. At June 30, 2006, Rinker had outstanding debt of approximately US$0.8 billion, cash of US$0.6 billion and LTM EBITDA of approximately US$1.4billion. Cost savings are expected to be relatively limited.

Positively, the transaction will improve the combined entities' operating profiles and provide geographic revenue diversification to existing operations. The resulting entity would earn approximately 40% of EBITDA from the U.S., 25% from Mexico, 20% from Europe and the reminder from various other countries. EBITDA from investment-grade countries should reach approximately 90%. Rinker currently generates approximately 85% of its EBITDA from the US, with the remainder primarily coming from Australia. The acquisition would allow CEMEX to increase its presence in the United States and access the new market of Australia. The transaction will also significantly enhance the combined company's position as an integrated cement player as it will become the world's largest producer of aggregates and ready-mix and the world's third-largest producer of cement.

The transaction is subject to customary closing conditions, including the acquisition of more than 90 percent of Rinker's shares, Australian and U.S. regulatory approval and approval by the companies' shareholders. Fitch will monitor developments and expects to resolve the Rating Watch by closing of the transaction.

CEMEX is the third-largest cement producer in the world based on production capacity of approximately 97 million metric tons in more than 50 countries. During 2005, CEMEX's revenues and EBITDA reached US$15.3 billion and US$3.6 billion, respectively. Rinker is one of the world's top 10 heavy building materials groups, with operations in aggregates, cement, concrete, asphalt and concrete pipe and products. During fiscal year ending March 2006, Rinker's revenues and EBITDA reached US$5.1 billion and US$1.4 billion, respectively. The combined company would become one of the world's largest building-materials companies, with pro forma revenues of US$23.2 billion and EBITDA of US$5.5 billion.

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