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 The Unifund Group has agreed to sell to Cemex S.A. its option to purchase the shares of La Auxiliar de la Construccion/SANSON (the SANSON Group of companies/SANSON) from La Corporacion Industrial y Financiera Banesto (La Corporacion). Cemex announced earlier this month that it has completed the purchase of Compania Valenciana de Cementos Portland, S.A. (Valenciana).
 This action follows the agreement on June 29 in which APAX, a subsidiary of Unifund, signed a put call option exercisable between July 10 until Aug. 31, 1992, that gave it the right to purchase all of the shares owned by La Corporacion in SANSON at a price of Ptas. 20,012 per share (U.S.$206 per share). Through this purchase Cemex assumes all the rights and obligations of this agreement.
 With the purchase of APAX's Option, Cemex will acquire La Corporaccion's 62.23 percent stake in SANSON in addition to all the shares purchased under a tender offer which La Corporaccion is undertaking for all the outstanding shares held by minority investors, which account for 29.77 percent of the capital of SANSON. SANSON has 8 percent of treasury shares that will not be tendered and will not be purchased by Cemex. If 100 percent of the public minority-held shares are tendered, the total cash price for the equity of SANSON will be U.S.$600 million. SANSON owns two cement companies in which there are minority private investors. The implied corporate value amounts to U.S.$936 million, which is comprised of U.S.$600 million to be paid by Cemex for SANSON as well as U.S.$194 million of net debt assumed and U.S.$142 million of minority interests in SANSON's subsidiaries that will remain outstanding. Completion of the purchase is subject to the final approvals of the Spanish authorities.
 Value of Transaction
 SANSON consists of four companies: La Auxiliar de la Construccion (SANSON), Portland Iberia, Portland Morata, and Cementos de las Islas. These companies are linked through cross ownerships and have been managed as a group by a central management team since April 1990. For reporting purposes, the SANSON Cement Group does not consolidate its financial statements however, in order to present relevant financial information on the total group, Cemex has consolidated these figures on a proforma basis:
 (In millions) PSTAS U.S.$(A)
 Sales 48,096 461
 EBIT (Earnings before interest & taxes) 10,273 103
 EBITD (plus depreciation) 12,648 126
 Net income 9,335 93
 Net total borrowed funds(B) 1,700 17
 Total assets 96,123 961
 Net worth 78,485 785
 Volume sold (MM tons) 4.1 4.1
 Productive capacity (MM tons)(C) 4.6 4.6
 (A) 1991 exchange rate, Ptas. to dollars.
 (B) Deducting excess cash; as of June 1992 net debt has increased to Ptas. 18,832 million.
 (C) Including adjusted ready-mix cement sales.
 The total transaction value(A) for SANSON (defined as the total cash purchase price, plus the value of the minority shareholdings, plus net total borrowed funds, minus the estimated value of non-cement assets) translated into multiples of:
 (A) Calculated at an exchange rate of 97 Ptas./$
 Value/EBIT 8.2
 Value/EBITD 6.7
 Value/Sales 1.8
 Value/Ton capacity 185
 Value/Ton sold 178
 This compares with multiples calculated on the same basis for Valenciana of:
 Value/EBIT 10.9
 Value/EBITD 8.3
 Value/Sales 2.2
 Value/Ton capacity 176
 Value/Ton sold 225
 The U.S.$600 million purchase price of SANSON has been initially funded by a bridge loan from J.P. Morgan. The bridge will be refinanced through a U.S.$200 million contribution from Cemex; a private equity placement of APAX of U.S.$90 million; the issuance of long-term debt and equity securities in Spanish and international markets; and the sale of SANSON's non-cement assets (approximately U.S.$100 million).
 The aggregate proforma financial results of SANSON and Valenciana show that, once consolidated, the companies will have approximately U.S.$1.1 billion of sales; earnings before interest, taxes, and depreciation of U.S.$302 million; net debt of U.S.$530 million; assets of U.S.$2.3 billion; productive capacity of 12.4 million tons (including ready-mix); and total sales (including adjusted ready-mix sales) of 10.9 million tons.
 Financial impact of acquisitions on Cemex
 Cemex forecasts EPS for 1993 post-acquisitions to be 8 percent higher than its EPS expectations before these transactions were undertaken. Total debt to capitalization is expected to decline to 37 percent at the end of 1993 due to scheduled debt amortizations, debt reductions from the sale of non-strategic cement assets, and a planned global equity offering of the consolidated Spanish cement group. Times interest earned is forecasted at 2.26 times in 1992 and 2.67 times in 1993. These ratios compare with the 49 percent total debt to total capitalization that Cemex had in 1990 after the acquisition of Tolteca.
 Cemex's projected consolidated 1993 results show sales of U.S.$3.6 billion (vs. the $2.5 billion expected prior to acquisitions), operating profits of U.S.$960 million (vs. $729 million before the purchases), and cashflows after capital expenditures and working capital requirements of U.S.$760 million (vs. $500 million).
 Strategic rationale
 The acquisitions of Valenciana and SANSON represent an excellent business opportunity for Cemex. Cemex will be able to manage operations in Spain effectively given the similarities between it and Mexico; both share a common language, culture, and similar cement industry environment. Other key reasons why Cemex undertook these acquisitions include:
 1. Throughout its 86-year history Cemex has maintained a strong focus on cement and a commitment to re-investing its surplus cash in its business in Mexico (since 1980, Cemex has invested U.S.$2.4 billion in expansion, modernization and acquisitions related to its cement business).
 During the 1990s Cemex intends to continue to re-invest in the Mexican cement sector to maintain its Mexican market share. More specifically, Cemex plans to: a) add new capacity to meet growing domestic demand; 6 million tons of additional capacity are now in construction and will come into stream between 1992 and early 1994; b) strengthen distribution channels; c) enhance production efficiency; and d) expand its ready-mix concrete business.
 Over the next decade -- after planned investments averaging U.S.$400 million per annum to support its Mexican business -- Cemex expects to generate significant excess cash. In order to strengthen its core cement business and to maintain its strong growth, management wanted to seek investment opportunities in attractive markets overseas. Cemex tried to identify markets in which it could purchase companies with significant domestic market share where it could apply its expertise as a leading cement producer to create shareholder value. The acquisitions of Valenciana and SANSON would meet this strategic objective.
 2. Spain is especially attractive for Cemex given the strong Spanish economy compared with the rest of Europe and the country's healthy market for cement.
 Spanish economy
 The outlook for the Spanish economy calls for above average GDP growth in relation to other EEC countries during the 1990s, with economic growth driven primarily by strong private demand and public infrastructure spending.
 Spain has just completed a six-year period of very high economic growth, however, this created rising inflation and a rising external deficit as demand outstripped domestic production.
 To offset these problems, the Spanish government, like Mexico's, has applied tight monetary policies and has focused its efforts on controlling inflation. While this tightening of Spain's fiscal and monetary policy has resulted in a current slowing of economic growth, recent macroeconomic results show that Spain has made significant advances in realigning its economy and can now expect more steady growth in the 1990s. While in 1991, domestic demand grew more slowly than forecasted, overall the economy performed satisfactorily; inflation has slowed, the trade gap narrowed, and interest rates began to decline. In 1992, Spain's economic policy has continued to focus on preparing the country for economic and monetary union within the ECC.
 Between 1992 and 1997, the Spanish economy is forecast to grow faster than the EEC average, and the average for the OECD countries, with real GDP rising between 3.4 percent and 3.6 percent. Substantial government investment in infrastructure is expected to support this strong economic growth.
 Comparative Infrastructure Trends
 West Spain
 Belg. Germany France Italy U.K. Spain Average
 Highways 5.1 3.4 1.2 2.0 1.2 0.5 22 pct.
 km/100 km2
 Roads 413 198 145 98 143 64 36 pct.
 km/100 km2
 Railways 11.7 11.4 8.3 5.4 7.2 2.7 36 pct.
 km 100/aq km
 Telephones 39 49 54 38 51 35 80 pct.
 x 1000 Inhab
 Housing 404 438 448 389 393 398 96 pct.
 x 1000 Inhab
 Spanish Cement Industry
 Spain is Europe's third largest producer and consumer of cement. Total Spanish demand for cement in 1991 was 29 million tonnes, representing approximately 15 percent of total European demand.
 While the repid growth of the Spanish cement market has lsowed over the past two tears, Cemex believes that during the 1990s the market will continue to grow -- though at a slower pace -- based on teh following characteristics:
 A -- Spain will continue to require considerable infrastructure construction to allow its economy to develop to the level of its Northern European peers, for example: the government's General Roads Plan calls for an investment of US$1.5 billion over the next eight years in road expenditures.
 B -- In more developed economies, most cement demad is related to public secotr investment; in spain, like Mexico, private sector, commerical and retail investment are key contributors to contruction spending and consequently to cement demand.
 C -- Strong growth in residential contruction will be driven by pent-up demand as the need for housing caused by the baby boom has not been jully statisfied since 1975 (in Spain -- like Mexico -- housing is primarily built from cement), and because Spain has a 1 percent annual population growth rate.
 Overall, Cemex believes that the Spanish cement market is structurally attractive for several reasons:
 A -- High transportation costs and rugged terrain have resulted in high regional markets;
 B -- Despite imports and slowing consumption, prices have remained attractive in real terms by world standards -- averaging in 1991 real poeseta terms between US$$81 and US$$94 per tonne during the past decade;
 C -- Supply and demand are roughly in balance so that capacity utilzation is high;
 D -- The improt threat for local producers hould decline below the current 2.5 million tonnes p.a., as import terminals in Spain are operating with narrow margins, and some are even losing money;
 E -- Spanish producers are effcient, resulting from investments made during the 1970/1980 downcycle when, in order to offset low export prices and to sustain positive margins in a weak market, they had to invest to reduce costs by converting approximately 70 percent of theri fule consumption from oil to coal or coke. Consequently, having made the investments, profits are now strong with low capital expenditrue requirements, os that today the median operating margin fro the industry is 21 percent, as compared with a median of 14.4 percent for the other large European producers.
 3 The SANSON Group Acquisition
 The SANSON Group is an excellent acquisition for many reasons. SANSON is Spain's second largest cement gorup in terms of sales and is fifth in terms of capacity. SANSON has a strong competitive position in Spain: it is present in some of the ocuntry's most attractive regional markets, with its major assets positioned in the favorable-priced Madrid market and in Aragon, which are both growing inland markets. SANSON also has an important presence in Cataluna and in the Canary Islands. SANSON's market performance is strengthened by its low-cosnt and effcient production capacity and its owned quarries. In addition, SANSON distributes 38 percent of its cement through its won distribution channels. SANSON sold 1.8 million cubic meters of ready-mix concrete in 1991.
 The regions in which SANSON operates enjoy attrative pricing, with average prices of US$90 per tonne in 1991. As a result the group has enjoyed one of the highest levels of operating margins in the industry (averaging 22 percent in 1991) and has generated excellent cash flow levels.
 4 While Valenciana and SANSON were valued independently, though the consolidation of their operations Cemex can achieve significant synergies:
 -- SANSON and Valenciana operate and are market leaders throughout a nbumber of regions of Spain with very little overlap. The combined group;s presence in markets throughout Spain should mitigate the impact of regional cyclicality and also places the gourp in closer proximity to customers throughout Spain, thereby reducing transportation costs.
 -- Since the early 1970s Cemex has achieved a large portion of its grouth through acquisitions in Mexico. As such, its management has gained significant expertise in repidly intergrating and consolidating operations. In Spain, Cemex plans to realize significant benefits by quickly rationalizing and integrating the production, distribution and purchasing operations of SANSON and Valenciana.
 -- Cemex has developed an advanced computer-driven distribution system to take advantager of its presence through Mexico. To optimize production of the 12 plants in Spain, Cemex plans to implement this syste, enabling it to shift produciton throughout the network of plants and terminals, to areas of high density and price, without exceeding the 200 mile limitation on cost-effective distribution. This system will allow Cemex to increase opeerational capacity of the combined entity; for example, SANSON's current capapcity utilization is close to 100 percent versus Valenciana's 75 percent capacity utilization.
 -- the combined operations will make Cemex a leading producter of ready-mix in Spain. While Spain is primarily a bagged market with only 30 percent of distribution occuring through ready-mix (as opposed to a European average of 50 percent), increasing labor costs and more developed markets portend a significant growth in the improtance of this wector over the next decade. Cemex plans to use its expertise in ready- mix gained over the past years in Mexico, where it accounts for 72 percent of the market, to implement a rationalization of the plant systems in Spain and a plan to significantly reduce production costs.
 -- Valenciana possesses leading-edge technology in the utilization of waste fuels to run its plants and in using coke to produce white cement. Cemex will be able to lower its cosnts in Mexico by applying these two technologies to its Mexican plants.
 -- Cemex already owns two important terminals in the Valenciana area, which can result in savings when linked with Valenciana terminals.
 -- SANSON currently buys 700,000 tonnes of clinker from other producers in Spain. Valenciana's excess capacity will allow it to supply SANSON.
 -- The combined SANSON/Valenciana business would be the largest cement producer in Spain and would reunite two companies that were at one time together.
 Company Descriptions
 Cemex, based in Monterrey, Mexico was founded 86 years ago. The Cemex group which is the leading cement producer in Mexico, and the fourth largest cement maker in the world, is primarily engaged in the production, distribution, marketing and sale of cement and ready-mix concreate.
 Cetain summary consolidate 1990 and 1991 financial information for Cemex (stand alone) is set forth below:
 (in millions) 1991 1990
 Net revenues 1,706 1,305
 Operating profits 420 199
 Net income 442 148
 Total assets 3,848 3,437
 Market capitalization 4,681 1,136
 Using trading P/E multiples based on July 17, 1992 prices over 1991 reported earnings, Cemex compares favorably with major European and global cement companies:
 Lafarge Heidelberger Holderbank Ciments Cemex
(times) 11.8 19.9 8.0 18.5 8.3

 On July 15, 1992 the GATT Panel issured a report concluding that the imposition of the anti-dumping order on cement from Mexico was inconsistent with GATT and recommended that the U.S. revoke the order, and reimburse all the duties collected.
 Valenciana is Spain's largest cement gorup in terms of capacity and sales. The Valenciana group of companies is Cemetos del Mar, Cementos Atlantico, and Valenciana de Cementos. The group operates primarily in the Valenciana (Levante), Cataluna, Andalucia, and Mallorca regions. Valenciana is the world's largest producer of white cement at 0.45 million tonnes. Valenciana also has 110 ready-mix concrete plants with a total production capacity of 4.5 million cubic meters per annum. Appromixmately 80 percent of the volume sold by Valenciana (cement and ready-mix) is sold in the Andalucia and Valenciana regions where average sales prices are approximatley US$85 per tonne.
 1991 Pro-Forma
 Cement Operations
 (US$millions) Ptas. US$
 Sales 63,075 630
 EBIT 12,624 126
 EBITD 16,658 167
 Total assets 75,410 754
 Volume sold 6.2 N.M.
 Productive capacity(A) 7.8 N.M
 Net total borrowed funds(B) 32,909 329
 (A) including adjusted ready-mix cement sales
 (B) deducting excess cash
 Valenciana owns significant non-cement assets, that were independently valued at US$200 million after-tax in the calculation of Cemex's purchase price. These assets are mainly in the real estate, transportation, and farming secots. It also owns real estate and has a significant aret colleciton. The market value of assest

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Date:Jul 20, 1992

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