UPDATE 3-Mexico's Cemex shares rise on news of debt plan

* Cemex stock closes higher as bank deal nears

* Some analysts wary that shares are overvalued (Recasts; adds company comments, closing stock prices)

By Gabriela Lopez

MONTERREY, Mexico, July 1 (Reuters) - Mexican cement maker Cemex looks close to refinancing $14.5 billion in bank debt and avoiding default but still faces slumping sales and may need to issue more shares to keep operating.

Investors are betting Cemex will succeed in convincing banks to give it a three-year extension until February 2014 to repay its bank loans, sending its shares higher on Wednesday.

Shares in the world's number three cement maker (CMXCPO.MX) closed up 2.11 percent to 12.63 pesos, while its shares on Wall Street (CX.N) added 2.89 percent to $9.61.

"Cemex has won approval of the main proposals of its refinancing plan with creditors who make up 66 percent of its bank debt," brokerage IXE said in a report, citing sources close to the negotiations in New York and Madrid this week.

Monterrey-based Cemex, which has seen its sales of cement and building materials collapse following the U.S. housing slump and the global financial crisis, has $18.8 billion in debt and faces $16 billion debt payments by the end of 2011.

Some of the banks with which Cemex is negotiating include: New York-based Citigroup (C.N); Spain's BBVA (BBVA.MC) and Santander (SBP.N); Europe's top bank, HSBC (HSBA.L); and Britain's Royal Bank of Scotland (RBS.L).

"A definitive agreement will be formalized within the next weeks," wrote Francisco Suarez, head of analysis at Actinver brokerage in Mexico City, in a note to clients.

Traders and analysts said Cemex was likely to reach a deal with banks similar to an agreement in June by HeidelbergCement (HEIG.DE), which won a $12 billion lifeline from banks.

Cemex has already won more time on debt payments that were due in March and the company said it was also considering a share offering as one way to help finance its debt repayments.

"We will likely have to issue equity as a financing source; our ability to raise equity capital may be limited," Cemex said in a filing on 2008 results to the U.S. Securities and Exchange Commission this week, adding that the move could be dilutive to shareholders.

CAUTION

But other analysts including Deutsche Bank and Credit Suisse were wary about being too triumphant, while the company says its auditors were also worried.

"Our independent auditors have expressed substantial doubt about our ability to continue as a going concern," Cemex said in its filing, although a spokesman said the company was required to cite all risks to shareholders.