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INTERVIEW-Italy's Cementir to launch bond, still hungry for M&A deals

ROME/MILAN, Oct 27 (Reuters) - Italy’s Cementir Holding will launch its first ever bond next year as the cement maker takes advantage of record-low interest rates to fund two recent acquisitions, its chief executive said, adding he was still interested in more deals.

Italy’s third-largest cement maker has just refinanced around 700 million euros ($765 million) in loans with a consortium of banks and is working with Intesa Sanpaolo, Mediobanca and BNP Paribas to launch the bond.

“We will issue a 300-400 million euro note with a maturity of 5 or 7 years in the first half of next year to lengthen the duration of the debt,” CEO and Chairman Francesco Caltagirone jr told Reuters in an interview.

The company can also launch a share sale of up to 300 million euros already approved by its shareholders.

“With interest rates so low a bond is better than a capital hike so we will likely stay put on the cash call for now,” Caltagirone said.

The group, which operates in 17 countries and derives around 90 percent of revenue abroad, agreed on July 26 to buy Compagnie des Cimentes Belges (CCB) from HeidelbergCement, entering the French and Benelux market.

A few days later, it purchased smaller domestic rival Sacci, gaining clout in northern Italy.

As a result of the deals, which cost around 440 million euros, Cementir expects to boost its revenue by 30 percent to 1.3 billion euros this year on a proforma basis - which is an estimate assuming the businesses have been owned all year.

It also forecasts the Belgian business will add 40 million euros to its proforma core earnings of roughly 190 million this year, while savings from Sacci will help it reach breakeven next year in Italy, where it is currently losing money.

“It will take some time to digest the latest acquisitions, but I still have some appetite,” Caltagirone said.

New targets for the group, 70 percent owned by the Caltagirone family, could be small domestic rivals or, in the medium term, a competitor based in South America, the CEO said.

“After nine year of contraction of cement output, I think the Italian market has reached the bottom,” he said.

In Italy, the second-largest cement market in the European Union, with an expected 19 million tonnes of output this year, Cementir competes with Buzzi Unicem and Italcementi, recently acquired by German giant HeidelbergCement.

A dozen other domestic groups are struggling to survive as output has halved since 2008.

Domestic producers hit by the crisis could be a buying opportunity, Caltagirone said, adding the right target would have a price tag of no more than “tens in million of euros”.

“The group does not have a base in South America. In the next five years or so I would like to buy a company there,” Caltagirone added.

He said Britain had lost its attractiveness after it voted in June to exit the European Union, and he planned no new investments in the country in the next five years. The group has a waste management company in the country, which accounts for less than 5 percent of its total revenues.

After the acquisitions, the group’s debt will rise to nearly 3 times its core earnings (EBITDA) from less than 1 before, Caltagirone said, anticipating some of the figures due to be published in a new business plan in January.

$1 = 0.9157 euros Editing by Susan Thomas and Mark Potter

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