Cemex, producer of cement and building materials, is to sell its 20 per cent share ownership in the TCL Group, a producer and marketer of cement and ready-mix products in the Caribbean.

The 49.9 million shares that Cemex controls in TCL group is being divested as part of the Mexican company's debt restructuring programme.

Stock exchange filing

In a stock exchange filing on Tuesday TCL advised that Cemex's response to the difficulties experienced because of the global economic crisis, has been to initiate cost-cutting measures, to seek debt re-financing, and to dispose of select assets.

TCL further advised that Cemex had been impacted by a sharp contraction in sales volumes in the United Sates, Spain and the United Kingdom and had also incurred a significant increase in the cost of debt with a difficulty in obtaining refinancing.

The company was also hit with high-energy and transportation costs, downgrades from rating agencies and significant decline in stock price.

In the third quarter of the year, Cemex also made a loss of US$700 million on derivatives trading and had to contend with a negative tax ruling in its home base, Mexico.

While Cemex has not yet officially informed the TCL's board of directors of its plans, TCL says the sale of the shares will not in any way affect the group's operations or its future prospects.

"Cemex's sale of their TCL shares is not likely to have any effect on our operations, nor is it likely to erode shareholder value," said Anthony Haynes, general manager of Carib Cement, a subsidiary of TCL.

Strategic alliance

A strategic alliance was formed between Cemex and TCL in 1994, but was not renewed after a 10-year period in 2004.

It is not clear whether TCL will buy back the shares, but said in the stock exchange report that steps have been taken to engage Cemex in discussion on the disposal of the shares.

sabrina.gordon@gleanerjm.com