Company Overview
| Company Name |
CEMENTOS PACASMAYO SAA |
| Company Address |
CALLE LA COLONIA 150
URBANIZACION EL VIVERO SURCO
LIMA 33 00000 |
| Company Phone |
5113176000 |
| Company Website |
www.pacasmayo.com.pe |
| CEO |
Humberto Nadal Del Carpio |
| Employees (as of 9/30/2011) |
1433 |
| State of Inc |
-- |
| Fiscal Year End |
12/31 |
| Status |
Priced (2/8/2012) |
| Proposed Symbol |
CPAC |
| Exchange |
New York Stock Exchange |
| Share Price |
$11.50 |
| Shares Offered |
20,000,000 |
| Offer Amount |
$230,000,000.00 |
| Total Expenses |
$2,504,665.40 |
| Shares Over Alloted |
0 |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
518,777,479 |
| Lockup Period (days) |
180 |
| Lockup Expiration |
8/6/2012 |
| Quiet Period Expiration |
3/19/2012 |
| CIK |
0001221029 |
We estimate that the net proceeds to us from this offering will be
approximately US$219.4 million, or US$252.7 million if the underwriters
exercise the over-allotment option in full, after deducting the underwriting
discounts and commissions and estimated offering expenses payable by us. The
following estimates assume the underwriters do not exercise the over-allotment
option and holders of investment shares do not exercise the right to subscribe
additional investment shares in the preemptive rights offer.
We intend to use approximately 50.0% of the net proceeds from this offering
for capital expenditures and other general corporate purposes to grow our
core cement business. The capital expenditures will include the increase of
cement production capacity of our Rioja facility, which is currently operating
at near full capacity, and part of the construction of a cement plant in
Piura based on the results of our pre-feasibility and engineering studies.
We believe that our expansion plans will allow us to meet projected increases
in demand for cement in coming years, help us deepen our commercial
relationships in regional areas in our market, reduce transportation costs,
and secure our leadership position in the northern region of Peru. We
routinely evaluate acquisition and investment opportunities that are aligned
with our strategic goals, so we may also acquire, or invest in, businesses,
technologies or products that are complementary to our core business. We will
have broad discretion over the uses of the net proceeds from this offering.
We currently also expect to use approximately 50.0% of the net proceeds from
this offering toward capital expenditures required to develop our phosphate
and brine projects. Our preliminary estimates of the investments required to
develop these projects are in the range of US$350 to US$400 million for
phosphate and in the range of US$250 to US$300 million for brine. These
estimates, however, are based on limited preliminary work and are subject to
change. We have not developed a specific timetable for the development of
these projects and our use of proceeds may vary depending on the progress and
ongoing evaluation of these projects. We expect to finance these projects with
a combination of the net proceeds from this offering, new borrowings and
financial contributions from current or future minority partners. We will
have significant flexibility in applying the net proceeds of this offering to
these projects.
Pending application of the net proceeds, we expect to invest the proceeds in
low-risk marketable securities, bank deposits and money market funds.
The cement market in Peru is competitive and is currently served by three
principal groups which together supply substantially all of the cement
consumed in the country. In the cement industry, the location of a production
plant tends to limit the market that a plant can serve because transportation
costs are high, reducing profit margins. Historically, we have supplied the
northern region of Peru while the two other groups have supplied the central
(which includes the Lima metropolitan area) and southern regions of Peru,
driven principally by the location of production facilities and distribution
focus. However, competition could intensify if other manufacturers decide to
enter our market.
We may face increased competition if the other Peruvian cement manufacturers,
despite incremental freight costs, expand their distribution of cement to the
northern region of Peru, or if they develop a cement plant in the north,
particularly if the cement markets in Lima or other areas of Peru become
saturated. Some large foreign cement manufacturers have announced plans to
build cement plants in the central region of the country. If competition
intensifies in the central region of Peru due to the presence of foreign
cement manufacturers or otherwise, it may have price repercussions in our
market.
We also face the possibility of competition from the entry into our market
of imported clinker, cement or other materials or products from foreign
manufacturers, which may have significantly greater financial resources than
us, particularly as production capacity continues to exceed depressed demand
in other parts of the world and transportation costs decrease.
We may not be able to maintain our market share if we cannot match our
competitors' prices or keep pace with the development of new products.
If any of these events were to occur, our business, financial condition
and results of operations could be adversely affected.
---
The Peruvian cement market is comprised basically of three groups,
which own seven cement producing companies:
• Cementos Pacasmayo and Cementos Selva, which principally serve the northern
region.
• Cementos Lima and Cemento Andino, which principally serve the central
region.
• Cementos Yura and Cementos Sur, which primarily serve in the southern
region.
The level of competitiveness of cement companies generally depends on their
cost structure, which is a function of the cost of energy, fuel, costs of
raw materials and transportation. Cement companies in Peru generally compete
within the limits of their distribution market, which is determined
principally by their geographic locations.
The following are the main characteristics of the cement sector in Peru:
• highly fragmented consumer base;
• low cost of energy and raw materials;
• operations and distribution primarily determined by geographic location;
and
• high correlation to auto-construcción and public and private investments.
Company Description
We are a leading Peruvian cement company, and the only cement manufacturer in
the northern region of Peru. We are among the most profitable publicly-listed
cement manufacturers in the world, based on operating margins over the past
three years. With more than 54 years of operating history, we
produce,
distribute and sell cement and cement-related materials, such as concrete
blocks and ready-mix concrete. Our products are primarily used in construction,
which has been one of the fastest growing segments of the Peruvian economy in
recent years. We also produce and sell quicklime for use in mining operations.
In 2010, we sold approximately 1.8 million metric tons of cement, representing
an estimated 21.3% share of Peru's total domestic cement shipments, and
substantially all the cement consumed in the northern region. From 2006 to
2010, our cement sales volume grew at a compound annual growth rate ("CAGR")
of 12.8%. Our performance during this period was driven primarily by growth
in the construction sector which over the past five years has expanded, on
average, at approximately two times the growth in Peru's annual gross domestic
product ("GDP"). We believe the construction sector will continue to grow
with the expected expansion of the economy and the continued housing deficit
in the country.
We own two cement production facilities, our flagship Pacasmayo facility
located in the northwest of Peru and our smaller Rioja facility located in
the northeast. Our facilities have total installed annual cement production
capacity of approximately 3.1 million metric tons. We also have installed
annual production capacity of 240,000 metric tons of quicklime. We own
concession rights to several quarries with reserves of limestone and other
raw materials located near our facilities. We estimate that our existing
quarries have sufficient reserves to supply us with limestone for
approximately 70 years, based on our 2010 cement production levels.
We have three projects to increase our cement production capacity: (i) we are
installing two new vertical kilns as well as upgrading one of our horizontal
rotary kilns at our Pacasmayo facility, which we expect will begin production
in the first quarter of 2012, to increase our installed annual clinker
production capacity by 200,000 metric tons; (ii) we are more than doubling
the cement production capacity of our Rioja facility, which is currently
operating at near full capacity, by installing a new production line that
will add 240,000 metric tons of installed annual cement production capacity by
mid-2012; and (iii) we plan to undertake pre-feasibility and engineering
studies to build a new cement plant in Piura, the third largest city in
northern Peru. These developments will allow us to meet projected increases
in demand for cement in coming years.
We provide consumers with high-quality and value-added cement products and,
as a result, we believe we have developed strong brand recognition in our
market. We have developed one of the largest independent retail distribution
networks for construction materials in Peru. Through our network of more than
130 independent retailers, we distribute our cement products as well as other
construction materials manufactured by third parties, such as steel rebar,
cables and pipes, in the northern region of Peru. We also sell our cement
products directly to other retailers that are not part of our distribution
network and to private construction companies and government entities.
In addition to our core cement business, we are undertaking two non-metallic
mining projects, which we believe present significant growth opportunities
for our company. We have discovered phosphate deposits in one of our fields,
which contain an estimated 541.4 million metric tons of mineralized material.
We also have concessions for fields with identified brine deposits. We
believe that, if we are able to extract these minerals in a profitable
manner, these projects could provide us substantial new revenue streams,
diversify our portfolio of products and improve our profitability.
Cementos Pacasmayo and Hochschild Mining plc are each majority owned and
controlled, directly and indirectly, by Mr. Eduardo Hochschild and together
constitute the businesses of the Hochschild group (the "Hochschild Group"),
which has operated in Latin America for the past 100 years. Hochschild Mining
plc has been listed on the London Stock Exchange since 2006 and Cementos
Pacasmayo has been listed on the Lima Stock Exchange since 1995.
-----
We are a publicly-held corporation organized under the laws of Peru.
Our executive offices are located at Calle La Colonia 150, Urbanización
El Vivero, Surco, Lima, Peru. Our telephone number at this location
is + (511) 317-6000. Our website address is www.pacasmayo.com.pe.
Home
Search NASDAQ
Search Web
