OREANDA-NEWS. S&P Global Ratings Services affirmed its 'BB-' long-term corporate and issue-level ratings on Grupo Cementos de Chihuahua S. A.B. de C. V. (GCC). We also removed them from CreditWatch negative, where we placed them on May 3, 2016, following the company's original announcement to acquire several U. S. assets from Cemex S. A.B. de C. V. (global scale: B+/Positive/--; national scale: mxBBB/Positive/mxA-2). The outlook is stable.

The recovery rating on GCC's $260 million senior unsecured notes due 2020 remains unchanged at '3' and indicates our expectation of meaningful (50%-70%; higher band of the range) recovery prospect for the bondholders in the event of a payment default.

GCC recently announced that the acquisition amount, which it disclosed in May 2016, was reduced to $306 million from $400 million. The asset purchase agreement now includes one cement plant located in Texas; two cement terminals located in Amarillo and El Paso Texas; and the concrete, aggregates, asphalt and building materials businesses in El Paso Texas and Las Cruces New Mexico. Moreover, the company publicly announced its intention to fund the purchase with $250 million of additional debt and with $56 million of cash reserves.

Although, the transaction is still subject to approval from the U. S. antitrust authority, we don't believe that it will hurt GCC's credit quality because we believe that its credit metrics will remain in line with the current rating level, particularly, debt to EBITDA below 3.0x. In addition, according to GCC's disclosure, we understand that the proposed new financing will rank pari passu in right of order and payment in the event of a payment default, with the existing $260 million senior secured notes due 2020. This would mitigate the risk of a potential structural or contractual subordination for bondholders.