The process began in 2020, when the company proposed transitioning from a conglomerate structure to independent businesses. The first step was to spin off Nemak and accelerate the transfer of corporate capabilities to the Business Units. The plan was also to reduce corporate expenses, which have dropped 80% compared to 2019 levels.
Axtel was spun off in 2023, and $500 million dollars in debt was refinanced so the company would have greater payment flexibility.
Over the past year several essential conditions were met to spin off Alpek. ALFA increased capital, raising approximately $400 million dollars. The offer was oversubscribed 2.6 times.
Support for these initiatives was also reflected in the consent from more than 91% of bondholders to amend certain clauses of ALFA’s bond due in 2044.
A major goal behind the transformation is to lower corporate debt and maintain financial strength. To that end, ALFA also received dividends from Alpek and Sigma which, combined with the capital increase, totaled $575 million dollars to reduce debt.
The last step in this process was in October when ALFA shareholders approved the final spin-off of Alpek. Alpek’s recovery has been remarkable, increasing its 2024 EBITDA guidance by 13% to $675 million dollars. Likewise, Sigma recorded 14 consecutive quarters of growth and reported its highest comparable quarterly EBITDA since 2022.
ALFA’s transformation has paved the way for each Business Unit to reach its fair value based on its own merits and a promising future. When the spin-off of Alpek is completed, Alfa|SIGMA will remain as a business focused on branded foods.
Could you have guessed everything that had to be done for this transformation? Make sure to leave us your comments!
