Brunner Mond Completes Financial Restructuring

24 December 2001 00:00  [Source: ICB Americas]

Brunner Mond, Europe's second largest soda ash producer after Solvay, has been taken over by a group of banks and financial institutions after a financial restructuring deal turning debt into equity.

CVC Capital Partners, a private equity investment company, that acquired Brunner Mond in 1998, is no longer involved with the UK-based company.

Following the completition of the deal, Barclays Capital, Chase Manhat-tan International, Citibank International and Westdeutsche Landesbank Giro-zentrale (West LB), together with two other financial institutions, own 80 percent of the company.

"The substantial reduction in debt, together with improved market conditions experienced in 2001, have placed Brunner Mond in a stronger position to develop its business," says David Wertheim, the company's chief executive and deputy chairman.

Altogether £140 million ($213 million) in debt has been wiped off its balance sheet, while borrowings have been cut from £180 million to £40 million. As part of the restructuring, the company's shareholders are providing a further £29 million in debt financing.

"The ag-reement will put us in a better position to continue with our capital investment program," says Stephen Bentley, group finance director. Among its recent investments is a £150 million combined heat and power (CHP) plant at its main site at Northwich, northwest England.

It is currently seeking ways to replace a process using a caustic liquor stream, which accounts for 25 percent of the output from its 400,000-ton-per-year soda ash plant at Delfzijl, the Netherlands. The caustic liquor comes from an adjacent chlorine plant, which Akzo Nobel plans to close.

Brunner Mond, which has an annual capacity of 1.4 million tons, ran into financial difficulties in the late 1990s when it was forced to renegotiate its financing because of deteriorating conditions in the European soda ash market.

Brunner Mond was also forced to declare force majeure on its UK soda ash contracts last year when the CHP unit at Northwich, run by the UK utility company Powergen, was damaged by heavy rainfall.#"We have seen volume sales in the soda ash market increase by about 2 to 3 percent this year," says Mr. Bentley. "The market has become tighter over the last year, and we expect a further im-provement in 2002."

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