Rhodia sees Euro230m extra restructuring charges in '04

07 October 2003 19:04  [Source: ICIS news]

London (CNI)--French specialty chemicals group Rhodia said on Tuesday it expects to take Euro230m ($267m) in additional charges during 2004 as part of its accelerated restructuring programme.

Following the resignation of its chief executive, Jean-Pierre Tirouflet last week, Rhodia announced it would seek additional cost savings of more than Euro150m in 2006.

Clamadieu

The company's new chief executive, Jean-Pierre Clamadieu, said the number of operating units would be cut from the current total of 17 to allow a more narrow focus. However, he declined to give more details.

Clamadieu said the company's banking covenants were at risk and negotiations are ongoing with lenders to renew the debt capacity on different terms. The company is under pressure not to bust key earnings-to-debt ratios.

The company's new chairman, Yves-Rene Nanot, said there would probably be some goodwill write-downs this year, which could erode results further.

The Euro150m of new savings are in addition to plans announced in 2002 and 2003, for which savings of Euro38m, Euro123m and Euro150m are expected in 2003, 2004, and 2005 respectively. Details were not readily available on the restructuring costs associated with the existing cost saving programme.

In terminating Jean Pierre Tirouflet's employment, Rhodia is to remunerate the ex-chief executive with 18 months' salary, which amounts to Euro1.5m-Euro2m.

By: Will Beacham
+44 208 652 3214

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