Kemira plans to float GrowHow fertliser business
25 May 2004 12:03 [Source: ICIS news]
LONDON (CNI)--Finnish chemicals group Kemira is planning to float its GrowHow agrochemicals business on the Helsinki stock market.
It said Monday that the timing of the listing depends on market developments but could take place as early as autumn (Q4) 2004.
Kemira said the listing could be carried out by selling shares in GrowHow or by distributing them as dividends to Kemira shareholders. It plans to retain the Finnish government as a significant shareholder, and wants the majority of shareholders following the listing to be in Finland.
Group treasurer Kaj Friman told CNI that a possible flotation plan might involve dividend distributions accounting for a 50% stake in GrowHow. "About 30% could be as an initial public offering (IPO), with Kemira keeping 20%," he added.
This plan would reduce the Finnish government's current 56% stake by half. However, Friman stressed that it had yet to be decided what proportion of GrowHow shares would be distributed as dividend.
GrowHow, which has an annual turnover of more than Euro1.2bn ($1.4bn), is one of Europe's largest producers of specialty fertilisers. It is one of Kemira's five core business areas along with paints and coatings, industrial chemicals, pulp and paper chemicals, and water treatment chemicals.
Kemira said that a separate listing will improve prospects for continued business development for GrowHow as well as for the parent group Kemira Oyj. Friman said the flotation of GrowHow would probably reduce Kemira group debt - currently about Euro750m - by about Euro200m-300m.
"It will make our balance sheet quite a bit stronger and mean we are much better placed to pursue acquisitions in our other core businesses."
In a statement, Kemira said GrowHow has been building up its organisation, legal structure, identity and operational model for a long time, with the aim of operating effectively as an independent company.
GrowHow recently announced a three-fold increase to Euro25m in first quarter operating profits
due to higher fertiliser prices and improved cost efficiency. Sales during the January to March period, however, fell 6% to Euro324m.
By: Neil Sinclair+44 20 8652 3214
Grain inventory globally is exceptionally low, explained Kemira, which strengthens grain prices and also supports fertiliser prices.
In floating GrowHow, Kemira would be following closely in the footsteps of Norway's Norsk Hydro, which very successfully floated its Yara fertiliser business earlier this year.
Kemira has been looking at future ownership options for its fertiliser business for at least two years ago. It did consider an outright sale or joint venture in 2002 but these plans were frustrated by the very depressed fertiliser market at that time.
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