US A Schulman mulls plant closures, new markets

04 January 2008 21:54  [Source: ICIS news]

HOUSTON (ICIS news)--Embattled US plastics compounder A Schulman could close North American plants and expand beyond the automotive market, all in a bid to turn around the company in the midst of a proxy fight, executives said on Friday during a conference call.

The officials, however, gave no indications that they will follow the recommendations made by Ramius Capital, a shareholder that wants the company to be sold.

Ramius said such a sale would be the best way to maximise shareholder value.

The investment group is waging a proxy battle against Schulman, in which it has nominated its own candidates to the company's board.

Ramius has defended its recommendation for a sale by criticising Schulman's financial performance during the past decade.

Schulman would not answer any questions concerning the proxy fight during its conference call, which followed the release of its earnings.

However, the company says it has made progress in turning itself around.

Schulman elaborated on its future plans following the release of its first-quarter earnings.

New chief executive Joe Gingo reiterated the company's 100-day plan, which calls for less reliance on the ailing US automobile industry.

This holds especially true for Schulman's new Invision product, a polyolfin sheet product that was developed for the automobile industry as an alternative to polyvinyl chloride (PVC), Gingo said.

As such, a new plant that would make Invision could likely produce masterbatches instead, which are not exposed to the automobile industry, Gingo said.

In addition, Gingo said he will look "very strongly" at plant consolidation at North America, as utilisation rates are low when compared with its European counterparts.

Schulman shares were trading on Friday at $21.89 (€14.89) on the NASDAQ, up 3.79%.

($1.00 = €0.68)

By: Al Greenwood
+1 713 525 2653

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