Cepsa kills prospect of Interquisa sale to LSB

11 February 2008 18:33  [Source: ICIS news]

LONDON (ICIS news)--Spanish petrochemicals group Cepsa on Monday sounded the death knell to a potential sale of its Interquisa purified terephthalic acid (PTA) business to La Seda de Barcelona (LSB).

Cepsa considers the deal “extinguished,” it said in a statement with Spanish market regulators.

Barcelona-based LSB had cancelled the €595m ($863m) deal “indefinitely” on 18 January.

Citing capital markets turmoil and reeling from a plunging share price, LSB said it would focus instead on consolidating a string of recent acquisitions in the European polyethylene terephthalate (PET) market.

In a statement with Spain’s market watchdog (CNMV), Cepsa said: “Following La Seda’s board decision, we consider the agreement reached on December 19 as extinguished.”

Cepsa’s terse comments came as LSB has recently scrambled to convince investors that its business outlook is solid. On the day it announced the Interquisa acquisition, analysts said the equity offering to finance the deal would dent shareholder value.

LSB’s shares dropped 8% and are down over 50% from their €2.76 high last July.

Under the long-awaited deal between LSB and Cepsa, LSB had planned to raise €500m in the stock sale and sell a 12-15% equity stake to Cepsa.

Last week, Spain’s stock market was rife with rumours that UK private equity firm Blackstone was considering buying up to 12% of La Seda to profit from its collapsing market.

La Seda and Blackstone would not comment on the speculation.

In a recent statement to shareholders, LSB President Rafael Espanol said: “Though our share price does not show it, I want to assure you that our industrial project and business outlook will help us close 2007 with record profits.”

Spain’s capital markets, which have mirrored the volatility of other European indexes, are suffering from a “complex financial situation,”  Espanol said, in which a decline in leading bourses does not reflect “the strong health of many companies.”

Amid the backdrop of a global recession, “we will endeavour, more than ever, to focus on our core business and integrate our recent acquisitions,”

Espanol concluded.

La Seda has €2bn in revenues and makes 2m tonnes of chemical/plastic products a year.

($1 = €0.69)

By: Ivan Castano Freeman
+44 20 8652 3214

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