Wales plant shutdown to cost Solutia $45m-60m

28 May 2008 00:29  [Source: ICIS news]

HOUSTON (ICIS news)--US rubber chemicals producer Solutia expects to take pre-tax charges of $45m-60m (€28m-38m) over the next four years due to the closure of its plant in Ruabon, Wales, in the UK, the company told regulators on Tuesday.

The costs include $17m-22m for severance and employee benefits; $15m-22m for clean-up and demolition; and $13m-16m due to contract obligations to continue providing third-party operations at the site, Solutia said in a filing to the US Securities and Exchange Commission (SEC).

The shutdown will reduce Solutia's annual revenue by about $50m, the company said.

However, annual pre-tax income from continuing operations should receive a benefit of $8m-12m, the company said.

Production at the plant should stop by the end of the year, Solutia said. The company should leave the site by the end of 2011.

Once Solutia ends production at Ruabon, it will no longer participate in the market for Santogard PVI pre-vulcanisation inhibitors; Perkacit DPG; and Flectol TMQ and Flectol HPG.

Solutia said it was closing the plant to limit its exposure to smaller product lines in which the company is no longer competitive.

"Our Ruabon site makes three product lines for which the market is over-supplied due to emerging competition from Far Eastern producers," according to a statement by Jim Voss, Solutia senior vice president and Flexsys president.

Flexsys is a Solutia subsidiary that produces rubber chemicals.

($1 = €0.63)

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By: Al Greenwood
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