11 February 2009 16:11 [Source: ICIS news]
(Adds dropped words “at the present time” in paragraph 12)By Joseph Chang
MIDDLEBURY, Connecticut (ICIS news)--US specialty chemical firm Chemtura is aiming to announce a major asset sale by the end of March that could bring in around $700m (€546m) in gross proceeds, chairman, president and CEO Craig Rogerson said on Wednesday.
“By the end of the first quarter, I would hope to be able to announce a sale. I’m optimistic as things are progressing as expected,” Rogerson said at the company’s headquarters in Middlebury, Connecticut.
Chemtura has $374m in debt maturing on 15 July and has been hit with investor concerns about bankruptcy.
“We’d like to net about $500m to pay down the $374m in debt and have extra cash to deal with liquidity issues,” Rogerson said in an exclusive interview.
“That $700m-$1bn range for the gross proceeds [of an asset sale] is probably not way off,” he added, referring to an ICIS report that the proceeds from the sale of Chemtura’s crop protection business could fetch that amount.
While Rogerson would not name the assets for sale, ICIS reported that Chemtura’s crop protection and petroleum additives businesses were on the selling block, according to sources in the financial community.
Chemtura is in the process of selling multiple businesses to ensure it can pay down that debt on time and that it can get a fair value for its assets, Rogerson said.
“We have multiple players involved in multiple asset divestment paths. We’ve had some very rigorous screening of potential buyers to make sure they have the cash or firm financing to close the deal,” Rogerson said.
“Also, there is a risk that people could take advantage of our situation. So we must make sure we have multiple choices, so that there is competition in this process,” he added.
Signs point to a sale of the crop protection business, as it is a high-quality asset that could bring in significant proceeds – between $700m-$1bn, according to sources.
“For us to get the kind of proceeds we’re talking about, we have to sell a good business – not one that we would typically want to sell,” he said.
One option that Rogerson ruled out was filing for bankruptcy protection under Chapter 11 at the present time.
However, in the absence of an asset sale, the company could look for an equity infusion, he said. This would be highly dilutive, with Chemtura’s stock trading at around 50 cents, representing a market capitalisation of under $130m.
“But I fully expect us to use funds from an asset sale to be able to pay off these bonds due in July,” Rogerson said.
Rogerson was chairman and CEO of US specialty chemical firm Hercules from December 2003 to its sale to Ashland in 2008. Prior to being named CEO of Hercules, he served as vice president and general manager of BetzDearborn, the Hercules business that was sold to General Electric (GE) in 2002 to reduce debt.
“That experience showed me that you can sell a good business, deal with the issues, and then grow the company again. That’s what we did at Hercules, and I’ve seen nothing that gives me any doubt that the same thing can happen here,” he said.
($1 = €0.78)
For more on ICIS’s interview with Chemtura CEO Craig Rogerson, look for the 2 March issue of ICIS Chemical Business
For more on Chemtura, visit ICIS company intelligence
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