29 June 2009 00:00 [Source: ICB]
HUNTSMAN SETTLES WITH BANKS FOR $1.73BN
US-based chemical firm Huntsman reached a $1.73bn (€1.25bn) cash and financing settlement with Deutsche Bank and Credit Suisse - the lenders in its doomed $10.6bn merger with Hexion Specialty Chemicals. Huntsman initially sought more than $4bn in damages against the lenders in a trial that began in a Texas state court. Huntsman will receive $620m in cash, $500m in senior secured term loan financing, $600m in unsecured note financing and $12m for the reimbursement of litigation costs. In its lawsuit against the lenders, Huntsman alleged that Hexion's offer was an inducement to dupe the company into rejecting an earlier acquisition offer by Netherlands-based petrochemical firm Basell.
WALL STREET PANS HUNTSMAN DEAL
Wall Street was underwhelmed by Huntsman's $1.73bn (€1.25bn) cash and financing settlement with Credit Suisse and Deutsche Bank. "In a rather disappointing turn of events, Huntsman settled its lawsuit meaningfully below the $3bn-plus recovery previously discussed," said BB&T Capital Markets analyst Frank Mitsch. "The cash settlement was less than expected, but the company also received favorable financing terms," said Jefferies & Co. analyst Laurence Alexander. Analysts had expected a cash settlement of around $1bn. Huntsman shares closed down 9 cents, to $5.92 on the settlement last Tuesday.
HUNTSMAN DOWNPLAYS WALL STREET REACTION
Huntsman chief financial officer Kimo Esplin downplayed muted Wall Street reaction to its settlement with banks Credit Suisse and Deutsche Bank. "I've spoken with about 20 of our top shareholders and they're all thrilled with the settlement. There may have been some short-term hedge fund players that were in the stock - not for the fundamentals but for [an expected] pop in the settlement," said Esplin. "They're naive to think that you're going to come out of Texas with a $4bn-5bn [€2.9bn-3.6bn] settlement," he added.
HUNTSMAN MULLS PAYING DOWN MORE DEBT
Huntsman will consider using its settlement money from Credit Suisse and Deutsche Bank to pay down debt in addition to the announced payoff of $295m (€212m) in 11.625% senior secured notes due 2010, said chief financial officer Kimo Esplin. This would include $200m in 11.5% debt due 2012. "We'll also significantly reduce or eliminate our undrawn $650m revolver [revolving credit facility]," he said. Huntsman will save considerable interest expense with the new loans from the banks on attractive terms, he added. The financing portion of the settlement consists of $500m in senior secured seven-year term loans, with an interest rate of LIBOR (London inter-bank offered rate) plus 2.25% and a $600m unsecured seven-year note at 5.5%.
SPE AIMS TO REVERSE MEMBERSHIP DROP
The Society of Plastics Engineers (SPE) is adopting a three-pronged program to reverse a membership decline; enrollment is down by 47% from an all-time peak of 30,000 in 1999, the US technical group said. To reverse the decline, the SPE has adopted a program that addresses technology, geography and younger members, said president Paul Anderson at the 2009 National Plastics Exhibition (NPE) in Chicago, Illinois, US. This will include a focus on bioplastics and nanomaterials, as well as using social media such as Facebook. More than 40,000 people registered to attend NPE.
SABIC TARGETS US FOR POLYOLEFIN EXPORTS...
Saudi Arabia's SABIC is taking its first steps towards exporting polyolefins to the US with plans to begin establishing warehouses in the country, said CEO Mohamed al-Mady. "The US will become a net importer of polymer material," said Al-Mady at NPE. "SABIC is capable of fulfilling those requirements." Part of SABIC's plan involves establishing warehouses in the US, since exporting directly from Saudi Arabia would create an unwieldy supply chain, said Khaled Al-Mana, vice president of SABIC Polymers.
...AND NEARS START UP OF RESINS PLANT
Saudi Arabia's SABIC's plastics subsidiary SABIC Innovative Plastics (IP) has nearly completed a resins plant in Spain and is ready to start expanding a resins compounding facility in China, said SABIC CEO Mohamed al-Mady at NPE. SABIC IP will open its Ultem resins plant in Cartagena, Spain, at the end of the year, while the 30% expansion of its compounding facility in Nansha, China, begins in July.
BANKRUPTCY LOOMS FOR US CUSTOM MOLDERS
Tightened credit and weak sales are likely to put 15% of the US custom molding industry, or 1,170 firms, into some form of bankruptcy, said Jeff Mengel, partner and head of the plastics team at US-based consultancy Plante & Moran, while at NPE. The US has 7,800 custom molders, with total sales of roughly $100bn (€71bn), he said. "It just has to happen," said Mengel. "There is no way we can have 7,800 companies operating at 30% capacity."
CHEMSPEC GOES PUBLIC
China-based specialty chemicals producer Chemspec International has priced its initial public offering of 8.1m American Depositary Shares (ADSs) at $9/share. The ADSs began trading on the New York Stock Exchange last Wednesday under the ticker symbol "CPC."
ACC SEES US CHEMICAL RECOVERY BY END OF Q3
The rate of the production decline in the US chemical industry has moderated in recent months, and the industry should resume growth toward the end of the third quarter, said the American Chemistry Council (ACC). "Along the supply chain, inventories-to-sales ratios for chemicals have improved over the past few months," said chief economist Kevin Swift. "It appears that the massive destocking of 2008 and into the first quarter of 2009 is dissipating."
DOW CORNING URGES US POLICIES TO BOOST SOLAR
US-headquartered silicon-based materials firm Dow Corning wants US federal lawmakers to set policies to boost the solar energy sector. "To make America a 21st century solar power, we need smart and effective government policies from Congress that will help the private sector grow, thrive and create thousands of new jobs," said Dow Corning CEO Stephanie Burns. Her firm is calling for a permanent advanced manufacturing tax credit, renewable electricity standards, federal interconnection and net metering standards, as well as renewable energy payments, known as "feed-in tariffs."
PERTAMINA PICKS DOW UNIPOL PP TECHNOLOGY
Indonesia's state energy and chemical company PT Pertamina has selected US-based Dow Chemical's UNIPOL Polypropylene (PP) Process technology for its new 250,000 tonne/year plant that is expected to be completed by 2011 at its Balongan complex in West Java, said Karen Shepard Jackson, global commercial director of Dow's Polypropylene Licensing & Catalyst group. "Pertamina chose the UNIPOL polypropylene process because it will enable it to build the most competitive and advantaged facility capable of producing a full range of products," she said.
MONSANTO Q3 PROFIT FALLS; WILL CUT 900 JOBS
US-based seeds and herbicides producer Monsanto's fiscal third-quarter net profit fell by 14% to $694m (€493m) as sales dropped by 11% to $3.16bn. The company also said that it will shed 900 jobs, or less than 4% of its regular global workforce, as part of a restructuring operation. The results reflected decreased revenues from Monsanto's Roundup and other glyphosate-based agricultural herbicides globally.
EVONIK TO EXPAND GLOBAL METHIONINE CAPACITY\
German specialty chemical major Evonik plans to further expand its global production capacity for feed additive methionine at sites in the US, Germany and Belgium. The expansion will be staged from 2011 through 2013, when Evonik's overall methionine capacity will reach 430,000 tonnes/year.
SHOWA SHELL, SAUDI ARAMCO PLAN SOLAR JV
Japan's Showa Shell Sekiyu and Saudi Aramco Oil have agreed to launch a feasibility study for a solar-power joint venture. "Amid sluggish demand for oil products such as gasoline, we, Showa Shell, aim to expand our business concerning new energy which uses solar cells," said a Showa official. Japan's fifth-largest refiner and Saudi Arabia's state-run oil company plan to spend several billion yen to set up small-scale microgrid-based solar power facilities by around 2011 in areas of Saudi Arabia that are not served by power grids, the official said.
ASHLAND TO SELL MARINE SERVICES BUSINESS
US specialty chemicals ¬producer Ashland has agreed to sell its global marine services business for $120m (€86m) to J.F. Lehman & Co. The business has revenues of about $140m/year and about 325 employees, with 28 offices and 98 stocking locations in 47 countries.
BASF SITE LEAKS 10 TONNES OF HPN INTO RHINE
BASF's main production site at Ludwigshafen, Germany, leaked 10 tonnes of hydroxypivalic acid neopentyl glycol ester (HPN) into the river Rhine. The chemical, which is used in the production of lacquers, leaked through the cold water system. HPN is irritating to the eyes but biodegradable, BASF said.
OLTCHIM TO TEMPORARILY CUT AROUND 1,000 JOBS
Romanian state-owned chemical company Oltchim will temporarily cut around 1,000 jobs for at least one month at its Ramnicu Valcea site to reduce costs. Oltchim, which employs around 3,700 people, has been operating at 40% of its normal production capacity due to feedstock supply problems.
LUKOIL BUYS DOW'S STAKE IN TOTAL REFINERY
Russia's Lukoil has bought US-based Dow Chemical's 45% stake in France-based Total's majority-owned refinery at Vlissingen, the Netherlands, for $725m (€522m). "A new downstream acquisition in western Europe organically fits in our company's strategy aimed at increasing oil refining capacities located in the immediate proximity to the markets where products with higher added value are sold," Lukoil president Vagit Alekperov said.
PKN ORLEN INTRODUCES VOLUNTARY REDUNDANCY
Polish oil, chemical and petrochemical group PKN Orlen has introduced a voluntary redundancy plan, part of an effort to trim its workforce by 19% over five years. The program offers zloty (Zl) 27,000 ($8,300, €6,000) in severance payments to those who volunteer for redundancy by the end of July, and Zl22,000 to those who apply in August.
TOTAL SACKS 900 STRIKERS AT UK REFINERY
The current employment contracts of up to 900 employees working on Total's hydrodesulfurization construction project at the Lindsey oil refinery in the UK were terminated on June 19. Contractors on the project have been on unofficial strike since June 11. The dispute has led to protests at the refinery and other industrial sites across the UK.
FLOODING EYED IN DEADLY ETHANOL DERAILMENT
A train carrying ethanol derailed near Rockford, Illinois, US, on June 19, killing one and injuring three, when 18 of the Canadian National Railway train's 114 cars jumped the tracks, causing a massive fire that burned through the night. Investigators said that they suspect heavy rains washed out the tracks.
CLARIANT TO CUT 500 MORE JOBS IN RESTRUCTURING
Clariant will cut a further 500 jobs in the second phase of its 2009 restructuring program. The company announced 1,350 cuts at the start of the year.
CF INDUSTRIES EXTENDS OFFER FOR TERRA
US fertilizer maker CF Industries extended the expiration date of its exchange offer for all of the outstanding shares of Terra Industries common stock to July 10. CF's previous offer was set to expire on 26 June.
GOODYEAR TO REDUCE PRODUCTION
Goodyear Tire and Rubber will change its operational strategy in North America on July 6, moving to a three-shift, five-day strategy instead of a continuous operating schedule. The company said weak demand was responsible for the change.
DOW AUTOMOTIVE OPENS NEW PLANT IN GERMANY
Dow Automotive, a unit of US major Dow Chemical, has opened a production plant for automotive adhesives in Schkopau, Saxon-Anhalt, Germany. The addition creates 180 jobs.
AKZO MAY CLOSE GERMAN SITE NEXT YEAR
AkzoNobel Polymer Chemicals may close its site in Emmerich near Essen in northwest Germany by the end of 2010, affecting 34 jobs. AkzoNobel produces peroxides and pastes at Emmerich.
SWISS CHEMS CALL FOR END TO STIMULUS
Switzerland's chemical and pharmaceutical producers do not want the country's government to launch a further stimulus program, the president of industry association SGCI said. Instead, the government needs to work on promoting investment in technologies and innovation for the future, Christoph Mader told members at the SGCI Chemie Pharma Schweiz general meeting.
INEOS IN "GROWTH" TALKS FOR GRANGEMOUTH
INEOS is talking to potential investors, including China's largest oil and gas company, PetroChina, in its refinery and petrochemical complex in Grangemouth, Scotland, according to a Grangemouth local government official, cited in the UK's Financial Times. INEOS would not confirm the talks but a spokesman said the company was in discussion with a number of potential partners about "growth opportunities".
PETROCHINA TO MAKE $1.2BN OFFER FOR SPC
PetroChina is due to make a mandatory Singapore dollar (S$)1.75bn ($1.21bn) general offer for the outstanding 54.49% shares of Singapore Petroleum Corp. (SPC). The state-owned oil and gas giant said in a statement released to the Shanghai Stock Exchange on Monday that it had completed the acquisition of a 45.51% stake in SPC and would buy the rest at S$6.25/share in two to three weeks.
FRANCE'S ORBEO TO ACQUIRE ONECARBON
French carbon emissions trading company Orbeo will acquire Netherlands-based OneCarbon International, for an undisclosed amount. Orbeo is a joint venture between French chemical company Rhodia and French investment bank Societe Generale.
PETROCHINA TO BUY TWO PIPELINES FROM CNPC
China's largest oil and gas producer, PetroChina, will buy two existing pipelines in western China from its parent firm, China National Petroleum Company, at yuan 9.7bn ($1.42bn). The pipelines - a crude oil pipeline and a refined oil pipeline - each 1,858km long, stretch west to east from Urumqi, northwestern province Xinjiang to Lanzhou, northwestern QGansu province.
CHINA FLOODING US WITH CHEAP TIRES - REGULATOR
The US International Trade Commission (ITC) said that the domestic market is being disrupted by a flood of tire imports from China, a finding that could affect demand for styrene butadiene rubber (SBR). The ITC said it will send its recommendations to US President Barack Obama's administration later in the month.
US NATURAL GAS RESOURCES AT RECORD HIGH
The US has enough natural gas to meet domestic consumption for the next century, the highest level of recoverable resources ever measured. The American Gas Association (AGA) cited new data from the Potential Gas Committee (PGC) indicating a total available supply of 2,074,000bn cubic feet (bcf) of natural gas. The US consumes about 22,000 bcf annually.
EVONIK CYRO TO REVAMP N AMERICA OPERATIONS
Evonik Cyro, a unit of Germany-based specialty chemical major Evonik Industries, plans to restructure it business in North America, resulting in about 56 job cuts. The producer of acrylic sheet and molding compounds cited declining demand from the automotive, construction and retail display industries. "Our business and industry are challenged by a dramatic fall in demand for our products in the automotive, construction and retail display industries," said president John Rolando.
DOW, GAZPROM PARTNER ON CO2 REDUCTION
US major Dow Chemical and Russian energy producer Gazprom have signed a memorandum of understanding to develop projects to reduce greenhouse gas emissions worldwide. Gazprom will provide a route-to-market for emissions offsets and use its global counterparty base to bring Dow's technologies to market through projects that could cumulatively reduce CO2 emissions by millions of tonnes, according to the two companies.
NYNAS OPENS NEW HOUSTON TERMINAL
Base oil producer Nynas Americas has opened the first phase of its new Texas bulk liquid storage terminal on the Houston Ship Channel. The terminal opened eight new storage tanks. When completed at the end of the year, the terminal will have 25 tanks with a storage capacity of 400,000 bbls for loading and unloading by truck, railcar and marine vessels.
RUSSIA LEVIES DUTY ON IMPORTED POLYETHERS
Russia has introduced an import duty on polyethers, effective until March 15 2010. From July 16, a duty of 10% - and no less than €0.35/kg ($0.49) - will be applied.
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