UpdateBraskem sees more US acquisitions under expansion plan

01 February 2010 17:16  [Source: ICIS news]

(adds updates throughout)

HOUSTON (ICIS news)--Petrochemicals maker Braskem said on Monday its takeover of Sunoco Chemicals’ polypropylene (PP) operations is the first of a number of acquisitions the Brazilian company plans in the US market.

Sunoco Chemicals has a combined 950,000 tonnes/year of PP capacity with plants in La Porte, Texas, Marcus Hook, Pennsylvania, and Neal, West Virginia.

Braskem agreed to pay $350m (€252m) for the assets, saying the deal also included a research centre Sunoco owns in Pennsylvania, but not the company’s phenol operations.

“We began mulling our expansion strategy in the US about a year ago,” said Braskem’s vice president and chief financial officer Carlos Fadigas during a conference call.

Fadigas said the Brazilian company will pay cash for the Sunoco acquisition.

Braskem’s net debt ratio versus earnings before interest, taxes, depreciation and amortisation (EBITDA) will increase to 3.30 from 3.24 as a result of the operation, the executive said, downplaying its impact on Braskem’s debt structure.

Fadigas said Braskem plans to use Sunoco as the gateway for its planned investments in the US.

On 22 January, Braskem consolidated the petrochemical arms of Brazil’s Petrobras, Odebrecht and Quattor to make it the largest plastic resins producer in the Americas as part of a long-term plan to become one of the world’s five largest producers.

The acquisition of Sunoco's PP business, which ICIS news reported last week as a likely deal, was subject to regulatory approval and customary closing conditions, and was expected to close on or before 31 March.

Moody’s Investors Service said the Sunoco acquisition would not affect its rating and stable outlook of Braskem.

“In Moody's view, the relatively small amount involved combined with the additional cash flow from the acquired assets  will result in immaterial impact on Braskem's debt protection metrics,” Moody’s said.

($1 = €0.72)

Additional reporting by Brian Ford

For more on polypropylene, visit ICIS chemical intelligence
For more on Braskem’s plants, visit ICIS plants and projects
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By: William Lemos
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