Spolchemie to restructure core businesses into independent units

23 July 2010 12:16  [Source: ICIS news]

LONDON (ICIS news)--Spolchemie plans to split its core businesses into several independent operating units, with the aim of attracting financial partners, divesting or even closing down unprofitable divisions, the troubled Czech Republic-based company said on Friday.

Spolchemie expects its lenders to approve a restructuring plan by the end of July, which involves extending standstill agreements on loans to the end of January 2011 in return for meeting the plan’s operational targets, CEO Francois Vleugels said.

If the restructuring plan is approved, the core epoxy resins, epichlorohydrin (ECH) and bisphenol A (BPA) business will form the main operating unit. Inorganics, focused on chlorine production, would be another.

Potassium permanganate production could form another group. However, Vleugels said: “This may be closed. It is the only producer in Europe but will require investment to continue.”

“We have got six months to create a permanent, positive solution for Spolchemie, with a focus on technologies which act independently.”

He said cooperation with external entities could be in the form of marketing agreements or financial partnerships. “We will consider closing some units and divesting some, but not the core epichlorohydrin, epoxy resin and polyester divisions.”

Spolchemie suffered badly during the economic downturn and was forced to turn all its assets over to lenders in 2009, lay off one-fifth of its 900 staff and implement a rescue plan under new leadership.

Vleugels said Spolchemie experienced price hikes of 70% for BPA between June and the end of April, although these have now stabilised somewhat thanks to some Middle East product availability.

“We could have sold 15% more if we’d had enough BPA,” he said. “This sent our working capital requirements through the roof. We’re still very tight on cash and have agreed a very aggressive repayment schedule with suppliers.”

Vleugels said he expects the company’s second-quarter earnings before tax, depreciation and amortisation (EBITDA) to be 50-60% higher than those in the first quarter.

Sales, which fell from €200m ($256.4m) in 2008 to €100m in 2009, are targeted to reach €160m-170m for 2010, he added.

Czech private equity group Viachem owns 63% of Spolchemie.

($1 = €0.78)

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By: Will Beacham
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