02 April 2013 17:32 [Source: ICIS news]
LONDON (ICIS)--The financial difficulties of the upstream business of France-based vinyls producer KEM ONE are due to owner Klesch Group’s decision to split the company in two, a representative of French union Confederation Francaise Democratique du Travail (CFDT) said on Tuesday.
A union representative specialising in the chemical industry said that the decision to split the business into separate upstream and downstream units is what led to upstream vinyls business KEM ONE SAS being placed into receivership last week.
The CFDT representative said: “I think so, yes. The big problem now is that Arkema gave Kem One €100m [at the time of the sale of KEM ONE in July 2012] for the business to continue its activities. And now where is this €100m? It is not easy for us to know where this money is.”
The France-based specialty chemicals company. Arkema, said last week that KEM ONE’s balance sheet at the time of the sale was free of debt, with €100m in cash reserves and significant levels of guarantees, and that Klesch had committed at that point to adopting a financing plan for the business.
The company has said that it also attributes the collapse of KEM ONE SAS into insolvency to Klesch’s decision to split the business into upstream and downstream units.
“Arkema points out that the situation created today results from a unilateral act by the Klesch Group which has decided to split up the upstream (Kem One SAS) and downstream (Kem One Innovative Vinyls SAS) activities and not to put in place the contemplated funding and guarantees,” the company said in a statement.
Although downstream business KEM ONE Innovative Vinyls is performing satisfactorily, according to KEM ONE, the two businesses have strong ties, and serious issues for the upstream unit are likely to result in issues for the downstream unit.
A KEM ONE spokesperson said: “If there is a bad issue for KEM ONE SAS, of course it would be very dangerous for the downstream activities [as the two businesses] are very linked. Today there are receivership proceedings only for KEM ONE SAS and it’s difficult to imagine the future, but we know [the two businesses] are very linked, and it’s important to think about the whole group.”
Total and Arkema, which are understood to be set to meet with the government-appointed receiver in the near future to discuss KEM ONE SAS, still have strong links to KEM ONE, and a solution would be in the best interest of all parties, the spokesperson added.
“Arkema is not just a historical shareholder, Arkema is our partner and one of our major customers, and we share some industrial platforms. And Total is a major supplier for us, so they can help us to find sustainable solutions to allow the business to continue to operate,” she said.
KEM ONE, Arkema and Total could not be reached for comment on 2 April.
($1 = €0.78)
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