“No deal” on sale of Poland's Organika-Sarzyna to ZAP: Source

07 October 2013 17:06  [Source: ICIS news]

LONDON (ICIS)--Ciech has failed to reach a deal with Zaklady Azotowe Pulawy (ZAP) for the sale of the Poland-based chemicals company’s epoxy and polyester resins unit Zaklady Chemiczne Organika-Sarzyna, a Ciech source said on Monday.

Instead of divesting Organika-Sarzyna by the end of this year, Ciech is set to invest zloty (Zl) 100m ($32.3m, €23.8m) in the subsidiary in an effort to boost its earnings before interest, taxes, depreciation and amortisation (EBITDA) – which stood at Zl 50m in 2012 – by around 50%.

“Our CEO’s public declarations have been pretty straight – we can sell Organika-Sarzyna, but it is not a must, our liquidity does not need this transaction,” said the source, in reference to how Ciech's fortunes have improved since a new wave of restructuring began last year.

Nitrogen fertilizer, melamine and caprolactam (capro) producer ZAP, a member of Poland's largest chemical group, Grupa Azoty, put in its bid for Organika-Sarzyna in March.

It would likely enter into fresh talks to acquire the unit from Ciech next year, in the view of WOOD & Company chemical industry analyst Piotr Drozd.

“In the context of the high price [which the two parties were discussing for the unit], we like the fact that ZAP chose to walk away from the deal,” said Drozd.

In February, Organika-Sarzyna’s resins business lost its epichlorohydrin (ECH) feedstock supplier when Ciech opted to shut down and divest assets at subsidiary Zachem as part of its widened restructuring drive.

Both Grupa Azoty and Ciech are controlled by the Polish government.

($1 = €0.74, $1 = Zl 3.10, €1 = Zl 4.20)

By: Will Conroy
+44 20 8652 3214

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