Will Ciech sell off and IPO be death by a thousand cuts?

death.jpgIn the past few days Poland’s major chemical group, Ciech, has announced plans to sell its fertilizer, agrochemical, silicates and glass units. Prior to that there was discussion of a possible initial public offering (IPO) for its soda ash business.

If all these go ahead the group will only be left with its organic chemicals unit. This could be death by a thousand cuts for the heavily indebted group which is under pressure to reduce its debt by Zl 400m ($123.5m, €99.5m) by the end of March 2011. The privatization of Ciech foundered when bids failed to meet treasury expectations.

Here are excerpts from Will Conroy’s latest ICIS news story which was published on Tuesday. “Ciech has drawn up a plan to dispose of two of its four divisions. The restructuring would see the group sell fertilizer and other assets in its agrochemial division and also seek buyers for its silicates & glass units.

This would leave Ciech with its two largest divisions, soda ash and organic chemicals, which generate around 70-80% of its revenue and two thirds of its earnings, before, interest, tax, depreciation and amortisation (EBITDA), the company said.

Two weeks ago, Ciech announced it was in talks with Poland’s Zaklady Azotowe Tarnow (ZAT) over ZAT’s possible acquisition of the Fosfory Ciech phosphorous fertilizer unit in the Baltic sea port city of Gdansk in northern Poland. The subsidiary has an annual fertilizer capacity of 400,000 tonnes.

Subject to board approval, Ciech’s plan to switch to two divisions will also see it put other assets up for sale, including a 73.75% stake in nitrogen phosphorus potassium (NPK) fertilizer producer Alwernia and glass and silicates subsidiary Vitrosilicon.

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