Vertellus to see growing benefit from US shale gas – CEO

Interview story by Joseph Chang

NEW YORK (ICIS)–US-based specialty chemicals company Vertellus expects to see benefits from the nation’s shale gas boom, from lower electricity and commodity chemical input costs to greater demand for its polymers additives, its chief executive said on Monday.

“Natural gas is a big input into our Indianapolis facility for power but also we benefit on the raw material side because we buy certain chemicals as feedstocks,” said Rich Preziotti, CEO of Vertellus, in an interview with ICIS.

The Indianapolis, Indiana-based company is a major buyer of formaldehyde, which is derived from methanol, which is in turn made from natural gas in the US.

Vertellus uses formaldehyde to produce pyridine and derivatives used in agricultural chemical and pharmaceutical applications. Its largest facility is located in Indianapolis.

“We should benefit as new [methanol] capacity comes on in the coming years,” said Preziotti.

Vertellus has made significant investments in Indianapolis for pyridine derivatives, with new capacity coming on in 2012, he noted.

In April 2013, the company formed a joint venture in China to restart a 10,000 tonne/year pyridine and picolines plant in Shandong province with partner Weifang Green Olive.

The pyridine and derivatives business, including for both ag and pharma, represents around 60% of total sales of around $600m.

Vertellus also produces castor-based polyols for coatings to help coatings manufacturers meet volatile organic compounds (VOC) emissions targets, and citrate-based additives for higher end polyvinyl chloride (PVC) products such as blood bags. The PVC additives are phthalate replacements, Preziotti noted.

In 2013, Vertellus bought out its joint venture partner in India. The business produces sulphone monomers and derivatives which are intermediates for polysulphone and polyethersulphone high performance polymers. End markets include aerospace, medical and automotive.

While Vertellus aims to grow both organically and through mergers and acquisitions (M&A), the latter remains challenging as valuations are high, said Preziotti.

Vertellus is owned by private equity firm Wind Point Partners, which bought the business in 2007.

However, Wind Point is in no hurry to exit its investment, said Preziotti.

“Our private equity owner is patient while looking for a targeted return. We’re not at that point yet, as we see more profit growth. Any potential exit would be more than a year away,” he said.