Lyondell reaches creditors' pact

February 18 (Business Standard) -- Global petrochemical major LyondellBasell, whose majority stake Reliance Industries (RIL) is looking to buy, today said it has reached a settlement with creditors paving the way for the company to exit bankruptcy.

As part of the agreement, the Unsecured Creditor's Committee and holders of the company's substantial debt have agreed to support its reorganisation plan, a statement by LyondellBasell said.

Weighed down by massive debts, LyondellBasells US operations and one of its European holding companies had filed for Chapter 11 bankruptcy protection in 2009.

In November last year, LyondellBasell and Mukesh Ambani-led RIL disclosed a "preliminary non-binding offer" by the Indian firm for taking a majority stake in the chemical major.

Going by industry sources, RIL's bid could be more than $12 billion.

The new agreement with creditors increases the amount from $300 million to $450 million that would be distributed to the holders of general unsecured claims, the millennium bonds and 2015 notes. The extra $150 million would be paid in the form of reorganised equity.

The company said the dispute between unsecured creditors and these defendants has been limiting its ability to complete approval of disclosure statement and reorganisation plan.

LyondellBasell pointed out that it would continue to work with all parties to design a confirmable reorganisation plan that maximises value for creditors.

The US-based company is privately owned by ProChemie GmbH, a JV of Access Industries and ProChemie Holding.

MRCMRC Reference

LyondellBasell. The share in the Russian market in 2008:
PE - 1.4% (including HDPE - 2.5%, LDPE - 0.3%);
PP - 4.1% (including block-copolymers - 9.5%).

Annual sales growth in Russia, during the recent 5 years:
PE - 27%;
PP - 88%.

The leader in the following polymers processing technologies:

pipe extrusion;

film extrusion;

injection molding.

AkzoNobel, Solvay Q4 to improve, but recovery fragile

AMSTERDAM (Reuters) -- Benelux chemicals companies AkzoNobel NV and Solvay will show the economic recovery is continuing, but cautiously and slowly as they report improving fourth-quarter results on Thursday.

Both companies are expected to show more resilient volumes, but no sharp improvement in their trading environment, hit also by pricing pressures, but partly offset by margin improvements.

AkzoNobel is expected to report a 10.5 percent rise in earnings before interest, tax, depreciation and amortisation (EBITDA) excluding one-offs of 421 million euros ($574.7 million), according to the average forecast from a Reuters poll.

In the same period last year it reported EBITDA of 381 million euros.

"We expect the company to improve margins further on the back of cost cutting, and see volumes improving year-on-year on the back of an absent destocking effect and emerging markets exposure," ING analyst Jan Hein de Vroe said.

AkzoNobel is targeting 540 million euros in operational savings and synergies from its acquisition of British paints company ICI by end-2011, but is poised to exceed that target having achieved 530 million euros in savings by its third quarter results last October.

The company - which has lagged its closest rivals for years in terms of operating margins - is targeting an EBITDA margin of 14 percent by the end of 2011, but analysts say AkzoNobel could either lift its target or exceed it.

"We expect AkzoNobel to realise an EBITDA margin of 13.8 percent in 2010, close to its target. If a recovery occurs in 2010, AkzoNobel could achieve its medium-term target a year ahead of schedule," RBS analyst Mutlu Gundogan said.

But worries still persist, with SNS Securities analyst Danny van Doesburg warning results from rival paint makers Sherwin-Williams and PPG suggest volumes remain under pressure and the recovery is slower than anticipated.

AkzoNobel was also fined 40.6 million euros in November by the European Commission for belonging to a price fixing cartel and the deadline to appeal the fine has expired. AkzoNobel could therefore book a charge, impacting its net profit.

AkzoNobel's improved margins come after it divested its drugs unit and narrowed its focus, a move that Belgian peer Solvay has also opted for, closing the sale of its drugs unit to Abbott Laboratories on Tuesday.

On Thursday, Solvay - which is targeting acquisitions after the drugs unit sale - is expected to report a 74 percent rise in recurring earnings before interest and tax (REBIT) to 217 million euros based on the average forecast from a Reuters poll.

In the year-earlier period, however, Solvay - one of the world's leading makers of polyvinyl chloride (PVC), heavily used in construction - reported a 53 percent slump in REBIT, hit by plunging demand for plastics and 30 million euros in inventory writedowns.

But despite the rise in group REBIT, ING's De Vroe said PVC volumes are likely to have remained very low in the quarter, with margin pressure from U.S. imports and price competition in Europe.

Margins at the chemicals unit should be "more or less intact" with lower energy costs countering the fact that volumes will have come under pressure, De Vroe said, noting that soda ash prices will have remained fairly stable.

Solvay is the world's leading maker of soda ash, a key raw material for glass and the outlook remains tough.

"We expect 2010 to be a difficult year in chemicals, as we expect a price decline of more than 5 percent in soda ash in 2010, resulting in approximately 3 percent lower REBIT margins," Rabo Securities analyst Fabian Smeets said.


Pretium Packaging announces completion of its merger with Novapak Corporation

ST. LOUIS (PRNewswire) -- Pretium Packaging LLC, a provider of custom blow molded packaging solutions with a primary focus in the food, pharmaceutical and personal care markets, in partnership with Castle Harlan Inc., a New York-based buy-out firm, and existing Pretium management, announces the completion of its merger with Novapak Corporation which was previously announced on January 18, 2010. The transaction is returning $8,572.42 per share in cash to holders of common stock in PVC Container Corporation, the parent company of Novapak.

The combined business will generate more than $240 million of blow molded bottle and injection molded pre-form sales to over 500 customers from 14 manufacturing facilities in the U.S. and Canada. The new entity will retain the name Pretium Packaging, be headquartered in Chesterfield, MO, and be managed by the current Pretium management team together with certain members of Novapak management.

Pretium's President and CEO George Abd stated, "We are very excited to realize the opportunity this combined enterprise presents. Both Pretium and Novapak have focused on small to medium volume, custom bottle applications. Much of both companies' recent growth has come in PET bottles. The advantage for both companies' customers is that while Pretium has invested significantly in one-step, wide mouth PET technology and assets, Novapak has made significant investment in two-step, narrow neck PET and pre-form manufacturing. The combination of these world-class assets and capabilities, will allow the merged company to offer our customers a full range of one-step and two-step PET bottles, as well as extrusion blow molding and injection blow molding alternatives in HDPE and PP. In addition, there is very little overlap between the two companies' current customers, enabling the company to now deliver a broader range of products and services to an already existing customer base. We are also thrilled to be aligned with Castle Harlan, which has a long history of partnering with management teams to realize shareholder value through superior customer service."


Clariant cuts jobs, moves factories as slump persists

February 16 (Bloomberg) -- Clariant AG, the world's biggest maker of printing-ink chemicals, will deepen job cuts and move some production to prepare for a year that will be ⌠similarly difficult to 2009.

Clariant will move its textile dyes and textile production from its headquarters in Muttenz, Switzerland to Asia, and paper-chemical production will move to Spain, it said today in a statement. The company will also partially close a factory in Brazil and shutter an Indian facility. The measures will lead to 500 job cuts in total, with 400 in Switzerland, Clariant said.

⌠Our performance still lags behind our peers, Chief Executive Officer Hariolf Kottman, who took over in September 2008, said on a conference call. ⌠Hence, we will decisively continue with our restructuring efforts in 2010, which we expect to be a similarly difficult year to 2009.

Clariant declined as much as 5.5 percent in Zurich, the biggest drop since Feb. 5. The plan for more job cuts follows a move last year to close production sites and reduce the number of employees to 17,500 as the global recession weighed on demand for chemicals used in dyes, plastic additives and pigments.

The company reported a fourth-quarter net loss of 68 million Swiss francs ($63.3 million) today, down from 207 million Swiss francs a year earlier.

Reorganizing the company will cost 200 million francs to 300 million francs this year, Clariant estimated. Sales in local currencies will rise in the ⌠low-single-digit range this year, while the margin on earnings before interest and taxes and exceptional items will likely rise above 6 percent, Clariant said. The margin was 4.1 percent in 2009.

Clariant estimates it can eek 80,000 francs to 100,000 francs on average for each job that it cuts, and the reductions will happen progressively over several quarters, Chief Financial Officer Patrick Jany said in an interview in Zurich.

Raw material costs will advance by 2 percent to 3 percent this year, and the company will offset that increase by raising its selling prices, the CFO said.

The stock fell as much as 63 centimes to 10.76 francs, and traded at 11.02 francs as of 12:43 p.m. The shares have lost 9 percent of their value this year.

⌠The new CEO has been aggressive and pro-active in cutting costs from the group and squeezing cash from all aspects of the business, Citigroup Global Markets analyst Andrew Benson said in a note. He recommends investors sell Clariant shares, because given the structural problems the group faces, we do not see scope for these shares to deliver value to shareholders.