Kraton to combine with the styrenic block copolymer business of LCY Chemical

MOSCOW (MRC) -- Kraton Performance Polymers, Inc. has announced that it has entered into a definitive agreement to combine with the styrenic block copolymer operations of Taiwan-based LCY Chemical Corp, according to Ein News.

The transaction will combine Kraton’s broad product portfolio and innovation platform with LCY’s cost-effective and innovative SBC operations and its proven record of driving growth in China and broader Asia.

The combination agreement calls for LCY to contribute its SBC business in exchange for newly issued shares in the combined company, such that Kraton’s shareholders and LCY will each own 50% of the outstanding shares of the combined enterprise. The combined company will be incorporated in the UK, will be listed on the NYSE, and will be led by Kevin M. Fogarty, Kraton’s president and chief executive officer, and a global management team with administrative headquarters located in Houston, TX.

"This combination addresses the strategic objectives of both Kraton and LCY. For Kraton, it represents a logical next step in our ongoing strategy to reposition our manufacturing assets, providing for significant improvements in overall cost structure, and furthering our investments in Asia, thereby increasing our participation in the fast-growing markets of China, and Asia Pacific more generally. Moreover, the combined company’s capital structure, financial flexibility and cash-flow profile will serve as a strong foundation for continued investment in growth," said Kevin M. Fogarty, Kraton’s president and chief executive officer.

"Kraton is an innovation company and our commitment to innovation, including our ongoing portfolio shift, will continue as the combined company focuses on accelerating growth in both its innovation portfolio and its core product offerings," added Fogarty.

“We expect the combination to result in synergies of USD65 million on a run-rate basis by 2017, which will be achieved through fixed-cost rationalization, optimization of variable-costs and through reductions in overhead costs. We estimate we will incur costs totaling approximately USD70 million in the next three years to achieve these synergies. We also expect the combination to be accretive on an operating basis by USD0.75 - USD0.80 in the first full year of combined operations."

The board of directors of LCY has also approved the definitive agreement to combine LCY’s SBC operations with Kraton. The combination is subject to the approval of Kraton’s and LCY’s shareholders; US, Taiwan, China and Turkey regulatory approvals; and other customary regulatory and other approvals and conditions.

The transaction is currently expected to close in the fourth quarter 2014, subject to the timing of necessary regulatory approvals. Kraton intends to file a proxy statement/prospectus with the US Securities and Exchange Commission relating to the transaction as promptly as practicable.

As MRC informed previously, in 2012, Kraton Performance Polymers Inc. exited its joint venture deal with Taipei, Taiwan-based Formosa Petrochemical Corp. (FPCC), seeking instead to expand hydrogenated styrenic block copolymer (HSBC) manufacturing capability in Asia on a stand-alone basis due to the project delay.

Kraton Performance Polymers, Inc. is a leading global producer of engineered polymers, including styrenic block copolymers (SBC).
MRC

MOSCOW (MRC) -- The US has temporarily lifted sanctions on 14 major Iranian petrochemical companies, following the implementation of the Joint Plan of Action (JPOA) on January 20, as per Ein News.

Iran and the P5+1 consisting of US, Russia, UK, France and China Plus Germany agreed to a nuclear deal in Geneva, the capital of Switzerland, on November 24, 2013. The deal also provided a temporary sanctions relief to implement the JPOA.

The JPOA is for six months, during which a final comprehensive deal is likely to be negotiated, which would result in permanent lifting of all sanctions on Iran.

"For the JPOA Period, the US Government is suspending certain sanctions on purchases by non-US persons not otherwise subject to the ITSR of petrochemical products exported from Iran as well as associated services that are required to facilitate such transactions," according to the Department of Treasury.

The relief provided in the JPOA with respect to Iran’s exports of petrochemical products will expire on July 20, 2014, and any transactions, payments, deliveries, or associated services provided in connection with such exports that occur after July 20, 2014, could expose the relevant parties to potential US sanctions.

The temporarily lifting of sanctions on petrochemical exports are applicable to the following fourteen Iranian firms: Bandar Imam Petrochemical Company, Bou Ali Sina Petrochemical Company, Ghaed Bassir Petrochemical Products Company, Iran Petrochemical Commercial Company, Jam Petrochemical Company, Marjan Petrochemical Company, Mobin Petrochemical Company, National Petrochemical Company, Nouri Petrochemical Company, Pars Petrochemical Company, Sadaf Petrochemical Assaluyeh Company, Shahid Tondgooyan Petrochemical Company, Shazand Petrochemical Company, and Tabriz Petrochemical Company.

As MRC reported previously, Iran's petrochemical industries earned approximately USD9.19bln from exporting petrochemical products to the international markets in the first 10 months of the current Iranian calendar year (March 21, 2013-January 20, 2014).
MRC

MOSCOW (MRC) -- Formosa Plastics Corp. (FPC) is likely to shut operations at its ethylene vinyl acetate (EVA) plant, reported Apic-online.

Located at Mailiao in Taiwan, the EVA plant has a production capacity of 168,000 mt/year.

The plant will be taken off-stream in end-March 2014 for safety inspections and will remain shut for 3-4 weeks, according to a Polymerupdate source in Taiwan.

As MRC wrote before, Formosa Plastics is seeking United States permits for a USD2 billion expansion of its Texas operations as cheaper natural gas prices make US production more competitive. The company asked federal and state environmental regulators to approve plans for an ethane cracker unit and downstream derivatives. The investment is bigger than was previously planned by Formosa Plastics as of February 2012, when it said it would spend USD1.7 billion to build two factories and a polyethylene plastics plant in Texas.

Formosa Plastics Corporation is a Taiwanese company based in Taiwan that primarily produces polyvinyl chloride (PVC) resins and other intermediate plastic products.
MRC

MOSCOW (MRC) -- Husky Energy has sanctioned a new crude oil flexibility project at its refinery in Lima, Ohio which will allow for the processing of up to 40,000 bpd of heavy crude feedstock from Western Canada starting in 2017, said Hydrocarbonprocessing.

The estimated cost of the upgrade is approximately USD300 million and will provide an efficient and cost effective way to process a greater variety of crudes.

The project will include modifications to the coker and processing units and will maintain the refinery's ability to refine light crude oil. Engineering work is underway and the equipment upgrades are scheduled to take place during planned turnarounds in late 2015 and late 2016.

The project is part of Husky's focused integration strategy and supports the company's growing heavy oil business in Western Canada, where a strong portfolio of existing and planned projects is expected to increase thermal oil production to 55,000 bpd in 2016.

It is also aligned with Husky's program to enhance its ability to respond more quickly and efficiently to market conditions by increasing feedstock, product and market access flexibility in its refining segment.

As MRC wrote before, Husky Injection Molding Systems Ltd. continues to build its mold-making stable, purchasing Schottli Group, a Swiss maker of molds for medical parts such as syringes, closures and food packagin.

Husky Injection Molding Systems is a leading global supplier of injection molding equipment and services to the plastics industry. The company has more than 40 service and sales offices, supporting customers in over 100 countries. Husky's manufacturing facilities are located in Canada, the United States, Luxembourg, Austria and China.
MRC

MOSCOW (MRC) -- Price increases of Polish expandable polystyrene (EPS) for February shipments were announced this week, according to ICIS-MRC Price report.

Ukrainian customers said export prices of Polish EPS of Syntos rose by EUR40-45/tonne FCA Oswiecim, exclusing VAT.

Prices grew following higher prices of styrene monomer (SM). As reported previously, February contract SM prices in Europe settled down at EUR1,427/tonne, up by EUR17 from the previous month.
MRC