By: Richard Higgs
November 6, 2012
BARCELONA, SPAIN (Nov. 6, 12:45 p.m. ET) — Packaging producer La Seda de Barcelona is prepared to sell its PET polymer and raw material plants to raise new capital if it cannot attract a minority industrial partner to help develop its PET and chemical operations.
This radical solution to the group’s current liquidity difficulties was revealed by La Seda’s executive president Carlos Moreira da Silva after an extraordinary LSB shareholders meeting. The move follows the Spanish group’s abortive attempt in July to raise 40 million euros in new share capital in support of an ambitious downstream investment program.
Barcelona-based LSB is in preliminary discussions with up to five potential partners with a view to one taking a 25 percent stake in a new business integrating all the group’s upstream PET, terephthalic acid (PTA), glycol and PET recycling operations.
LSB is hopeful that it will reach agreement with a suitable strategic partner in the first three months of 2013, a group spokeswoman confirmed. But, she stressed, the task of finding an industrial partner to invest in the business at this time of economic crisis would be “relatively difficult.”
If the Spanish group is unable to establish the joint venture, it would have to sell the upstream petrochemical assets. LSB has PET plants across Europe in Spain, Italy, Greece and Turkey and raw material chemical units in Spain and Portugal.
At a news conference after the shareholders’ meeting which was held to consider alternative board proposals to raise the investment capital, Moreira recognized there are many difficulties in trying to sell LSB assets in Spain, Portugal, Greece and Portugal.
La Seda’s Artenius PET plant at El Prat de Llobregat near Barcelona is currently operating at 70 percent of capacity while the PET unit at San Giorgio di Nogaro, Italy is at just 50 percent. However, the company’s PET plants in Adana, Turkey, and Volos, Greece, are running at full capacity.
With Turkey’s economy relatively buoyant, it is clear the most likely initial disposal, if it comes to a PET business sell off, would be the Adana business.
Despite its current financial difficulties, Moreira emphasised that LSB would continue operating and he was confident that projected sales for its petrochemicals businesses will be achieved in the first few months of next year.