Westlake about to create new publicly traded ethylene feedstock business

By Frank Esposito
Senior Staff Reporter

Published: April 29, 2014 3:07 pm ET
Updated: May 1, 2014 1:16 pm ET

Image By: Westlake Chemical Houston-based Westlake Chemical is about to develop a new business, Westlake Chemical Partners LP.

Related to this story

Topics Materials, Mergers & Acquisitions, Materials Suppliers
Companies & Associations Westlake Polymers Corp.

The ongoing natural gas boom is leading Westlake Chemical Corp. to file an initial public stock offering for Westlake Chemical Partners LP, a new business that will operate, develop and acquire production facilities and assets related to plastic feedstock ethylene.

Pipeline assets also are expected to be included in the new firm, according to an April 29 news release. Houston-based Westlake will be majority owner of the new entity. The IPO is expected to raise $272 million, but no listing date or per-share price range was included in the release.

The new company will trade under the symbol WLKP.

The new firm will include Westlake’s ethylene plants in Lake Charles, La., and Calvert City, Ky. Those plants have a combined annual capacity of almost 3.4 billion pounds. The Longview Pipeline — a 200-mile common carrier ethylene pipeline that runs from Mont Belvieu to Longview in Texas — also will be included in the new firm’s assets. Westlake has a polyethylene production unit in Longview.

These assets already have been placed into Westlake Chemical OpCo LP, a business entity owned by both Westlake and the new firm. Westlake’s downstream PE and PVC production facilities will consume a substantial majority of the ethylene produced by OpCo, officials said in an April 29 filing with the Securities and Exchange Commission.

Westlake will enter into a 12-year ethylene sales agreement with the new firm, under which Westalek will agree to buy 95 percent of the new firm’s ethylene output at a price that’s expected to generate a fixed 10-cent per-pound margin. Westlake, in turn, will supply the new firm with the ethane it needs to produce ethylene.

In the filing, officials said that the agreement “will promote more stable and predictable cash flows for OpCo.”

One industry source praised Westlake’s move to form the new firm, saying that Westlake was “a well-managed firm that’s made a lot of good decisions.” Investors apparently agreed with that assessment, driving Westlake’s per-share stock price up almost 10 percent to $70.53 on April 29, the day the move was announced. That hike has been sustained, as the firm’s per-share price was near $71 in early trading May 1.

At the Motley Fool financial web site, market analyst Travis Hoium wrote that the new firm would be a master limited partnership (MLP), adding that MLPs “have become a very popular tool for companies looking to squeeze as much value from energy and chemical-related products as possible.”

Westlake already is flush with the success of a surging per-share stock price that led to a two-for-one stock split on March 18. For full-year 2013, the firm’s profit grew almost 60 percent to more than $610 million. Annual sales grew more than five percent tom almost $3.8 billion.

Westlake — with major businesses in ethylene, polyethylene and PVC resin and pipe — has benefited from low-priced natural gas feedstock at many points of its production chain. The firm added 230 million pounds of ethylene capacity last year at its plant in Lake Charles, La. In 2014, Westlake plans to add almost 200 million pounds of PVC resin capacity and 180 million pounds of ethylene capacity at a site in Calvert City, Ky.


Comments

Westlake about to create new publicly traded ethylene feedstock business

By Frank Esposito
Senior Staff Reporter

Published: April 29, 2014 3:07 pm ET
Updated: May 1, 2014 1:16 pm ET

Post Your Comments


Back to story


More stories

Image

Ferro sells another piece of its plastics business

December 19, 2014 3:33 pm ET

Ferro Corp. has sold its North American polymer additives business to a private equity firm for $154 million in cash.    More

Image

Alex Brands buys iconic Shrinky Dinks toys

December 19, 2014 3:15 pm ET

First Slinky, now Shrinky Dinks. What will toy and games investment firm Alex Brands buy next?    More

Image

Antimicrobial polymers firm TiFiber launching pilot production in Ark.

December 19, 2014 10:58 am ET

TiFiber Inc., which makes synthetic compounds to control dangerous microorganisms, will locate a pilot production facility and its future company...    More

Image

Patel named LyondellBasell CEO

December 19, 2014 9:56 am ET

Bhavesh V. “Bob” Patel has been named CEO of Houston-based polyolefins producer LyondellBasell Industries NV, effective Jan. 12.    More

Image

Momentive to get a new name in January

December 19, 2014 9:45 am ET

Momentive Specialty Chemicals Inc. will change its name to Hexion Inc., effective Jan. 15.    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

Learn more

Plastics in Brazil - State of the Industry Report

This in-depth report examines the Brazilian plastics industry from a historical and geographical context. Our analysts provide insight on economic trends and forecasts, growing manufacturing sectors that utilize plastics, private investment opportunities, market environment challenges, and innovations in R&D.

Data tables and charts on producer prices, trade, plastics production and end market indicators is also included.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events