NEWTOWN SQUARE, PA. — Arco Chemical Co. will spend $2.6 billion over the next five years to expand businesses globally. Arco's board of directors approved the capital spending program Dec. 10.
For the period 1997-2001, about 70 percent — or $1.8 billion — is targeted for projects in the company's urethanes and performance chemicals businesses, Arco said. These projects include expansion of the propylene oxide/styrene monomer and butanediol facilities in Channelview, Texas, and construction of PO/SM and BDO facilities in Rotterdam, the Netherlands.
The remaining 30 percent of the five-year budget is targeted for environmental, health and safety projects, maintenance and administrative programs, the Newtown Square-based firm said.
Arco said it expects to fund its program through operating cash flows supported by either refinancing or additional borrowing.
For 1997, $450 million has been allocated for capital spending for all of the company's businesses.
Arco's projects will boost styrene capacity worldwide by about 1.65 billion pounds a year by 2001.
In Rotterdam, Arco will add 1.4 billion pounds of styrene and 625 million pounds of propylene oxide in early 2000, and 250 million pounds of BDO in 2001.
In Channelview, Arco will add 110 million pounds of propylene oxide and 248 million pounds of styrene in early 1998. A majority of the styrene already has been committed to an equity partner, said Gerald T. Davis, Arco spokesman. A debottlenecking project will put BDO capacity to 120 million pounds per year by late 1997, he said.
Also, Arco completed the purchase of Olin Corp.'s toluene diisocyanate and aliphatic diisocyanate businesses in Lake Charles, La., for $565 million.
The deal, announced in October, includes an estimated $80 million of working capital, Arco said Dec. 4.
With the deal, Arco has acquired Olin's related patents and process technologies. Arco will employ about 480 people previously associated with Olin at those facilities.
The acquired Olin assets represent TDI capacity of 250 million pounds and ADI capacity of 17 million pounds. The operations produce key ingredients for urethane foams, industrial coatings, adhesives and sealants.
Arco also will purchase technology for the isocyanates and a dinitrotoluene technology package.