Reeling from a three-year loss of almost $150 million, PVC maker Borden Chemicals and Plastics LP filed April 3 for protection under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Del.
Company officials cited "a critical debt and liquidity situation" caused by depressed resin prices and demand, and sharply increased energy costs.
"We recognize that we're a stand-alone resin producer and that our competitors are more integrated than we are," Borden spokesman John Kompa said. "We'll continue to look for ways to be more integrated as we move through this situation."
Geismar, La.-based Borden has been unable to overcome low PVC demand in the last year, as well as a lack of integration in the chlorovinyl chain, which includes PVC and raw materials such as vinyl chloride monomer and ethylene dichloride.
Kompa added that the bankruptcy filing will not affect Borden's ability to meet customer orders and is not expected to result in laying off any of the firm's 550 employees.
Borden operates about 1.5 billion pounds of PVC capacity at plants in Geismar and Addis, La.; and Illiopolis, Ill., ranking fifth among North American PVC makers with a market share of about 9 percent.
Industry consultant Dick Roman of Cleveland said a large PVC processor might be interested in the Borden assets. But he doubted that another PVC maker would buy the Borden plants, since they are small compared to newer plants. Borden's largest PVC plant is its 600 million-pound-capacity site in Addis. By comparison, Shintech Inc. is opening a new, billion-pound-capacity plant in Addis this year.
Another industry contact disagreed, saying Borden's newer, well-maintained Geismar and Addis sites might interest a PVC maker looking for an inexpensive way to add capacity, but the 25-year-old Illiopolis plant would require too much maintenance and reinvestment.
That source added that Borden's unique acetylene-based VCM production method hurt the company as prices for natural gas, an acetylene feedstock, soared in the last year. Borden stopped VCM production in Geismar earlier this year.
"It was cheaper for Borden to buy VCM from other producers than to make it for themselves because of the cost of acetylene," the contact said.
With both its acetylene-based and conventional ethylene-based VCM in operation, Borden was about two-thirds integrated in VCM. The acetylene shutdown lowered its VCM integration to about 43 percent.
Mark Schneider, Borden president and chief executive officer, said the company will continue to explore a potential merger, joint venture or asset sales. The firm remains in contact with interested parties, but Kompa declined to reveal how many firms were interested in Borden's assets.
Borden lost $84 million in 2000 while posting sales of $491 million.