Chemtrusion Inc. President Scott Owens is leading a group that wants to buy the compounding company from parent company InterSystems Inc.
There is an unusual twist to this management buyout: A key factor in InterSystems' decision to sell the division is that Owens otherwise might have left the company, which could have led to the loss of Chemtrusion's biggest customer.
InterSystems, a holding company in Omaha, Neb., announced the pending deal Aug. 22, when the firm released its second-quarter financial results. Chemtrusion is the main business of InterSystems, which is traded on the American Stock Exchange.
A toll compounder, Chemtrusion operates compounding factories in Houston and Jeffersonville, Ind. Chemtrusion runs the Indiana factory for Mytex Polymers, a joint venture between ExxonMobil Chemical Co. and Japan Polychem Corp., formerly Mitsubishi Chemical Corp.
In the quarterly report, Chip Craig, InterSystems' chief executive officer, said he expects Chemtrusion to be sold for $2.7 million. That breaks down to $400,000 at closing, a promissory note for $300,000 and future consideration of $2 million based on sharing the management fee for operating Chemtrusion's factory in Indiana.
Contacted Aug. 24 in Houston, Owens would not comment on terms of the deal.
According to InterSystems' 2000 annual report, Mytex has the right to terminate its agreement if Owens no longer is employed by Chemtrusion in an executive post, and in the event of a change in control of Chemtrusion.
``A significant factor that couldn't be ignored in reaching this decision was that the offer came from Chemtrusion's president, who had expressed his reluctance to work under a parent-company structure into the future,'' Craig said. ``Without the president's involvement with the company, Chemtrusion ran the risk of forfeiting its principal operating contract.''
Owens did not want to comment on that, except to say Chemtrusion has close ties with all its customers.
Owens said his goal is to keep together the Chemtrusion team, which includes several veteran employees. Owens started there in 1987 as project engineer in the original Chemtrusion plant.
``I can say that, as president of Chemtrusion, I've had the pleasure of leading a team of employees comprising the best people in this industry,'' Owens said.
Last year InterSystems launched a new strategy of providing capital funding for small and midsize businesses. That will be its core business after selling Chemtrusion.
In the second-quarter report, Craig said InterSystems ``realized its Houston operations have operated unprofitably each of the last three years ... and has the ability at any time to put a severe strain on InterSystems' limited capital.''
Owens declined to comment on the Houston plant specifically. He said Chemtrusion has faced ``challenges and changes in the marketplace,'' like other companies.
``The business as a whole is a healthy business,'' he said.