MELBOURNE, AUSTRALIA - Melbourne-based Orica Ltd. and Cleveland-based PolyOne Corp. have sold the PVC resin portion of their Australian Vinyls Corp. joint venture to an investment consortium for A$40 million (US$20.8 million).
Orica and PolyOne on Jan. 11 announced the sale to a consortium led by former AVC Managing Director Murray Winstanley and investor CPH Investment Corp., based in Sydney, Australia. The pact is to be finalized Feb. 15.
The deal includes only AVC's plant in Laverton, Australia. Next month AVC will close its PVC resin plant in Altona, Australia. The Altona plant's size and age made it ``uncompetitive in the current market environment,'' AVC said. The closing will eliminate 44 jobs.
AVC spokesman Rob Faulkner said it will be ``business as usual'' at the Laverton plant, despite the Altona closing.
``It will be the first time Laverton has run at capacity, so it will be more efficient and busier here after the changeover next month,'' he said.
Orica and PolyOne will retain ownership of AVC's PVC compounding business, which has annual sales of US$20 million. It has production facilities at Deer Park, Flemington and Mentone in Melbourne. The joint venture, which the Winstanley group did not want to buy, will operate as Welvic Australia Pty. Ltd.
AVC began operations in 1997, serving markets including pipe, electrical cable, flooring, medical products, packaging, stationery and footwear. Orica owns 62.5 percent of AVC, and PolyOne owns the remainder.
Malcolm Broomhead, Orica managing director and chief executive officer, said the vinyls business recorded losses for the past two years. In August, Orica announced a write-down of its investment in AVC. PolyOne will recognize a write-down of its AVC investment in its 2001 results.
PolyOne reported a pretax restructuring charge of US$5.1 million in 2001 that included its share of the cost of closing the Altona plant and the write-down of associated assets.
The A$40 million (US$20.8 million) includes a deferred A$10 million (US$5.2 million) payment, with an additional performance payment due if profitability targets are met.
No details of the incentive payment were released. The supplementary A$10 million payment has been deferred until ``a later date,'' but Orica spokesman Stewart Murrihy said the payment is ``at least beyond this financial year.''