Borden Chemicals and Plastics LP has sold its last PVC and vinyl chloride monomer plant to Geismar Vinyls Corp., a newly formed affiliate of PVC and low density polyethylene maker Westlake Group.
Geismar Vinyls will pay $5 million cash and provide a promissory note for as much as $4 million for Borden's Geismar, La., plant, which can produce 575 million pounds of PVC and 650 million pounds of VCM each year.
The plant's PVC works have been idle since April as Borden worked its way through bankruptcy proceedings that began in early 2001. Geismar-based Borden earlier had sold a PVC plant in Addis, La., to Shintech Inc. of Houston and a similar plant in Illiopolis, Ill., to Formosa Plastics Corp. USA of Livingston, N.J.
The sale is to close by the end of the year, but demand will determine when the plant begins operating again, Westlake spokesman David Hansen said.
Geismar Vinyls will operate as a separate entity. No decisions have been made as to how its management or sales staff will be set up, Hansen added. Some material produced in Geismar also could be sent to North American Pipe Corp., a Westlake-owned firm that ranks as one of North America's largest pipe makers, he said.
The value of the promissory note in the deal will be determined by earnings performance factors connected to the plant. Hansen declined to offer details of what those factors might be. It's also unknown how many people will be employed at the plant when it reopens.
The deal should make Houston-based Westlake a larger player in the North American PVC game. In recent years, Westlake's profile had decreased as it closed a plant in Pace, Fla., leaving its sole PVC works at a 750 million-pound-capacity plant in Calvert City, Ky. Acquiring the Geismar plant will increase Westlake/Geismar Vinyls' share of North American PVC capacity from 5 percent to about 8 percent, according to an industry estimate.
``We're doing this because it provides our ownership with flexibility and options they didn't have before,'' Hansen said. ``It also provides proximity to customers and feedstocks.
``Over the long-term, we believe [PVC] is a solid business.''