Solutia's nylon resins and specialty films businesses should not be affected by the $500 million sale of portions of the firm's specialty products unit to UCB SA of Brussels, Belgium, Solutia said.
The sale will help St. Louis-based Solutia pay down debt and maximize the value of its integrated nylon business, John Hunter, Solutia chairman, president and chief executive officer, said in a Dec. 3 news release. Integrated nylon, including nylon resin and compounds, is the largest of Solutia's three business units, accounting for about 46 percent of total sales in the first nine months of 2002.
The sale covers specialty amino resins, liquid and powder coatings and adhesives made at 10 plants worldwide. Plants in Europe, South America and Asia will be sold. Solutia will retain its North American plants and produce the affected products for UCB on a contract basis.
The products being sold represent more than half of sales for Solutia's specialty products unit, which generated $697 million in the first nine months of 2002.
``Looking at the overall situation, these businesses were the ones that it made the most sense to sell,'' Solutia spokeswoman Beth Rusert said in a telephone interview. ``This is a major step in improving our financial health.''
Rusert said Solutia has no plans to divest any nylon or film assets.
The move is the latest step Solutia has taken in the past year to alleviate pressure from a faltering economy and from liability over polychlorinated biphenyl contamination that Solutia inherited from forerunner Monsanto Inc.
Solutia's nylon unit struggled in the first nine months of 2002, as sales dropped more than 5 percent vs. the 2001 period to $964 million. Company officials said that improved sales volumes in nylon resins and acrylic fibers were offset by volume decreases in nylon intermediates and carpet fiber.
Overall, Solutia's nine-month sales in 2002 were flat at $2.1 billion.
The disappointing performance and concern over PCB litigation has sent Solutia's per-share stock price on a downward spiral. It began the year at around $13.50 but had dropped to less than $3 by late November. News of the UCB deal seemed to have a positive effect, however, with the price hopping to almost $3.60 in early trading Dec. 3.