Lubrizol Inc. said it has no immediate plans to pay down debt by selling off parts of its newly acquired Noveon unit, contrary to a suggestion offered in a report from a well-known debt-rating agency.
However, a Lubrizol spokesman said the company is conducting a review that eventually could result in unit closings or layoffs.
A June 15 report from New York-based Moody's Investors Service said that Noveon's specialty plastics business ``has good margins, but no overlap with Lubrizol's operations.''
``In Moody's opinion, several businesses that offer no synergies and are minimal contributors to the bottom line could be divested to accelerate debt reduction,'' officials said in the report, in which Moody's also downgraded its debt rating for Wickliffe, Ohio-based Lubrizol.
But Lubrizol spokesman James Baldwin said June 17 that the company can meet debt payments through cash flow from its businesses and from a $425 million stock offering scheduled for later this year.
Baldwin added that Lubrizol was not surprised by the Moody's announcement, but the firm believes Moody's ``took liberties'' with some information in its release.
Lubrizol's $1.84 billion purchase of Brecksville, Ohio-based Noveon - which was completed June 3 - included the assumption of $920 million in debt. The move pushed Lubrizol's total corporate debt close to $2 billion.
Although no sales are imminent, Baldwin said Lubrizol is evaluating its manufacturing process, and that evaluation may have an impact on both Lubrizol and Noveon facilities.
Baldwin said the review, which is expected to continue into next year, ``could result in certain units shutting down or in reductions in staffing.''
``We'll look at everything very carefully before making decisions,'' he said. ``But it's too early in the process right now to provide any details.''
The Noveon deal is the largest in Lubrizol's 76-year history and is expected to save the firm $40 million during the next three years.
Lubrizol is a publicly traded supplier of specialty additives and lubricants, but has no existing plastics product lines. The firm posted sales of $2 billion in 2003 and employs more than 5,000 worldwide.
Noveon employs 2,800 at 27 sites globally.
The company had sales of $1.1 billion last year. Its offerings include specialty PVC, thermoplastic polyurethane and cross-linked polyethylene product lines.
Noveon's specialty materials unit, which contains most of its plastics-related business, was the largest of the company's three units in 2003, representing 38 percent of its total sales.