AVON LAKE, OHIO (July 6, 3:20 p.m. EDT) — PolyOne Corp. has exited the PVC resin field by selling its stake in Oxy Vinyls LP to partner Occidental Chemical Corp. for $261 million.
Avon Lake-based PolyOne — and its predecessor Geon Co. — had owned 24 percent of Dallas-based Oxy Vinyls since Geon and OxyChem merged their PVC and vinyl chloride monomer businesses in 1999. PolyOne will retain its existing PVC and VCM supply agreements with Oxy Vinyls through 2024.
Officials with PolyOne said proceeds of the sale, which was announced July 6, will be used to pay down debt. The firm will use about $141 million to pay off senior notes that were due in 2010. Making the move will reduce PolyOne's annual interest expenses by $25 million between 2006 and 2008, officials said.
“In one step, we have substantially strengthened our financial profile, eliminated a primary source of earnings volatility and reaffirmed our commitment to our strategy,” PolyOne Chairman, President and Chief Executive Officer Steve Newlin said in a July 6 news release.
The deal also calls for PolyOne to buy out OxyChem's 10 percent stake in the PVC Powder Blends LP compounding business for $11 million.
OxyVinyls contributed almost $59 million in operating earnings to PolyOne in 2006 — almost twice what it contributed in 2005. Overall, OxyVinyls had 2006 sales of $2.5 billion and operating earnings of almost $273 million.
More recently, however, PolyOne's shares in OxyVinyls and in feedstock maker Sunbelt Chlor-Alkali Partnership of McIntosh, Ala., were cited as primary reasons why its first-quarter profit fell more than 80 percent, when compared with the same quarter in 2006.
OxyVinyls ranks as North America's second-largest PVC maker, with about 4.2 billion pounds of annual capacity, trailing only Shintech Inc. of Houston. OxyVinyls makes PVC and related products at plants in La Porte, Deer Park and Pasadena, Texas; Louisville, Ky.; Pedricktown, N.J.; and Niagara Falls, Ontario. OxyChem is a unit of Occidental Petroleum Corp. of Los Angeles.
PolyOne ranks as North America's largest compounder, with a market share estimated at about 10 percent. The firm posted sales of $2.6 billion and profit of $123 million in 2006. That sales number was up 7 percent vs. 2005, while the profit total was more than double the 2005 amount.