Basell falls for Nell

24 June 2005 09:41:08

The endgame for Basell begins... This was emailed at 9pm last night.

Companies incorporated as Sarl in Luxembourg have limited reporting requirements. They need only one director, that can be a company or a person but who need not live in Luxemborg. Accounts must be filed, but they need not be audited. But they must have a deed of incorporation.

Nell Acquisition S.a.r.l. Basell
Press ReleaseLuxembourg / Hoofddorp, The Netherlands - June 23, 2005

1. Anticipated New Capital Structure for Acquisition of Basell
Nell Acquisition S.a.r.l. (“Nell”) anticipates closing the transaction to acquire Basell toward the end of July 2005, provided all necessary regulatory approvals are obtained by then. Upon completion:

· Nell intends to finance the acquisition through a combination of approximately 80% debt and 20% equity.

· Nell plans substantial refinancing of all of Basell’s existing indebtedness except for certain limited bilateral arrangements in specified countries and Basell’s 8.1% notes due 2027.
·
Nell is reviewing its options and is considering prefunding, redeeming, defeasing or tendering for the Basell’s 7.6% notes due in 2007.

2. Basell Announces Q1 EBITDA for 2005 and 12 Months EBITDA to 31st March
Basell has advised Nell that unaudited Q1 2005 EBITDA are approximately €230 million and that for the prior 12 months, ending 31 March 2005, EBITDA are approximately €690 million. Unaudited numbers are on a US GAAP basis.

Notes
Basell is the world’s largest producer of polypropylene and advanced polyolefin products, a leading supplier of polyethylene and catalysts, and a global leader in the development and licensing of polypropylene and polyethylene processes. Basell, together with its joint ventures, has manufacturing facilities around the world and sells products in more than 120 countries.

Sweet Addiction

The European Commission could be on the verge of doing three useful things: helping the environment, helping innovation and helping the petchem industry with feedstock

We have a situation in Europe, where farmers in the Eastern part of England, in the Netherlands and Germany grow sugar beet. To ensure these people get a ‘reasonable price’ for their sugar beet the price of sugar in Europe is managed under a European agreement that goes back to at least 1968.

According to Europa Bio, the price of sugar in Europe is about twice the global market price and is being investigated by the European Commission and is considering cutting the price of sugar by 39% over the two years between 2006 and 2007. This featherbedding of farmers has hobbled some of Europe’s brightest sunrise industries in biotechnology.

Unlike traditional chemical routes to products such as vitamins and enzymes, biotechnology uses sugars not oil as its feedstock. So to some extent the business has followed cheap sugar.

Companies in the sector have already moved polylactic acid production out of Europe and into China. It was cheap sugar not cheap labour that propelled the move. There is a real risk that Brazil and the US, which have cheap, accessible sugar could become world hubs for the business.

So Europeans could be paying for sugar in three ways, through tax, through the till and they could loose a highly taxable industry to other parts of the world.

Apart from these high tech uses of sugar, it is a good starting point for bio-ethanol. That's alcohol from fermentation. The commission has set targets that around 6% of all the motor fuel sold in the EC in 2010 should be bioethanol. Stimulating that business needs infrastructure and cheap feedstock. Cutting the artifcicially high price of sugar will help cut greenhouse gasses and increase the availability of petchem feedstocks that are curretnly burnt in petrol.

Experts warn of overheated chemicals sector

Rooting about on the web, I came across this story. Chinese politicians are concerned that the domesetically built inorganic chemcials sector there is in danger of overheating leading to boom and bust.

Experts warn of overheated chemicals sector

Now is the summer of our discontent

Sorry, more bad Shakespear. I do read other authors. But it struck me that the news that there is a strike underway at carbon-black maker Cabot in the US, was the third I'd heard about in the last week. Not counting the wood-burning pot-boiler in Finland. One other at Tessenderlo, Belgium a one-day stoppage, on 10 June. Another 24-hour protest at BASF's Feleuy, Belgium plant over restructuring.
The reasons are complex, but workers in Europe are increasingly worried about job security and see profitability rising in a number of sectors. The US workers at Cabot Supermetals have been negotiating since 31 March and are currently without formal contracts of employment.

Why do badly managed firms survive?

Why do badly managed firms survive?

I read the piece in a back issue of the Economist last Friday. The London School of Economics and the business consultants McKinsey think they may have found at least part of the answer
I'd welcome your comments....

At the time I was rattling across the West Country my way to interview someone who makes a living telling companies how to dismantle chemical plants so they can be shipped around the world and rebuilt. Look out for that in European Chemical News.

Simon