IHS Chemical Week


Chemical Finance Digest, June 20-24

2:52 PM MDT | June 27, 2011 | By VINCENT VALK

Topping the headlines last week, PetroLogistics is filing for a $600 million IPO. The company did not disclose the share price of the offering, or how many shares it plans to sell.
In M&A news, Eastman is planning to acquire Sterling Chemicals for $100 million.
Tata Chemicals Europe has secured a $240 million debt deal, replacing the package used to fund the company's acquisition of British Salt in January. Meanwhile, Cytec has renewed and amended its $400 million credit agreement.
At CW's CFO Conference, bankers and execs discussed keeping growth on track as economic uncertainty rises. At an M&A panel I attended, the prospect of a 'new bubble' was raised, all in all, it sounded pretty similar to what was said at Houliahn Lokey's Global Industrials Conference last month. I blogged about that here, and don't really have much to add, except this: it's a little surreal to hear about "froth" in the M&A markets, just a few years after the last crisis, and especially so when the economy still isn't doing particularly well.
Outside that, Rockwood CFO Robert Zatta gave an interesting talk on his company's deleveraging efforts. I'd think they're doing something right, seeing as Rockwood's stock has gone up to $52/share from a February 2009 trough of $4/share. At the same time, debt-to-EBITDA was down to 2.2x in the first-quarter, from over 6x before the deleveraging began. The company used IPO proceeds, asset sales, and excess cash in a concerted effort to pay down debt. The company is comfortable with its current capital structure, Zatta says, but it may not quite be done deleveraging– it would like to repay $750 million in high-yield bonds.
In macroeconomic news, U.S. GDP growth was revised upwards, albeit slightly, from 1.8% to 1.9%, IHS Global Insight expects growth to pick up, to over 3%, in the second half, as commodity prices decline somewhat and the motor vehicle supply chain recovers from the Japan disaster. Still, growth is expected to fall back again in 2012. Stating the obvious, Global Insight economist Nigel Gault notes "this is a long, drawn-out and painfully slow recovery." It could be made even more painful by sovereign debt problems, both in the euro zone and, in an entirely unnecessary bit of political brinksmanship, in the U.S.

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