Solvay To Divest Solvay Indupa Stake To Braskem

(RTTNews) - Belgium-based chemicals and plastics maker Solvay SA (SVYSF.PK, SVYZY.PK) has reached a binding agreement with Braskem, Brazil's leading PVC producer, to sell its 70.59% interest in Solvay Indupa. This deal comes after Solvay classified Solvay Indupa as an "Asset held for sale" from the 2012 fourth quarter.

The transaction is based on a total enterprise value of $290 million, or 211 million euros, representing 5.1 x mid-cycle REBITDA. The enterprise value consists of Solvay Indupa's net financial debt, which was accounted for in Solvay's "Assets and Liabilities held for sale" at year-end 2012 for 178 million euros. The cash proceeds for Solvay's equity stake are to reach $25 million, or 18 million euros.

The sale is likely to result in an estimated non-cash net loss of some 120 million euros for Solvay Group share. The loss includes the impairment resulting from the fair valuation of Solvay Indupa, which would be recognized at the year end, and the recognition at the closing date of the transaction of currency translation losses, previously recognized in equity in accordance with IFRS rules.

"This divestment is part of Solvay's strategic portfolio management. It will reduce the Group's exposure to the economic cycle and to energy-intensive businesses, allowing Solvay to achieve higher growth, higher returns and lower capital intensity," says Jacques Van Rijckevorsel, member of Solvay's executive committee. "As part of Braskem, Solvay Indupa will enjoy ready access to raw materials and energy which will enhance its position in a competitive and growing market. This will allow Solvay Indupa to develop its activities sustainably in Latin America for the benefit of both its customers and employees."

The closing of the transaction is subject to the customary closing conditions, including antitrust approval. With 936 employees and two production sites in Argentina and Brazil, Solvay Indupa recorded net sales of 542 million euros in 2012. It is listed on the Buenos Aires Stock Exchange.