Business Concentrates

Huntsman sets price for IPO

Huntsman Corp., in a filing with the Securities & Exchange Commission, says it expects its proposed initial public offering of 51.1 million shares of common stock to be priced at $21 to $23 per share. The company will also issue 5 million shares of convertible preferred stock valued at $50 per share. Huntsman estimates the net proceeds of the IPO, expected in mid-February, to be about $1.3 billion. It will use the funds to pay down debt, which currently totals more than $5 billion. If the IPO is completed as proposed, Standard & Poor's rating service will raise debt ratings for four Huntsman companies to BB– from B. Holding company and parent Huntsman Corp. will be assigned the same BB– rating. S&P credit analyst Kyle Loughlin says: "The IPO is a meaningful step that improves the capital structure and reduces default risk. However, despite improving business prospects, Huntsman will still have an aggressive debt burden that elevates vulnerability to the industry cycles that are inherent in the chemicals business."

Arkema plans vinyl revamp

Arkema, the chemical business of French oil company Total, is launching a cost-cutting plan in its France-based vinyl products business. The plan, which was presented recently to the firm's central works council, involves the elimination of 548 jobs, although the company says layoffs will be avoided through early retirement and redeployment in the company. The biggest impact will be in Saint-Auban, where Arkema will shut down chlor-alkali, vinyl chloride, trichlorethylene, and chloroacetic acid plants and eliminate 380 jobs. Production of organic peroxides will end in Saint-Fons, as will production of bromochemicals in Jarrie. Arkema says it will invest $390 million in the vinyl business over the next five years to modernize sites and ensure long-term competitiveness.

Nova expanding Corunna site

Nova Chemicals is investing about $210 million to modernize its Corunna, Ontario, ethylene complex. Scheduled for completion next year, the project will add 225 million to 400 million lb per year of ethylene capacity--depending on feedstock--as well as more capacity for coproducts such as propylene. The company says the expansion will allow it to reduce ethylene shipments to Ontario from its Alberta operation. "This modernization will help us ensure reliable high production rates as we head into peak industry conditions," Nova CEO Jeffrey M. Lipton says. Separately, Nova says it is increasing capacity for its Arcel polyethylene/polystyrene packing foam resin in Beaver Valley, Pa., to 100 million lb by the end of 2006.

Dow buys out PBB Polisur

Dow Chemical has bought out Repsol YPF's 28% stake in their PBB Polisur petrochemical joint venture in Bahia Blanca, Argentina. According to a Repsol financial filing, the purchase price was $97.5 million. PBB Polisur has capacity for 700,000 metric tons of ethylene and 600,000 metric tons of polyethylene per year. The deal does not include Repsol's 38% stake in Compañía Mega, a natural gas liquids consortium that supplies ethane to the joint venture. Dow says it is not currently interested in increasing its 28% interest in Mega.

GE invests big in Spain

GE Advanced Materials is building an Ultem polyether imide (PEI) plant in Cartagena, Spain. The company is giving no details about the new unit. However, in late 2002, the firm told C&EN that it was considering a PEI plant in Cartagena based on new technology. Additionally, GE has started up a $780 million polycarbonate plant in Cartagena. The 130,000-metric-ton-per-year polycarbonate plant is the company's second at the site and doubles capacity there. GE says some 90% of the new plant's output will be exported.

DuPont signs with Icoria

DuPont Crop Protection has picked the biotechnology company Icoria to screen a DuPont chemical library for compounds that improve crop productivity by increasing nutrient uptake and stress tolerance. Icoria will employ its ChemTraits screening process, which uses externally applied chemicals rather than genetic engineering to modify a plant's characteristics. DuPont, which will also evaluate the ChemTraits process in its own labs, will make an up-front payment to Icoria as well as possible milestone and royalty payments.

Cargill renames polymer firm

Following its agreement to buy out Dow Chemical's stake in the Cargill Dow polylactic acid joint venture, Cargill has decided to rename the venture NatureWorks, the existing brand name for the polymer line. Dow CEO Andrew N. Liveris recently told analysts that he doubted customers would "pay a premium for environmentally friendly polymers." In announcing the name change, Kathleen Bader, the CEO of NatureWorks and a former Dow executive, said, "Customers are recognizing the benefits of a polymer made from annually renewable resources that is competitive with fossil-fuel-based materials on cost and performance." NatureWorks, which posted a 40% increase in sales in 2004, says the polymers are cost competitive with polyethylene terephthalate resins.

Lanxess stock is launched

Following more than a year of planning, Bayer has spun off Lanxess on the Frankfurt Stock Exchange. Lanxess includes the bulk of Bayer's chemicals business and one-third of its polymers business. Each Bayer shareholder received one share of Lanxess for each 10 shares held in Bayer. Lanxess' shares debuted at about $20.50, valuing the new firm at nearly $1.5 billion. Lanxess starts life with a mandate to get trim. Managers of the new firm discussed plans last month to reduce personnel expenses by $30 million this year (C&EN, Jan. 10, page 12).

Sumitomo boosts LCD presence

Adding to several hundred million dollars spent in the past three years, Sumitomo Chemical will invest more than $135 million in liquid-crystal display (LCD) materials. Close to $50 million will go to build a color filter unit at a customer's LCD plant in Taiwan's Hsinchu Science Park. Another $50 million will go to an LCD and semiconductor materials R&D facility at Sumitomo's South Korean subsidiary, Dongwoo Fine Chem. Sumitomo will also increase color filter capacity by a third, to 160,000 sheets per month, at another South Korean subsidiary, Dongwoo STI. In Japan, Sumitomo will spend $10 million on an electronic materials R&D center in Ehime. Also in Ehime, Sumitomo will spend nearly $30 million to relocate a polarizer coating plant from another city and to upgrade quality control for polarizing films. To compete better in southern China, Sumitomo will set up a polarizer finishing plant in Hong Kong that will complement facilities now under construction farther north in Wuxi. Sumitomo expects that its sales of electronic materials will increase from $1.8 billion in 2004 to $2.4 billion in 2006.

Chemical output slips slightly

U.S. chemical production in December edged down from the previous month, but was still ahead of where it had been in December 2003. According to seasonally adjusted Federal Reserve Board data, the production index for all chemicals in the last month of 2004 was 111.5 (1997 = 100), off less than 0.1% from November. The index was up 3.4% from the comparable month in 2003. The government's estimate of seasonally adjusted capacity utilization for December was 76.0%, compared with 76.1% in November and 73.8% in the previous December.

InnoCentive in two new deals

InnoCentive, the scientific problem-solving website, has signed agreements with Rohm and Haas and the Indian Institute of Chemical Technology. Rohm and Haas is the latest chemical company to sign up to use InnoCentive to help solve its research problems. The firm's emerging technologies R&D group will be the initial user. InnoCentive's deal with IICT is on the other side of the problem-solving equation. The two have signed a letter of understanding on an agreement that will enable IICT scientists to access problems posted on the InnoCentive website. InnoCentive earlier signed a similar deal with India's National Chemical Laboratory.

Mitsubishi ups carbon fiber

Mitsubishi Rayon will boost capacity at its California-based carbon fiber subsidiary Grafil by a third, to 2,000 metric tons per year. Mitsubishi has also agreed to source between 500 and 750 metric tons of carbon fiber from SGL Technic, a Scottish subsidiary of German carbon fiber producer SGL Carbon. Mitsubishi says it's considering building a 2,000-metric-ton-per-year carbon fiber facility in Japan. The Japanese firm, whose global carbon fiber capacity now stands at 4,700 metric tons, says it expects to qualify to provide material to the giant Airbus 380 passenger plane.

Shire signs with New River

Shire Laboratories and New River Pharmaceuticals plan to codevelop and manufacture New River's NRP104, an amphetamine pro-drug that is currently in Phase III clinical trials for the treatment of attention deficit hyperactivity disorder. Shire will pay $50 million upon signing the agreement and a further $50 million upon acceptance of a New Drug Application by FDA. There's also potential for New River to receive up to $300 million in milestone payments and a sales bonus of $100 million. In the U.S., the firms agree to cooperatively develop, manufacture, market, and sell the drug. For the rest of the world, Shire has licensed the right to the compound, with New River receiving a "low-double-digit royalty" on sales.

BUSINESS ROUNDUP

• Novartis has begun a two-year effort with Argenta Discovery to develop diabetes therapies. The agreement involves 18 medicinal chemists at Argenta. 

• FMC will restart 250,000 tons per year of soda ash capacity at its Granger, Wyo., facility, which was idled in 2001 because of poor market conditions. FMC says it is responding to recovery in soda ash demand, particularly in the export market.

• ExxonMobil Chemical will expand oxo-alcohol capacity by some 22% to 220,000 metric tons per year at its Singapore petrochemical complex. The work is scheduled for completion in the second half of next year.

• JSR Corp. will stop producing latex in Kashima, Japan, and will boost annual capacity by 20,000 metric tons in Yokkaichi. The Japanese synthetic rubber and electronic materials firm calls the plan an efficiency move.

• The Novartis Venture Fund invested $28 million in health-related companies in 2004, including $8.5 million in six new companies. Three firms in the Novartis portfolio--Eyetech Pharmaceuticals, Idenix Pharmaceuticals, and Theravance--completed initial public offerings last year.

• Dow Chemical is making capital improvements in its solvents and intermediates business that will increase isopropanol capacity in Texas City, Texas, by 40 million lb per year. The company says the project will take three years.

• Wright Chemical, a Wilmington, N.C.-based producer of fine and specialty chemicals, has been acquired by Oak-Bark Corp. Oak-Bark is headed by William E. Oakley, former president of Wright, and James C. Barker, Wright's vice president of sales and marketing.