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Chemtura's Bankruptcy

Firm cut dividends, jobs and put businesses up for sale, but it was not enough

by Marc S. Reisch
March 23, 2009 | A version of this story appeared in Volume 87, Issue 12

Ending weeks of speculation about its future, specialty chemical firm Chemtura has joined LyondellBasell Industries and Tronox to become the third major chemical firm since January to fall victim to a failing economy and file for bankruptcy reorganization.

Chemtura CEO Craig A. Rogerson says that efforts to increase the firm's cash position by eliminating its dividend, cutting jobs, and putting businesses up for sale have not been enough. The firm also faces a deadline to pay a $374 million bond in mid-July. "Our reduced liquidity position, combined with the anticipated expiration of our bank waiver, led us to determine that a court-supervised restructuring was the best course of action," Rogerson says.

The bankruptcy, filed on March 18, was not unexpected. A few weeks ago, chemical stock analyst Dmitry Silversteyn of Longbow Research speculated that Chemtura might not be able to satisfy financial covenants, sell businesses, and raise cash in time to avoid bankruptcy. And in a February interview with C&EN, Rogerson, who joined Chemtura in December 2008 after serving five years as CEO of Hercules, suggested that bankruptcy might be an option (C&EN, March 9, page 16).

Referring to Chemtura's then 37-cent share price, Rogerson told C&EN, "I would say people are not betting that we are going to be able to get a sale done." Chemtura's shares traded at 12 cents each just before the firm filed for reorganization.

In the meantime, Chemtura says it will carry on business as usual and has secured $400 million of financing from Citibank to help support operations. The company has filed motions in the U.S. Bankruptcy Court for the Southern District of New York asking for court approval to continue paying employee wages and benefits. Going forward, it also says it will pay suppliers in full for all goods and services.


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