Issue Date: April 27, 2010
Eastman Aims To Sell Its Polyester Unit
Eastman Chemical says it is reviewing "strategic options," notably a divestiture, for its polyethylene terephthalate (PET) resins business.
Eastman started making polyester for fibers more than 50 years ago when it was the Tennessee Eastman division of Eastman Kodak. Today, the company makes PET resins for packaging and beverage bottles. It plans to retain its operations in specialty copolymer polyesters.
The company has retained Merrill Lynch as its financial adviser for the strategic review. "I expect the process will proceed at a fairly good pace," Eastman CEO Jim Rogers told financial analysts. "We will be able to get a feel in the next few months of who the best owner of the assets is: whether it is Eastman or somebody else."
PET accounts for nearly all of Eastman's performance polymers reporting segment, which has been struggling in recent years. In 2009, it generated an operating loss of $66 million on sales of $719 million. The year before, it lost $57 million on $1.1 billion in sales.
The company makes PET in Columbia, S.C., where it runs a 535,000-metric-ton-per-year plant that uses IntegRex technology, which it developed in the early 2000s to closely integrate terephthalic acid and PET production. Eastman says the plant is overcoming operational difficulties that have plagued it since a 2008 expansion.
Eastman has already exited PET outside of the U.S. In 2007, it sold plants in Argentina and Mexico to Grupo Alfa, a Mexican conglomerate that owns U.S. PET resin maker DAK Americas. That same year, La Seda de Barcelona bought an Eastman PET plant in Spain. In 2008, Eastman sold PET assets in the U.K. and the Netherlands to Indonesia's Indorama for $354 million.
During that period, Eastman also shut down some 400,000 metric tons of PET capacity worldwide, though it did convert some of it to specialty polyester copolymer production.
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