The HCC separation is planned to take place as a spin-off of 100% of the newly independent firm’s shares to current holders of Hexion Holdings common stock and warrants, who will then own shares of both companies. The holding announced in August this year that it had filed with the US Securities and Exchange Commission to launch an initial public offering on the New York Stock Exchange. Target for the IPO was given as the 2021 fourth quarter.

In view of the company’s recent strong performance, and after a comprehensive evaluation of potential strategic actions, Hexion’s chairman, president and CEO, Craig Rogerson – who will continue in those roles – said the board and management team had determined that now is the right time to pursue a separation. The construction chosen, he said, will provide each company with “significant liquidity, a sharper strategic focus and appropriately capitalized balance sheets.”

Material benefits to the standalone companies, Rogerson said, could include a focus on specific operational, R&D and growth priorities and the implementation of financial targets that best fit each business, in addition to a capital structure, dividend policy and capital deployment strategy tailored to specific business models and growth strategies.

Both businesses, the holding chief noted, are expected to have direct access to the debt and equity capital markets an investor base aligned with the streamlined value proposition for each company. Hexion Holdings, with pro forma sales of $.1 4 billion in 2020, can continue to expect favorable cash flow attributes and a stronger financial profile as it continues to build on its strong momentum driven primarily by building applications in North America, the CEO said.

HCC positioned to expand in global markets

As a standalone company, Hexion said it believes that HCC, with 2020 sales of $1.1 billion will have greater ability to grow and expand its leadership position in attractive global markets, addressing customers’ demands for more environmentally friendly solutions for markets such as wind energy and automotive. The company also will remain a leading global supplier of epoxy resins and systems.

HCC’s senior management team is to be led by Ann Frederix, currently senior vice president, Coatings & Composites within Hexion Holding. The new company will be based at Rotterdam, the Netherlands, with Stafford, Texas, as its primary US office. The spin-off will also maintain an executive office in Shanghai, China, and continue to operate world-scale epoxy plants in Pernis and Deer Park, Texas, as well as running additional manufacturing operations in the US, Germany, Spain and South Korea.

Technological and logistical plans for the Hexion carve-up seem to be borrowed from the playbooks of prior moves in the international chemical industry, such as the separation of Bayer and Lanxess over a decade ago or the earlier creation of chemical parks to manage tangible capital assets of dissolved conglomerates such as ICI or Hoechst. As some of the production structures overlap, Hexion and HCC are expected to enter into a Shared Services Agreement that would include site maintenance.

Author: Dede Williams, Freelance Journalist