Spanish PET Producer La Seda de Barcelona Files for Bankruptcy

Spanish PET producer La Seda de Barcelona has filed an insolvency petition in a Barcelona commercial court after failing to gain the support of 75% of its creditors to restructure its finances.

At the end of May, the company said it had secured approval from leading lenders for a debt restructuring package that would keep it in business until the end of June. The plans apparently fell apart as management and creditors could not agree on how the company's operations could be refocused. As one move to stem losses, La Seda had announced that it would close its unprofitable 80,000 t/y polymerization plant at Volos, Greece.

In the middle of the past decade, the Spanish company ran an aggressive expansion course, ramping up PET capacity throughout Europe, buying up plants put up for sale by companies such as Eastman of the U.S. that were departing the difficult European market and taking over rivals such as Volos of Greece and packaging producer Schmalbach-Lubeca of Germany.

However, along with Asian competition - the expansion drive by Indonesia's Indorama is one example - its polymerization business was pressured by an oversupplied market and weakening demand blamed in part on poor European weather. Volatility in petrochemical markets also took its toll.

In 2012, La Seda began an unsuccessful search for a joint venture partner or an industrial investor. It also sought at times to integrate its production chain - ranging from PET feedstocks paraxylene (PX), monoethylene glycol (MEG) and ethylene oxide (EO) to PET polymerization and bottle production - alternatively, to separate or even sell them. Shareholders with differing interests made the decision-making process difficult.

For full year 2012, the company reported sales flat at €1.17 billion, but operating losses widened to €68.8 million from €10.6 million a year earlier. The net consolidated loss rose to €133.7 million from €49.6 million, as EBITDA was halved from €48 million to €24.8 million. The bottle manufacturing end of the business, by contrast, increased its EBITDA from €43.8 million to €49.6 million.

In the event of liquidation, it is unclear what would happen to La Seda's production facilities scattered through southern Europe, Turkey and North Africa. The PET packaging business is seen as most likely to survive.