Takeover of insolvent PVC producer Kem One is Sealed
As expected, the Lyon, France, commercial court overseeing the Kem One bankruptcy has given the nod to the sole remaining bidder for the PVC producer. In a volte-face against the plan announced a day earlier, the name of that bidder is Alain Krassny, the industrialist who chairs the supervisory board of Austria chemical producer Donau-Chemie.
Although U.S. private equity group OpenGate formally withdrew its bid in favor of Krassny, this was only a formality and does not mean that the former Rhone-Poulenc executive will be the exclusive owner of Kem One. French law did not enable the merger of the two bids as planned in the short time remaining.
OpenGate and Krassny each will put up €5m for the transaction. The Donau-Chemie chairman, who is credited with turning the Austrian company around, has been named as new president of Kem One. The company's current chief operating officer Frédéric Chalmin has been appointed director general.
The prospective new owners of the PVC business are said to have already concluded difficult negotiations with Kem One's raw materials and energy suppliers. According to French reports, ethylene suppliers Total and LyondellBasell agreed to rebates of 13.6% and 13.5% respectively. Negotiations with electricity giant EdF, which had been asked by the court to discount supplies during the insolvency, are described as "extremely difficult."
Under a court order, Arkema had been obliged to pay part of the ongoing electricity bill for its erstwhile subsidiary. The company took a €125m non-recurring charge for this in its Q1 2013 balance sheet. The French government reportedly also contributed €128m to the Kem One rescue. According to unconfirmed news reports, the rescue plan foresees reducing the company's workforce to around 1,200 from 1,300 currently.
OpenGate's interest in Kem One is part of a move by the investor to build up a new integrated PVC player, creating added value for an eventual resale. In a deal due to be completed in the first half of 2014, it has agreed to acquire to Solvay's PVC compounding subsidiary Benvic based at Jemeppe, Belgium. At the beginning of 2013, it acquired the European profile extrusion business of another Belgian company, Tessenderlo.
