PolyOne to Sell Elastomers & Performance Additives Business to Lion Chemical Capital and ACI Capital

01-Jul-2004

PolyOne Corporation announced that it has signed a definitive agreement to sell its elastomers and Performance additives business to an entity formed by an investor group led by Lion Chemical Capital LLC and ACI Capital Co., Inc.

The purchase agreement provides that PolyOne will receive gross proceeds before associated fees and costs of approximately $120 million, of which $106 million will be paid in cash and $14 million in the form of a note from the buyer. This price is within PolyOne's range of estimates for the sale of the Elastomers unit. The transaction, which is expected to close in the third quarter, is subject to customary closing conditions and the buyers' receipt of their financing.

The Elastomers and Performance Additives business is a leading merchant provider of customized, high-performance elastomer materials and additives for use in diverse end markets, including the transportation, electrical, industrial and printing industries. Headquartered in Solon, Ohio, the group operates five manufacturing facilities in the United States and one each in Mexico and the United Kingdom. Its first rubber compounding facility in China is slated to open near Shanghai later this year.

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Revenues for the four quarters ended March 31, 2004, were $349 million, which represents 13.5 percent of PolyOne's total sales from both its continuing and discontinued operations during that period.

"This action represents significant progress toward our announced goals to focus on our businesses with the greatest synergy and to improve our balance sheet," said Thomas A. Waltermire, president and chief executive officer. "Our Elastomers business unit is the largest of the businesses we targeted for divestment late last year. We are satisfied that we have negotiated a fair value, and we plan to apply the proceeds to debt reduction."

"This business has the capacity and proven capability to grow, and we are committed to its success," said Peter De Leeuw, managing director of Lion Chemical and the prospective chairman of the new company. "We anticipate no immediate change in business practices of the Elastomers unit, and no effect on Elastomers customers, suppliers or employees. The unit's current management team, headed by PolyOne Vice President and General Manager John E. Quinn, will remain in place."

Added Ezra Field, a managing director of ACI Capital, "We are excited to have the opportunity to make this investment, and we look forward to a successful partnership with the company's management. We believe we are acquiring a market-leading business at an attractive point in the business cycle."

PolyOne announced last October that, as part of its efforts to improve profitability and strengthen its balance sheet, it would confine its strategic emphasis to its Plastics Compounding, Color and Additives Masterbatch, and Distribution businesses. These businesses have leading market positions, and most of them are global in scope. In line with this goal, PolyOne announced that it would divest its Elastomers and Performance Additives, Engineered Films and Specialty Resins businesses. As a result, the Company began reporting these business units as discontinued operations in the fourth quarter of 2003. PolyOne has stated that it expects to complete all three dispositions in 2004. The pending Elastomers divestment is the first such disposition.

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