Solutia Inc. (St. Louis, MO) will sell its nylon business to an affiliate of the chemical, material, and healthcare-focused private equity firm SK Capital Partners II LP (New York, NY). In return for the unit, which Solutia has been shopping since last summer, it will receive $50 million in cash, a 2% equity stake in a new company based on the nylon business, and annual cash payments of $1 million through 2011. Proceeds from its sale will help Solutia pay down debt under its asset-based revolving credit facility. Solutia’s Heather Gronek told PlasticsToday that the new standalone business would be led by Frederic Poses. Formerly CEO of American Standard and COO of AlliedSignal Inc., Poses will be installed by SK Capital.
Jeffry N. Quinn, chairman, president, and CEO of Solutia Inc., said in a release the deal means “Solutia will have completed its transformation into a pure-play performance materials and specialty chemicals company, with a portfolio of high-value products with world-leading positions.”
In an interview with MPW last August, Craig Yeager, Vydyne compounding manager for Solutia, said growth in 6/6 compounds would be a major focus for the company going forward but that capital was needed to expand compounding capacity, leading the company to seek outside investors. Solutia classified the integrated nylon segment as a discontinued operation effective the third quarter of last year. In the Q3 earnings conference call on Oct. 30, Solutia said the nylon segment generated revenue of $506 million—essentially flat with the prior year’s performance. Selling prices were up year-over-year but didn’t compensate for lower volumes, and adjusted earnings posted a loss of $5 million in the quarter, compared to $24 million in profit the prior year.
In addition to the nylon business’s management and employees, the deal includes its five manufacturing plants located in Alvin, TX (Chocolate Bayou); Decatur, AL; Greenwood, SC; Pensacola, FL; and Foley, AL. Solutia believes the sale of the former Monsanto unit will close in the second quarter of 2009. In the same August 2008 interview, Robert Jacobs, sales manager Americas for Solutia, described the company’s Pensacola site as the largest integrated nylon 6/6 manufacturing site in the world. That facility is supported by 6/6 production in South Carolina.
Gronek told PlasticsToday that the nylon business being sold to SK Capital is the world’s second largest producer of nylon 6/6 intermediates, resins, and fibers. In a fact sheet, it reports nylon sales of $1.962 billion, with 34% coming from resins, followed by fibers with 21%. Starting in 2006, the company expanded nylon production capacity in three phases, most recently adding 68,000 tonnes of capacity last year, for a total increase of 140,000 tonnes.
Solutia’s product line will now include Saflex PVB glass interlay; CPFilms UV-protection aftermarket window films; and technical specialties including Flexsys family of rubber industry chemicals; Skydrol aviation hydraulic fluid; and Therminol heat-transfer fluid.
On April 2, 2008, in its first deal, SK Capital Partners announced the acquisition of continuously cast acrylic sheet and solid surface sheet manufacturer Aristech Acrylics LLC (Florence, KY) from Mitsubishi Corp. SK Capital is headed by managing directors Barry Siadat and Jamshid Keynejad and is affiliated with The Valence Group.—[email protected]