European equity supplier acquires plastics division

NatWest Ventures announced the acquisition of three companies comprising the core of the Plastics Laminate Div. of Laporte PLC for $27 million.

The companies purchased are Chamberlain Phipps Coatings, the leading U.K. supplier of vinyl base for the wallcovering industry; Chamberlain Plastics, which also has a significant share of the U.K. high-value plastic laminating market; and Ricon, the leading U.K. manufacturer of double-sided adhesive tape. The combined 1994 revenue and operating profits of these companies were [pounds]34.6 million and [pounds]3.9 million, respectively.

A new company, CAL Group Ltd., has been formed as a result of the acquisition. Roger Hatfield, CAL Group's CEO, says, "This is a tremendous opportunity to build a first-class business, starting out with three market leaders forming a cohesive coatings and laminates business from day one. We intend to expand both organically and by acquisition and have already identified acquisition targets, which will substantially increase the size of the group."

The $27 million funding for the acquisition was led, negotiated, and arranged by NatWest Ventures. NatWest is providing $4.9 million of equity. The balance of equity consideration has been provided by Schroder Ventures (a sum of [pounds]4.1 million) and the management team. Mezzanine finance has been provided by NatWest Markets Mezzanine Finance, and senior debt and working capital facilities have been provided by the Royal Bank of Scotland.

Alasdair Gibbons, director of NatWest Ventures, comments, "We won the bidding through our ability and appetite to act as principal and in dealing in an open and direct manner with the vendor. The group has exciting expansion plans, which we intended to support over the next few years as opportunities arise, creating a leading player in its sector."

ICI Expansion - ICI's worldwide polyester business comprises activities in paraxylene, pure terephthalic acid (PTA), Melinar PET packaging, and Melinex polyester films. Annual turnover has doubled in the last four years and now exceeds [pounds]1 billion.

Demand for PTA, used to manufacture polyester fiber, packaging, and film, continues to increase rapidly in Taiwan and Asia in general.

ICI recently announced the formation of a joint venture and expansion of PTA capacity in Taiwan. The major Taiwanese fiber group, Far Eastern Textile Limited (FET), will acquire a 300% shareholding in IGI's existing Taiwan PTA business based on its 380,000 tpa plant located at Kuan Yin, near Taipei. The joint venture company will be named ICI Far Eastern Limited.

FET will pay [pounds]61 million for its 30% share, which will result in a one-off gain of approximately [pounds]11 million being credited to ICI Group profits in 1995 books.

"Plans announced for Taiwan are a good example of the way in which ICI is approaching a new investment in polyester markets," says Deryk King, managing director of ICI's polyester business and chairman-elect of ICI Far Eastern. "The agreement to form a joint venture with Far Eastern Textile locks in a significant proportion of good project returns."

ICI's strategy for PTA is to create a small number of large-scale, low-cost production centers to meet growing internal needs as well as those of key regional customers. ICI Far Eastern will sell most of its output to FET and other customers in Taiwan, with some exports to selected Asian markets.

Among the company goals are the creation of shareholder value and the forging of strategic partnerships in order to strengthen ICI's competitive position.

ICI Far Eastern will construct a second plant of 450,000 tpa capacity at Kuan Yin site. This plant will be the first to utilize ICI's new-generation, proprietary PTA technology, which offers exceptional capital cost productivity and low operating costs. It will reportedly be the largest single-stream facility in the world and will make the Kuan Yin complex a global leader in low-cost PTA production.

The plant will cost approximately US $300 million and is scheduled for completion in the first quarter of 1997. The ICI and FET boards have given support for the project, and construction is already under way. About 100 permanent new jobs will be created as a result of the venture.

Vladimir Wolpert publishes reports dealing with paper and plastics technology, marketing, and environmental matters. He has been in the industry for more than 50 years.


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