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NOVACOR CHEMICALS LTD. - COMPANY UPDATE

 NOVACOR CHEMICALS LTD. - COMPANY UPDATE
 CALGARY, Alberta, Dec. 13 /PRNewswire/ -- As part of continuing


actions to strengthen its businesses, NOVA Corp. of Alberta (NYSE, Toronto, Montreal, Calgary: NVA) announced today that it will record a charge against fourth quarter earnings of $675 million after tax. Over $600 million of this charge represents non-cash adjustments to the carrying value of certain chemicals assets.
 As a result of the charge, future annual earnings are expected to improve by approximately $50 million after tax, principally because of reduced non-cash depreciation charges. NOVA expects to report a small net income from continuing operations, before this charge, for the fourth quarter of 1991.
 "NOVA management has taken a hard look at the carrying value of various chemicals assets and investments. We came to the conclusion that tough decisions were necessary to reflect current economic realities and our expectations for chemicals markets. We expect little or no improvement in market conditions or prices in the near term," said J. E. Newall, NOVA president and chief executive officer.
 As a result, certain money-losing chemicals plants have been closed and management teams have been streamlined and reorganized. NOVA's comprehensive review of all facets of its chemicals business will be completed in the second quarter of 1992.
 "Our goal for these chemicals businesses is to focus resources and attention in those areas where we can achieve a sustainable competitive advantage. We are determined to show above-average performance among our competitors in North America," said J. E. Feick, president and chief operating officer of Novacor Chemicals Ltd., the operating entity that encompasses NOVA's chemicals operations.
 Elements of the charge are:
 -- $175 million for previously announced closures of non- profitable chemicals operations, continued rationalization and restructuring of NOVA's styrenics business; costs related to overall management streamlining and reorganization; for the reduction in the carrying value of other assets; and an increase in the provision for deferred income tax; and
 -- A non-cash write-down of $500 million. Of this amount, a non-cash provision of $435 million relates to the write-down of chemicals assets acquired in 1988 through the purchase of Polysar Energy & Chemical Corp. The value of these assets has declined due to current expectations that commodity chemical prices and margins will remain depressed for some time. The remaining $65 million is a non-cash write-down against the underlying asset values of NOVA's U.S. polypropylene plant, and Novalta Resources Inc., a wholly owned oil and gas producing company based in Calgary. These investments, previously held for sale, have been retained in the chemicals business. The write-down for Novalta is due to current low prices for natural gas.
 These fourth quarter adjustments are in addition to the previously announced loss of $259 million after tax on the sale of NOVA's 43 percent interest in Husky Oil Ltd.
 Newall said these charges are part of NOVA's action plan to improve its long-term financial and business performance. Recently, NOVA also has:
 -- Decentralized senior management of NOVA and its two major businesses to deliver immediate and significant improvement in cost containment;
 -- Consolidated the petrochemicals and plastics divisions into one unified business to reduce costs and improve effectiveness; and launched the ongoing comprehensive strategic review of each of the corporation's chemicals businesses, to be completed in the second quarter of 1992.
 -- Reduced capital spending to minimum levels in all business areas except the Alberta Gas Transmission Division, (AGTD) which is expanding to meet customer requests for increased service;
 -- Negotiated an agreement for the sale of NOVA's interest in Husky to reduce cash outflows and funding requirements for the Husky investment and to redeploy this capital for AGTD expansion;
 -- Reduced dividends paid to common shareholders to conserve cash for reinvestment in AGTD.
 Newall said NOVA's strategic direction is clear. "Our goal is to be the most cost-effective natural gas transmission business and to create a more competitive chemicals business. These steps will help us achieve those objectives," he said.
 NOVA is a widely held company operating internationally from headquarters in Calgary, Alberta, Canada. NOVA builds its future on pipelines, and the manufacturing and marketing of chemicals processed primarily from Alberta natural resources.
 -0- 12/13/91
 /CONTACT: J.E. Reick, 403-290-8902, or A.T. Poole, 403-290-7714, or C.A. Read, 403-290-7807, all of NOVA/
 (NVA.) CO: Novacor Chemicals Ltd. ST: Alberta IN: SU:


AL -- LA025 -- 2549 12/13/91 17:16 EST
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Date:Dec 13, 1991
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