UNION CARBIDE ANNOUNCES RESTRUCTURING PLAN
UNION CARBIDE ANNOUNCES RESTRUCTURING PLAN DANBURY, Conn. Dec. 16 /PRNewswire/ -- Union Carbide Corporation
(NYSE: UK) today announced that its board of directors has unanimously approved a plan to spin off Carbide's industrial gases business to shareholders as a free-standing company. It said it fully expects that the current dividend of $1.00 per share will be maintained in the aggregate, with Union Carbide Corporation at about $0.75 per share, and industrial gases at $0.25 per equivalent share.
In related moves, the corporation will sell about $500 million of assets in the next 18 to 24 months to reduce the debt ratio of Union Carbide after the spinoff from the current 50 percent to less than 40 percent. "Capital spending of its chemicals and plastics business will be balanced to assure sufficient cash flow for dividend and debt coverage during this economic downturn," said Chairman Robert D. Kennedy. Noting that "we are ahead of schedule on our previously announced $250 million cost reduction program across the corporation," Kennedy said "we are encouraged to believe we can increase our work process simplification efforts to reach $400 million in savings by 1994." Today's announcement follows a series of moves taken over the past few years to enhance and deliver value to shareholders by restoring the corporation's investment grade credit rating, selling off underperforming assets, and realigning the business units into worldwide subsidiaries. "The split of the corporation into two separately traded entities is a new beginning for each," said Kennedy. Union Carbide Corporation, whose sales will total about $5 billion after the spinoff, will streamline its core polyethylene, ethylene oxide/glycol, solvents and coatings and specialty chemical businesses. Carbide is among the world's largest producers of polyethylene, the world's largest manufacturer of ethylene glycol, and is the leading North American supplier of solvents and intermediates to the paint and coatings industry. Union Carbide Industrial Gases (UCIG) is the leading industrial gas company in the Western Hemisphere and one of the three largest in the world. Worldwide sales in 1990 were $2.38 billion, up 17 percent from the prior year. "A separate industrial gas business will be a very tough world competitor," Kennedy said, "with its own unique market and financial characteristics. In addition to sharper management focus, shareholders should benefit from the inherently higher market multiple of industrial gas companies over the cycle, a pure stock play and the more stable, higher growth nature of the industry. The business will also benefit from its own direct access to market capital." Kennedy said that Carbide is carving out a niche in which it can win in the cyclical chemicals business. "With the leading, low-cost process technology and a single-minded focus on the things we do best, we will establish Carbide as the low-cost and preferred supplier in the industry, generating highly competitive returns throughout the chemical cycle," he added. Carbide said the spinoff is expected to take four to six months to implement. Prior to completion of the spinoff, the corporation intends to obtain a ruling that the transaction will be tax free. The Union Carbide Corporation Board is expected to set new record and payment dates upon receipt of the favorable tax ruling. Kennedy remains as chairman and chief executive officer of Union Carbide Corporation. H. W. Lichtenberger, president and chief operating officer of the corporation, becomes chairman and CEO designate of the new worldwide industrial gases company, effective today. Lichtenberger had been with the industrial gases organization for 25 years before joining the chemicals and plastics business in 1985. E.G. Hotard remains president of industrial gases. W. H. Joyce is executive vice president of Union Carbide, and will be responsible for chemicals and plastics operations. Financial officers will be G.E. Playford for Union Carbide Corporation, and J.A. Clerico for industrial gases. -0- 12/16/91 /CONTACT: T.F. Sprick of Union Carbide, 203-794-6992, or J.D. Secor of UCIG, 203-794-5548/ (UK) CO: Union Carbide Corporation ST: Connecticut IN: CHM SU: TNM SH -- NY064 -- 2572 12/16/91 14:06 EST
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|Date:||Dec 16, 1991|
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