March 16, 2021

Dow Chinese Alkoxylates Investment

Dow signs MoU to establish South China Specialties Hub

• World-class manufacturing base will enhance Asia Pacific customers’ local access to innovative material science solutions
• Further positions Dow to capture growth in world’s largest chemicals market

ZHANJIANG, China – March 4, 2021 – Dow (NYSE: DOW) today signed a Memorandum of Understanding (MoU) with the Zhanjiang Economic and Technological Development Zone Administrative Committee (Zhanjiang EDZ) to build the Dow South China Specialties Hub, a multi-year project providing customers local access to Dow’s portfolio of high value products and innovative technologies.

“Asia Pacific is the world’s largest chemicals market. Demands in the region are evolving towards high-value, specialty chemicals that help customers meet rapidly-developing megatrends in mobility, urbanization and sustainability,” said Jon Penrice, Dow Asia Pacific president. “The establishment of the Dow South China Specialties Hub would further position Dow to provide industry-leading materials science solutions to continue to grow with our customers in China and throughout the entire region.”

The new manufacturing hub would extend Dow’s local reach, further enhancing supply reliability, responsiveness to market needs and customized innovation, and better positions customers for success in markets including automotive, pharmaceuticals, cleaning chemicals, apparel, lubricants and adhesives.

Aligned to Dow’s focus on low capital intensive, fast payback and high return growth projects, under the MOU the Company would invest approximately $250 million to construct specialty polyurethanes and alkoxylates facilities, with a total product capacity of approximately 250,000 tons. The site also offers opportunity for future development and expansion at the Specialties Hub.

Henry Ling, vice president of operations, Dow Asia Pacific, said, “The South China Specialties Hub will be built to Dow’s world-class environmental, health and safety standards and aligned to Dow’s recent commitment to become net carbon neutral by 2050. The new hub will adopt and employ advanced digital, intelligence and automation technologies to create a manufacturing space of world-class safety, productivity, reliability and sustainability performance.”

“Dow is a global leader of material science solutions and we are happy to see its planned investment for establishing a specialties manufacturing hub in Zhanjiang,” said Liang Pei, party secretary of the Zhanjiang EDZ. “We are committed to turning our petrochemical park at the Donghai Island into a world-class one, providing a modern infrastructure and necessary supportive policies to Dow and the park’s other companies.”

The Dow South China Specialties Hub will be located at Donghai Island in Zhanjiang, the farthest southern tip of mainland China. Unique advantages include a deep-water port, transportation networks, and a world-class chemical park with advanced infrastructure and services. The strategic location enables Dow to cover demand across Asia Pacific.

https://corporate.dow.com/en-us/news/press-releases/dow-signs-mou-to-establish-south-china-specialties-hub

March 16, 2021

Dow Chinese Alkoxylates Investment

Dow signs MoU to establish South China Specialties Hub

• World-class manufacturing base will enhance Asia Pacific customers’ local access to innovative material science solutions
• Further positions Dow to capture growth in world’s largest chemicals market

ZHANJIANG, China – March 4, 2021 – Dow (NYSE: DOW) today signed a Memorandum of Understanding (MoU) with the Zhanjiang Economic and Technological Development Zone Administrative Committee (Zhanjiang EDZ) to build the Dow South China Specialties Hub, a multi-year project providing customers local access to Dow’s portfolio of high value products and innovative technologies.

“Asia Pacific is the world’s largest chemicals market. Demands in the region are evolving towards high-value, specialty chemicals that help customers meet rapidly-developing megatrends in mobility, urbanization and sustainability,” said Jon Penrice, Dow Asia Pacific president. “The establishment of the Dow South China Specialties Hub would further position Dow to provide industry-leading materials science solutions to continue to grow with our customers in China and throughout the entire region.”

The new manufacturing hub would extend Dow’s local reach, further enhancing supply reliability, responsiveness to market needs and customized innovation, and better positions customers for success in markets including automotive, pharmaceuticals, cleaning chemicals, apparel, lubricants and adhesives.

Aligned to Dow’s focus on low capital intensive, fast payback and high return growth projects, under the MOU the Company would invest approximately $250 million to construct specialty polyurethanes and alkoxylates facilities, with a total product capacity of approximately 250,000 tons. The site also offers opportunity for future development and expansion at the Specialties Hub.

Henry Ling, vice president of operations, Dow Asia Pacific, said, “The South China Specialties Hub will be built to Dow’s world-class environmental, health and safety standards and aligned to Dow’s recent commitment to become net carbon neutral by 2050. The new hub will adopt and employ advanced digital, intelligence and automation technologies to create a manufacturing space of world-class safety, productivity, reliability and sustainability performance.”

“Dow is a global leader of material science solutions and we are happy to see its planned investment for establishing a specialties manufacturing hub in Zhanjiang,” said Liang Pei, party secretary of the Zhanjiang EDZ. “We are committed to turning our petrochemical park at the Donghai Island into a world-class one, providing a modern infrastructure and necessary supportive policies to Dow and the park’s other companies.”

The Dow South China Specialties Hub will be located at Donghai Island in Zhanjiang, the farthest southern tip of mainland China. Unique advantages include a deep-water port, transportation networks, and a world-class chemical park with advanced infrastructure and services. The strategic location enables Dow to cover demand across Asia Pacific.

https://corporate.dow.com/en-us/news/press-releases/dow-signs-mou-to-establish-south-china-specialties-hub

March 12, 2021

Vita Opens Innovation Center

Technical Innovation Centre launched by MP

It has been a Budget Week like no other with a big focus on kick-starting the economy and ‘building back better’. At The Vita Group, we continue to invest in the future, ensuring we’re able to sustainably deliver the very best products and solutions for our customers for generations to come. As part of this mission, we are proud to unveil our fourth innovation hub with the launch of Vita’s new Innovation Centre in Accrington, Lancashire.

The Accrington Technical Innovation Centre will work in partnership with employees and customers across our European footprint to lead research, development, and collaboration on highly engineered and customized polyurethane foam, including driving forward sustainable solutions through the use of biopolyols.

Vita’s four state-of-the-art innovation centres in Accrington, Corby, Middleton and Lithuania collectively represent a £1.3m investment for the Group, 80% of which has been allocated to its sites in the North West.

The centre was officially opened by Sara Britcliffe MP for Hyndburn & Haslingden, at a virtual launch event hosted from the site in Accrington. It offered guests a virtual tour of the new facility, as well as an overview of the site from Group CEO Ian Robb and Technical MD Stuart Roby.

Joining via video link, Sara Britcliffe MP said: “The Innovation Centre is a fantastic example of the type of investment needed in our area to help make the vision of a levelling up agenda a reality. As we start to ease restrictions, I am eager to put Hyndburn & Haslingden firmly back on the map, and work with local businesses like The Vita Group to make our area an innovation hub for the entire region, bringing forward more exciting projects like this, driving jobs and growing the next generation of innovative businesses and facilities.”

A huge congratulations to all involved and welcome to our new colleagues who will help to make this new facility a world-class centre of excellence, combining Vita’s technical expertise in foam chemistry with the latest state-of-the-art testing equipment and systems.

March 12, 2021

Vita Opens Innovation Center

Technical Innovation Centre launched by MP

It has been a Budget Week like no other with a big focus on kick-starting the economy and ‘building back better’. At The Vita Group, we continue to invest in the future, ensuring we’re able to sustainably deliver the very best products and solutions for our customers for generations to come. As part of this mission, we are proud to unveil our fourth innovation hub with the launch of Vita’s new Innovation Centre in Accrington, Lancashire.

The Accrington Technical Innovation Centre will work in partnership with employees and customers across our European footprint to lead research, development, and collaboration on highly engineered and customized polyurethane foam, including driving forward sustainable solutions through the use of biopolyols.

Vita’s four state-of-the-art innovation centres in Accrington, Corby, Middleton and Lithuania collectively represent a £1.3m investment for the Group, 80% of which has been allocated to its sites in the North West.

The centre was officially opened by Sara Britcliffe MP for Hyndburn & Haslingden, at a virtual launch event hosted from the site in Accrington. It offered guests a virtual tour of the new facility, as well as an overview of the site from Group CEO Ian Robb and Technical MD Stuart Roby.

Joining via video link, Sara Britcliffe MP said: “The Innovation Centre is a fantastic example of the type of investment needed in our area to help make the vision of a levelling up agenda a reality. As we start to ease restrictions, I am eager to put Hyndburn & Haslingden firmly back on the map, and work with local businesses like The Vita Group to make our area an innovation hub for the entire region, bringing forward more exciting projects like this, driving jobs and growing the next generation of innovative businesses and facilities.”

A huge congratulations to all involved and welcome to our new colleagues who will help to make this new facility a world-class centre of excellence, combining Vita’s technical expertise in foam chemistry with the latest state-of-the-art testing equipment and systems.

March 11, 2021

Hexion Results

Hexion Inc. Announces Fourth Quarter 2020 Results

Fourth Quarter 2020 Highlights

• Net sales from continuing operations of $655 million, an increase of 4% compared with $630 million in the prior year period
• Loss from continuing operations, net of taxes of $37 million
• Net loss of $35 million

• Segment EBITDA from continuing operations of $74 million compared to $53 million in the fourth quarter 2019. Both periods reflect the treatment of the pending divestiture as discontinued operations.
  
  
• As previously announced, Hexion entered into a definitive agreement to sell our Phenolic Specialty Resin, Hexamine and European-based Forest Products Resins businesses for approximately $425 million including cash consideration of $305 million

March 10, 2021 07:00 AM Eastern Standard Time

COLUMBUS, Ohio–(BUSINESS WIRE)–Hexion Inc. (“Hexion” or the “Company”) today announced results for the fourth quarter ended December 31, 2020.

“We were pleased to drive strong results in the fourth quarter of 2020 as Segment EBITDA from continuing operations improved by 40 percent compared to the prior year reflecting our diversified portfolio and rebounding demand in many key end markets,” said Craig Rogerson, Chairman, President and Chief Executive Officer. “It was also our highest fourth quarter Segment EBITDA from continuing operations in the last seven years reflecting our multi-year efforts to streamline our cost structure, while still strategically investing in the specialty portions of our business. In the fourth quarter of 2020, our Adhesives segment reflected continued strength in North America residential construction and gains in our global formaldehyde business. Segment EBITDA in our Coatings and Composites segment increased more than 100 percent year-over-year due to strong results in specialty epoxy from wind energy demand and Versatic Acids™ and Derivatives due to increasing demand in architectural coatings, as well as improved results in our base epoxy resins.”

Mr. Rogerson added: “Despite softer overall earnings in 2020, we generated solid cash flow from operations. In the second half of the year, we generated $92 million of free cash flow¹ and positive free cash flow for full year 2020 despite the pandemic and a weaker second quarter of 2020. As we conclude the year, I’d like to acknowledge the dedication and resiliency of our global associates as they focused on safely operating our plants without interruption and serving our valued customers in the face of the global pandemic. Last September, we were also pleased to announce the sale of our Phenolic Specialty Resin, Hexamine and European-based Forest Products Resins businesses during a time when potential transactions within the industry were often paused because of the pandemic. When completed, this transaction will streamline our portfolio and specialty product mix, while improving the Company’s financial flexibility and liquidity profile.”

“Looking ahead, we are cautiously optimistic about the global economic conditions considering the potential ongoing impact of the pandemic. Several key end markets – housing and wind energy in particular – were strong through year-end and those trends have continued in early 2021. We expect to further strengthen our balance sheet and continue to deliver significant free cash flow in the coming year. Looking ahead, we also expect to pursue potential bolt-on and/or more transformational transactions. With solid momentum heading into 2021, we remain focused on driving year-over-year earnings growth and generating stakeholder value through opportunistic share repurchases and debt reduction.”

Hexion Announces Strategic Divestiture

On September 27, 2020, the Company entered into a Purchase Agreement for the sale of its Phenolic Specialty Resin (PSR), Hexamine and European-based Forest Products Resins businesses (together with PSR, the “Held for Sale Business” or the “Business”) for approximately $425 million to Black Diamond and Investindustrial. The consideration consists of $335 in cash and certain assumed liabilities with the remainder in future proceeds based on the performance of the Held for Sale business. The final purchase price is subject to customary post-closing adjustments.

Hexion expects to use the net proceeds to invest in its business and reduce its borrowings under its Senior Secured Term Loan, in accordance with its credit agreement. The transaction is intended to close in the first quarter of 2021, subject to regulatory approvals and other customary closing conditions, including Works Council consultation.

Fresh Start Accounting

Upon emerging from Chapter 11 on July 1, 2019 (“Effective Date”) and qualifying for the application of fresh-start accounting, Hexion’s assets and liabilities were recorded at their estimated fair values which, in some cases, were significantly different than amounts included in the Company’s financial statements prior to the Effective Date. Accordingly, Hexion’s financial condition and results of operations on and after the Effective Date are not directly comparable to our financial condition and results of operations prior to the Effective Date. References to “Successor” or “Successor Company” relate to the financial position and results of operations of the reorganized Company subsequent to the Effective Date. References to “Predecessor” or “Predecessor Company” refer to the financial position and results of operations of the Company on or before the Effective Date.

Fourth Quarter 2020 Results

In January 2020, Hexion updated its reportable segments to align around two growth platforms: Adhesives; and Coatings and Composites. The Adhesives Segment is organized around Construction Adhesives, Industrial Adhesives, and Intermediates and Derivatives, while the Coatings and Composites Segment is organized around Composites, Performance Coatings, and Base Chemicals. Corporate and Other continues to be a reportable segment.

As of December 31, 2020, the Company reclassified the assets and liabilities of our Held for Sale Business as held for sale on the unaudited Condensed Consolidated Balance Sheets and reported the results of its operations for the three months and year ended December 31, 2020 as “(Loss) income from discontinued operations, net of taxes” on the unaudited Condensed Consolidated Statements of Operations. Amounts for prior periods have similarly been retrospectively reclassified for all periods presented. See Schedules 9 and 10 for additional financial information for our Held for Sale Business.

Total net sales for the quarter ended December 31, 2020 were $655 million, an increase of 4% compared with $630 million in the prior year period. Volumes positively impacted net sales by $63 million due to volume increases in Hexion’s global formaldehyde, specialty epoxy and base epoxy resins, and Versatic Acids™ and Derivatives businesses. Pricing negatively impacted sales by $31 million due primarily to raw material price decreases contractually passed through to customers across many businesses. Foreign currency translation negatively impacted net sales by $7 million due to the weakening of various foreign currencies against the U.S. dollar in the fourth quarter of 2020 compared to the fourth quarter of 2019.

Net loss for the Successor three months ended December 31, 2020 was $35 million compared to a net loss of $46 million in the Successor period through December 31, 2019. Total Segment EBITDA from continuing operations for the quarter ended December 31, 2020 was $74 million, an increase of $21 million compared with the prior year period, or 40 percent, primarily reflecting improved results in our adhesives and coatings and composites businesses.

Fiscal Year 2020 Results

Total net sales for the year ended December 31, 2020 were $2.5 billion, a decrease of 10% compared with $2.8 billion in the prior year period. Pricing negatively impacted sales by $182 million due primarily to raw material decreases contractually passed through to customers across many of our businesses, as well as unfavorable product mix and continued competitive market conditions in our base epoxy resins and specialty epoxy resins businesses. Volume decreases negatively impacted net sales by $70 million, which was primarily due to volume decreases in our North American and Latin America forest products resins businesses and our North American formaldehyde business driven by COVID-19’s negative impact on global demand. These decreases were partially offset by volume increases in our specialty epoxy business driven by strong global demand in wind energy. Foreign currency translation negatively impacted net sales by $42 million.

Net loss for the year ended December 31, 2020 was $230 million compared to a net income of $2,805 million for the year ended December 31, 2019. Total Segment EBITDA from continuing operations for the year ended December 31, 2020 was $294 million, a decrease of 14 percent compared with $340 million in 2019, driven primarily by the impact of the global pandemic, weaker margins in the Company’s base epoxy resins business, and temporary manufacturing outages at our Pernis site which negatively impacted our 2020 Segment EBITDA by approximately $15 million. These Segment EBITDA decreases were partially offset by improved earnings in the specialty epoxy and Versatic™ Acids and Derivatives business, as well as continued cost reduction and productivity initiatives. Fiscal Year 2020 was also negatively impacted by the absence of $18 million of Segment EBITDA in the prior year related to deferred revenue that was accelerated on July 1, 2019 as part of Fresh Start Accounting.

Segment Results

Following are net sales and Segment EBITDA by reportable segment for the Successor three and twelve months ended December 31, 2020 and Successor three and twelve months ended December 31, 2019.

(1) Intersegment sales are not significant and, as such, are eliminated within the selling segment.

Hexion Announces Site Expansion Plans

As part of its broader investment plan to drive innovation and growth in its specialty product lines, Hexion announced that it intends to expand its Portland, Oregon, manufacturing site. The Company is beginning the permitting stages of a second automated manufacturing line in Portland to support its recently-launched ArmorBuilt fire resistant wrap, a new product which greatly improves fire protection when applied to a substrate, such as wood utility poles. The first automated production line will come online at the end of the first quarter of 2021 and the second automated line is expected to start up around year-end 2021.

ArmorBuilt wrap is a proprietary wrap from Hexion that can be applied to either new or existing wood utility poles. Hexion has been providing high-performing adhesives for decades and has leveraged its expertise to develop a fire-retardant coating for more sustainable wooden utility poles that greatly improves their fire resistance. ArmorBuilt wrap has passed an industry approved wildfire simulation burn test for fire resistance.

Efficiency and Cost Savings Initiatives

In the fourth quarter of 2020, Hexion continued to implement the creation of a business services group with Capgemini to provide certain administrative functions to further improve the Company’s organizational efficiency and reduce its costs in future years. In fiscal year 2020, the Company also achieved $23 million of cost savings related to all its cost savings initiatives. At December 31, 2020, Hexion had approximately $6 million of total in-process savings that it expects to realize over the next 12 months.

https://www.businesswire.com/news/home/20210310005460/en/Hexion-Inc.-Announces-Fourth-Quarter-2020-Results