Company News

December 19, 2023

Red Sea Trauma

How companies are responding to attacks on ships in the Red Sea

How companies are responding to attacks on ships in the Red Sea
FILE PHOTO: A logo is seen on the facade of the BASF plant and former Ciba production site in Schweizerhalle near Basel July 7, 2009. REUTERS/Christian Hartmann/File Photo

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19 Dec 2023 08:35PM

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Attacks on vessels by Iranian-backed Houthi militants in Yemen have disrupted international commerce on the shortest shipping route between Europe and Asia.

The attacks, targeting a route that accounts for about 15 per cent of the world’s shipping traffic, have pushed several shipping companies to re-route their vessels.

Below are companies’ (in alphabetical order) responses to the disturbances:

BASF

The German chemical company does not see disruptions to raw material supply or product distribution, but it is closely monitoring the situation, a company spokesperson said.

BP

The oil major on Dec. 18 said it had temporarily paused all transits through the Red Sea.

COVESTRO

The German chemicals maker said any possible increases in transit times due to shipping lines avoiding the “Bab-el-Mandeb” passage would not impact its product supply. Covestro expects its ocean shipping line partners to continue shipping through the passage as soon as it can be operated safely.

DANONE

The French food group said most of its shipments had been diverted, which will increase transit times. Should the situation continue in the mid to long-term and last beyond 2-3 months, the group will activate mitigation plans, including using alternate routes via sea or road wherever possible, a Danone spokesperson said.

ELECTROLUX

The Swedish home appliances maker has set up a task force to reduce the impact of maritime attacks. The measures include identifying particularly time-sensitive deliveries and finding alternative routes if required, the company told Reuters.

EQUINOR

The Norwegian oil and gas firm on Dec. 18 said it had re-routed vessels that had been heading towards the Red Sea.

ESSITY

The Swedish hygiene products maker is monitoring the situation and staying in contact with impacted suppliers to ensure continued flow of goods, but sees a limited impact as only a low percentage of its supplies move through the Suez Canal, the company told Reuters.

MOSAIC

The U.S. fertilizer company said on Dec. 18 it had re-routed a couple of U.S.-bound shipments around the Cape of Good Hope rather than through the Red Sea.

TSMC,

TSMC, the world’s top contract chipmaker, said on Tuesday it had a long-established enterprise risk management system in place, and after an assessment it did not anticipate a significant impact on its operations.

(Compiled by Izabela Niemiec in Gdansk; editing by Milla Nissi and Ed Osmond)

https://www.channelnewsasia.com/business/how-companies-are-responding-attacks-ships-red-sea-3999041

December 18, 2023

Adnoc Bid for Covestro

Adnoc is said to prepare higher bid for Covestro

Dec. 18, 2023 1:38 PM ETCovestro AG (CVVTF) Stock, COVTY StockBy: Rob Williams NY, SA News Editor

Abu Dhabi, UAE - January 2020: Main Entrance of the ADNOC (Abu Dhabi National Oil Company)
Marco Curaba/iStock Editorial via Getty Images
  • Abu Dhabi National Oil Co. is readying a higher bid for Covestro (OTCPK:CVVTF) (OTCPK:COVTY) and is prepared to offer concessions to begin detailed due diligence, Bloomberg News reported Monday, citing people with knowledge of the matter.
  • State-owned Adnoc is prepared to offer €60 a share as soon as the coming days, the people said. That price would value Covestro (OTCPK:CVVTF) (OTCPK:COVTY) at about €11.3 billion ($12.3 billion). Adnoc also is willing to offer job guarantees for several years and $8 billion of investments after closing the deal, Bloomberg News reported, citing its sources.
  • Talks between the two companies started in September after informal bids of €55 and €57 a share that Covestro (OTCPK:CVVTF) (OTCPK:COVTY) rejected as too low. Covestro’s (OTCPK:CVVTF) (OTCPK:COVTY) stock has risen about 45% this year to €53 a share, valuing the petrochemical company at €10 billion.

https://seekingalpha.com/news/4047628-adnoc-is-said-to-prepare-higher-bid-for-covestro?mailingid=33734335&messageid=2900&serial=33734335.299

December 17, 2023

Saint-Gobain Streamlining

Saint-Gobain to Sell Majority of UK Foam Insulation Business to Soprema

Published: Dec. 7, 2023 at 1:33 a.m. ET

By David Sachs

Saint-Gobain said it would sell a majority stake in its U.K. foam insulation business to Soprema as part of its disposal plan.

The French construction supplier said late Wednesday that Celotex’s assets will be transferred to a new standalone company, which will be 75% owned by Soprema, a private French waterproofing and insulation firm. Saint-Gobain will retain a 25% minority stake, it said.

The move is part of Saint-Gobain’s streamlining strategy, which includes asset-disposals.

Celotex has two manufacturing facilities in the U.K. and employs 155 people, Saint-Gobain said. The transaction is expected to close early next year.

Financial details were not disclosed.

https://www.marketwatch.com/story/saint-gobain-to-sell-majority-of-uk-foam-insulation-business-to-soprema-04c54756

December 10, 2023

LyondellBasell to Sell EO & Derivatives to INEOS

LyondellBasell Announces Sale of Ethylene Oxide & Derivatives Business and Production Facility to INEOS

HOUSTON, Dec. 8, 2023 /PRNewswire/ — LyondellBasell (LYB) today announced it has entered into an agreement to sell its Ethylene Oxide & Derivatives (EO&D) business along with the production facility located in Bayport, Texas to INEOS Oxide (INEOS).

“This transaction is evidence of our disciplined focus on value creation through the execution of a key pillar of our strategy – growing and upgrading our core,” said Peter Vanacker, LyondellBasell CEO. “Successful execution of this strategic pillar involves making difficult decisions to divest businesses which are not part of our core. We remain proud of the positive cash generation, access to advantaged feedstocks, reliability and highly skilled team that makes up the EO&D business and are excited to have reached an agreement with INEOS to enable the business to continue generating value under different ownership. We look forward to collaborating closely with INEOS on a seamless transition.”

The Ethylene Oxide & Derivatives business in Bayport produces high-quality ethylene oxide and various derivatives. The fully integrated platform with access to cost-advantaged feedstocks and logistics networks has excellent performance and reputation in the market.

Tobias Hannemann, CEO INEOS Oxide said, “We are pleased to announce this strategic acquisition. INEOS is a leading producer in Europe and this significant step expands its Ethylene Oxide & Derivatives business into the US, which is the world’s largest market. It also complements our existing Ethanolamines production facility in Plaquemine, Louisiana.”

The purchase price for the transaction is $700 million. The transaction is expected to close in the second quarter of 2024 following completion of the planned maintenance at the facility and is subject to regulatory and other customary closing conditions. J.P. Morgan acted as financial advisor and King & Spalding acted as legal counsel to LyondellBasell.

https://lyondellbasell.mediaroom.com/index.php?s=43&item=1470

December 10, 2023

Winter is Coming

“Winter Is Coming” For Leveraged Companies 

by Tyler Durden

Friday, Dec 08, 2023 – 12:45 PM

Earlier in the year, as regional banks faced a domino effect of failures, Bank of America strategist Michael Hartnett pointed out that every Fed tightening cycle has historically resulted in a crisis.

Given that the Federal Reserve hasn’t allowed a real credit cycle since the early 2000s, prolonged monetary tightening suggests that “winter is coming” for leveraged companies. 

“The whole market and companies have been living in this la la land, this fake world of wealth of quantitative easing where you can borrow at 1% or 2%, you can buy anything, you can make lots of mistakes and you’re not going to get called out,” said Paul Horvath, chief executive officer at investment firm Orchard Global. 

Horvath, speaking at the Milken Institute’s Middle East and Africa Summit in Abu Dhabi this week, was quoted by Bloomberg. He warned: “Winter is coming, and I don’t think people have enough parkas.”

The asset manager head said financial markets are holding up well so far, given the high rates. He noted corporates are levered up due to private equity firms buying up companies with cheap money, adding a global financial crisis might not be in the cards – but expects there will still be stress. 

Bloomberg pointed out there were record levels of dealmaking during the pandemic era of cheap money. This led to a surge in private equity buyouts, backed by leveraged finance and the debt load placed on the target company. A large amount of that debt for junk-rated firms is coming due as large maturity walls approach. 

Also speaking at the event was SLR Capital Partners co-founder Michael Gross, who said there is no easy solution for companies needing to refinance this debt. 

“It’s going to take more than public markets coming back,” Gross said, adding, “It’s going to probably require private equity sponsors to find unique solutions like putting in more equity or finding preferred investors to step into the capital structures.”

Gross said managing portfolio companies with outdated debt structures will also face challenges for private credit funds.

He explained that funds were structured in a world of “perfection” based on an era of low interest rates, but that has all changed. 

A higher for the longer environment with mounting macroeconomic headwinds only means over-leveraged firms are increasingly falling into distressed

The impact of this tightening cycle could be worse than the Great Recession – unless the Fed reverses course. 

Rate traders are already pricing more than 100bps of rate cuts for 2024. 

Meanwhile, Anne Walsh, chief investment officer of Guggenheim Partners Investment Management, said the US economy “hasn’t had a real corporate credit cycle since the early 2000s,” indicating a “purge is about to happen.” 

https://www.zerohedge.com/markets/winter-coming-leveraged-companies