Arizona Chemical Faces Divestment, Again

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Pine chemical supplier Arizona Chemical and six other businesses are targeted for possible sale or spin-off as part of a major restructuring to improve returns and reduce debt, parent company International Paper announced last month. Arizona Chemical was put up for sale in 2000 as part of an earlier restructuring, but was taken off the table in 2002.

IP expects its evaluation of Arizona Chemical and the other businesses slated for divestment to be completed by the first quarter of 2006. Arizona, headquartered in Jacksonville, Fla., supplies Uniflex branded esters for synthetic lube applications; Sylvatal distilled tall oils used as emulsifiers in metalworking fluids; Cenwax castor derivatives used as thickener precursors in lithium greases; and Century fatty acids used in many lube applications for lubricity, detergency or corrosion control.

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Were forging ahead with business as usual, said Gregg Achatz, marketing manager for Arizonas fuel additives and lubricants segments. Lubricant formulators and additive producers are very important to us, and that wont change. Weve done some restructuring within Arizona [unrelated to the current divestiture effort] to better serve customers, including sharpening sales and technical functions and appointing employees as specialists to develop stronger customer relations.

The company was for sale through 2002, Achatz confirmed, but International Paper couldnt conclude a deal that made sense, so divestment plans were abandoned for the time. Although Arizona Chemicals primary feedstocks are byproducts of the papermaking process, IP has now decided to focus on just two business platforms: uncoated papers and industrial and consumer packaging.

Were focused on our customers, Achatz said. We have new products to be launched before the end of this year, including a novel lubricity improver for synthetic metalworking fluids, and a new approach to detergency for passenger car motor oils.

Arizona Chemical had 2004 sales of about $670 million and employs 1,400 people around the world. International Paper, headquartered in Stamford, Conn., said in its July 19 restructuring announcement that it would decide by mid-August whether to move its headquarters to Memphis, Tenn., to become even more efficient and further streamline operations.