Chemtura Reorganizes (Again)


Chemtura Corp. has taken steps to realign its businesses, as it also strives to trim fixed costs, improve cash flow, and perhaps sell assets to pull itself out of a downward spiral.

Last week, the Middlebury, Conn.-based specialty chemical company said it would realign as two business groups, Performance Products and Engineered Products, with its petroleum additives, lubricants and greases reporting under the former.

Heading up the new Performance Products group is David Dickey, the corporation’s executive vice president. Robert Wedinger, who formerly headed the petroleum additives and urethanes businesses, was named executive vice president for strategic initiatives.

This is the third major reorganization for Chemtura since 2005, when it was forged from the merger of Great Lakes Chemical and Crompton.

Chemtura’s new president, chairman and CEO, Craig A. Rogerson, said this latest regrouping will better balance workloads and allow the petroleum operations “to pursue best-available business options.” Rogerson, who until November was head of Hercules Inc., took the reins at Chemtura in early December following the departure of chief executive Robert L. Woods, who left with a $4 million severance package.

Until a new group president is appointed, Rogerson will himself lead the new Engineered Products segment, which includes Chemtura’s flame retardant, crop protection, organometallic and polymer/surfactant businesses.

Chemtura’s petroleum additives offerings include phenolic and aminic antioxidants, a broad range of petroleum sulfonates, high-viscosity polyalphaolefins, phosphate esters and specialty greases. In 2006, these represented almost 10 percent of its $3.7 billion total revenues. The following year, it expanded the business with the $160 million addition of Kaufman Holdings, which included Anderol specialty lubricants and Hatco polyol esters used for jet-turbine lubricants and refrigeration oils.

In addition to these, the newly formed Performance Products segment also holds Chemtura’s consumer products, urethanes and antioxidant plastic additives.

A company spokesman on Tuesday declined to say which assets of the company, such as its petroleum additives or lubricants operations, might be up for sale. He stated that the company has publicly said it is willing to explore divesting a business or part of a business. Some businesses, such as oleochemicals, optical monomers and a fungicide line, have been sold off in recent years, but attempts to sell Chemtura as a whole have been fruitless so far. Last summer, the company attempted a sale to private equity firms Blackstone Group and Apollo Group, but those talks ended without reaching a deal.

The company also has been trimming its payroll, with layoffs that began in December and affect about 500 professional and administrative staff worldwide — about 10 percent of its entire workforce. Those cuts are expected to save the company $50 million a year in costs, but also will hurt its fourth-quarter 2008 results, it advised investors.

The company said it now is cutting output to match falling demand, reducing inventories, and furloughing or reducing production personnel as well. In particular it has seen order volumes suffer for polymer additives and chemical specialties used in electronics, polyolefins, building and construction, and other industrial applications.

On Monday, Chemtura also announced that on Friday, Jan. 23, it entered into a new “U.S. accounts receivable facility,” through which its receivables go directly to lenders including Citicorp and approximately 10 other banks.

Stephen Forsyth, Chemtura’s chief financial officer, explained to Lube Report that this helps finance working capital, as the lenders advance money immediately that Chemtura otherwise would have to finance itself, instead of waiting to be paid by customers under 30-day or longer payment terms. The initiative has a three-year term, and replaces an earlier arrangement dating to 2006. Chemtura can sell up to $150 million in receivables under this facility.

The company’s common stock price closed yesterday at $0.57 per share, a tumble of over 90 percent in one year’s time and a level that risks a delisting warning if it doesn’t climb over $1 soon.

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