* Assets sales demanded by European Commission
* Solvay to exit PVC business after three years of venture
* Disposals, market conditions force revision of deal terms
(Updates with CFO on asset divestments)
By Philip Blenkinsop
BRUSSELS, June 26 Belgian chemicals group Solvay
SA expressed confidence on Thursday that it could
complete a PVC joint venture with INEOS by the end of the year,
with a number of parties interested in buying assets the pair
are bound to sell.
Solvay and privately held INEOS agreed in May 2013 to form a
venture from which the Belgian group would eventually exit, but
completion of the deal has been delayed by an EU investigation
into its impact on competition.
The European Commission said last month that INEOS plants in
Belgium, France, the Netherlands, Germany and Britain would need
to be sold for the deal to go ahead.
"We have good assets, a good business. We've had a lot of
expressions of interest," Solvay Chief Financial Officer Karim
Hajjar told a conference call. "I have no crystal ball, there is
no guarantee clearly, but we are very, very confident given the
expressions of interest."
Solvay also said it had revised the terms of its deal with
INEOS, reflecting the required disposals as well as a tougher
market environment. It said it would exit the business in three
years, compared with a previous plan for between four and six
It will now receive an upfront payment of 175 million euros
($239 million), compared with an initially envisaged 250
million. And it would transfer liabilities of 250 million euros.
The Belgian company said it would exit the venture, set to
be called INOVYN, and receive an additional amount based on
average core profit over those three years. Solvay said the
targeted amount was 250 million euros, with a minimum payment of
Bank Degroof analyst Bernhard Hanssens said Solvay would
receive a lower multiple than the 5.5 times enterprise
value-to-EBITDA ratio announced a year ago, with some 120
million euros less cash than he had expected, or some 1.4 euros
Solvay shares were down 0.3 percent at 1015 GMT, slightly
weaker than a broadly flat STOXX Europe 600 chemicals index
Solvay's PVC exit fits with its plan to shift from
lower-margin bulk plastics to speciality polymers and chemicals,
such as for the oil and gas sector, and consumer chemicals for
skin and hair care products.
Solvay said the transaction would result in a mainly
non-cash impairment of 420 million euros, which would impact net
income in the second quarter.
INOVYN will be headquartered in London and would have 2013
proforma sales of more than 3 billion euros, with 14 sites in
($1 = 0.7335 Euros)
(Editing by Mark Potter and David Holmes)