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Contact:
Jodi Allen (Investor Relations)
(973) 357-3283
Cytec Announces Agreement to
Sell Building Block Chemicals Business
WOODLAND PARK, N.J., January 31, 2011 -- Cytec Industries Inc.
(NYSE:CYT-News) announced today it has reached a definitive
agreement to sell its Building Block Chemicals business, with
2010 sales of $600 million, to an affiliate of HIG Capital, LLC.
Total consideration to be received of $180 million includes cash
consideration of $165 million at closing and a Note for $15
million. The sale is subject to customary closing conditions.
Shane Fleming, Chairman, President and Chief Executive Officer
commented, “This transaction, when completed, will allow us to
put more attention and resources on our core growth platforms of
Engineered Materials, In Process Separations and Waterborne and
Radcure Coating Resins, focusing on organic growth and possible
bolt-on acquisitions.
“With an outstanding performance in 2010, it is an appropriate
time to divest the business. I want to thank the Building Block
Chemical employees for their perseverance in the challenging
times and for creating a viable, dynamic business for the
future.”
The Building Block Chemicals product lines include acrylonitrile,
sulfuric acid and melamine which are produced mostly for third
party sale. In the case of acrylonitrile and melamine, a portion
of the production is for internal use with acrylonitrile used in
the manufacture of carbon fiber and melamine used in the
manufacture of certain coating resins. All products are
manufactured at its world-scale, highly integrated facility
located in Fortier, Louisiana.
Included in the transaction are the sales, marketing,
manufacturing, R&D and technical service personnel and the
aforementioned manufacturing site located in Fortier, Louisiana.
At closing, the companies will also execute long term supply
agreements for acrylonitrile and melamine at market pricing. The
purchaser has agreed to offer employment to the approximately
445 employees who are involved in the operations of this
business.
Excluding the impact of the anticipated gain on this transaction
and the loss of operating earnings related to the divestiture of
Building Block Chemicals, the transaction is expected to reduce
Cytec continuing earnings in 2011 by approximately $0.15 per
diluted share. This is mostly attributable to the impact of the
new supply agreements at market pricing for melamine and
acrylonitrile and assumes current high market prices throughout
2011. Historically, market pricing for melamine and
acrylonitrile varies widely. The company’s policy is to transfer
products between its operating segments at cost versus market
pricing, which includes intersegment sales by Building Block
Chemicals. Continuing costs related to Corporate Services are
mostly offset by savings from the recently launched Shared
Services initiative which is expected to be completed by
mid-2011.
The effect of the new supply agreements at market pricing, and
actions by the Company to offset its impact have been included
in Cytec’s recently issued earnings from continuing operations
guidance for 2011.
Mr. Fleming added, “This transaction moves us forward on our
strategy of having a greater portion of our portfolio oriented
towards specialty growth businesses and allows us to increase
our focus on driving organic growth plus pursue potential
bolt-on or technology acquisitions in our growth platforms.”
About HIG Capital, LLC
H.I.G. Capital is a leading global private equity
investment firm with more than $8.5 billion of equity capital
under management. Based in Miami, and with offices in San
Francisco, Atlanta, Boston, and New York in the U.S., as well as
affiliate offices in London, Hamburg and Paris in Europe, H.I.G.
specializes in providing capital to small and medium-sized
companies with attractive growth potential. H.I.G. invests in
management-led buyouts and recapitalizations of profitable and
well-managed service or manufacturing businesses. H.I.G. also
has extensive experience with financial restructurings and
operational turnarounds. Since its founding in 1993, H.I.G. has
invested in and managed more than 200 companies worldwide. For
more information, please contact Rick Rosen at (305) 379-2322 or
refer to the H.I.G. website at
www.higcapital.com
Use of Non-GAAP Measures
Management believes that net earnings excluding special
items and diluted earnings per share excluding special items,
which are non-GAAP measurements, are meaningful to investors
because they provide a view of the Company with respect to
ongoing operating results. Special items represent significant
charges or credits that are important to an understanding of the
Company’s overall operating results in the period presented.
Such non-GAAP measurements are not recognized in accordance with
generally accepted accounting principles (GAAP) and should not
be viewed as an alternative to GAAP measures of performance. A
reconciliation of GAAP to non-GAAP measurements can be found at
the end of this release.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions
contained herein, statements contained in this release may
constitute “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. Achieving
the results described in these statements involves a number of
risks, uncertainties and other factors that could cause actual
results to differ materially, as discussed in Cytec’s filings
with the Securities and Exchange Commission.
Cytec Corporate Profile
Cytec’s vision is to deliver specialty chemical and
material technologies beyond our customers’ imagination. Our
focus on innovation, advanced technology and application
expertise enables us to develop, manufacture and sell products
that change the way our customers do business. These pioneering
products perform specific and important functions for our
customers, enabling them to offer innovative solutions to the
industries that they serve. Our products serve a diverse range
of end markets including aerospace composites, structural
adhesives, automotive and industrial coatings, chemical
intermediates, electronics, inks, mining and plastics.
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