Geon, OxyChem Complete Vinyl Joint Venture
Oxy Vinyls, LP (Dallas, TX), the commodity polyvinyl chloride/vinyl chloride monomer (PVC/VCM) joint-venture between OxyChem Div. of Occidental Petroleum Corp. (Dallas, TX) and Geon Co. (Cleveland, OH) has formally begun operations. The new entity instantly becomes North America's largest and the world's third- largest PVC producer.
The business, owned 76% by OxyChem and 24% by Geon, combines the two companies' polyvinyl chloride (PVC)/vinyl chloride monomer operations as well as other related businesses. It will have capacity for approximately 4.2 billion lb/y PVC and 4.8 billion lb/y VCM. When the deal was announced in June 1998, Oxy Vinyls was to include 920,000 t/y of OxyChem chlorine capacity, but those assets were not part of the transaction.
Occidental Petroleum chairman Ray Irani says OxyChem will save $80 million per year "through operating and supply-chain efficiencies and consolidation of some administrative functions."
Both OxyChem and Geon made major contributions to Oxy Vinyl's asset base. OxyChem delivered its huge Pasadena, TX, PVC plant; its Deer Park, TX, VCM unit; and its 50% interest in the Ingleside, TX, OxyMar VCM facility; as well as some related facilities.
Geon contributed five PVC resin plants in Deer Park, TX, Louisville, KY, Pedricktown, NJ, Niagara Falls, ON, and Scotford, AB; and a VCM unit in LaPorte, TX.
Both Geon and OxyChem signed long-term contracts to buy VCM from OxyVinyls to serve their specialty resin businesses. Geon also inked a long-term PVC purchase agreement with OxyVinyls to supply its compounding business.
As part of the agreement, Geon acquires OxyChem's compound and vinyl film businesses in Burlington, NJ, and will create another, smaller joint venture for dry blend compounding. Geon will own 90% of that business, OxyChem, 10%. Geon also will receive $110 million in cash and/or cash equivalents, and will transfer $185 million in debt to OxyVinyls.
As part of its agreements with OxyChem, Geon acquired OxyChem's compound and vinyl film businesses in Burlington, New Jersey, and will create another, smaller joint venture for dry blend compounding. Geon also will receive $110 million in cash and/or cash equivalents, and will transfer $185 million in debt to OxyVinyls.
"This is an important beginning for both the joint venture and the 'new' Geon," said William Patient, chairman and CEO. "Adding OxyChem's compounding and film businesses to Geon is a significant next step as we create a multi-billion-dollar global performance polymers and services business." (In related news, Geon announced on May 6 that Thomas Waltermire, currently president and COO, will become CEO of the company, following Patient's retirement.)
Jack Hurst, formerly OxyChem XVP for manufacturing and engineering, becomes OxyVinyls's first CEO. The business will be governed by a six-member board comprised of three representatives each from Occidental and Geon.
For more information: Oxy Vinyls LP, 5005 Lyndon B. Johnson Freeway, Dallas, TX 75244. Phone: 972-720-7000. Fax: 972-404- 3669.