Kraton Performance Polymers and Formosa in joint venture for HSBC manufacturing

18-Jul-11

Kraton Performance Polymers, Inc. has announced the execution of a framework agreement with Formosa Petrochemical Corp. (FPCC), which sets forth the major terms and conditions which will, upon completion of the necessary definitive agreements, govern the formation of a 50/50 joint venture between the two companies to construct and operate a 30 kiloton hydrogenated styrenic block copolymer ("HSBC") plant to be located in Mailiao, Taiwan. The agreement establishes a framework between Kraton and FPCC governing all commercial, operational, technical and management aspects of the planned joint venture company. Kraton and FPCC expect to finalize documentation by December 31, 2011 and currently plan to have the plant operational in the second half of 2013. The cost of the plant is currently expected to be in the range of US$165-200 million. "In response to growth in global demand for our differentiated grades of HSBC's, we have been evaluating alternatives for additional capacity that would employ Kraton's latest state-of-the-art technology for producing HSBC's. This announcement is the result of a comprehensive one-year site selection process involving significant Kraton resources, during which we considered several possible investment alternatives," said Kevin M. Fogarty, Kraton's President and Chief Executive Officer. "We are extremely pleased and honored to now announce this planned formation of a joint venture with FPCC, a global leader in the production of petrochemicals and plastics. FPCC's significant project execution expertise and operational resources will help ensure timely completion of the construction phase of the project. We view this joint venture project as the first step in a long-term relationship with FPCC, which may provide for future capacity expansions. Moreover, as an integral part of this strategic growth investment at Mailiao, FPCC's petrochemical complex will provide the joint venture with on-site, competitive feedstock inputs, including butadiene, as well as site services and utilities," Fogarty added. "When completed, this investment will provide significant, additional supply capability, and provide a platform to launch a series of new innovative polymers, to serve the impressive growth plans of our Asian and global customers."