Qenos - the plastics and rubber subsidiary subsidiary of Orica set for sale

06-Jul-05

Orica, holder of 50% stake in Qenos, one of the largest producers and marketers of polyethylene products in Australia, has entered the final stage of sale negotiations for Qenos, its plastics and rubber subsidiary. Orica has a half-stake in the business under a joint venture arrangement with oil giant ExxonMobil Chemical Although parts of Qenos were sold earlier this year to the polypropylene distributor Basell, the core asset of the group - the polyethylene operation - is likely to be sold in a trade sale later. Heavy institutional support has been seen for the company's stock in the past month, including Perpetual Trustees, which boosted its holding by more than 2.5 million shares in June. Several offshore investors are also understood to have expressed an interest in acquiring Qenos, including private US fund Platinum Equity. Qenos' earnings performance has suffered due to rising oil prices in the past 4 years. Though the year 2004 saw the business generate a profit of US$31.47 million, the company has accumulated losses of almost US$190 million on its balance sheet. Qenos is contemplated to invest about US$60 million in the company's Altona plant to reduce its reliance on oil as a feedstock in a bid to stabilize costs within the operation.