Sustained losses compel Sterling Chemicals to exit acrylonitrile, derivative businesses

19-Sep-05

Huge losses have compelled Houston based Sterling Chemicals Inc. to call it a day at its acrylonitrile business and related derivative operations. The businesses have been shut down since February of 2005 following a force majeure involving availability of propylene. Sterling's acrylonitrile and derivatives businesses sustained gross losses of US$7 million during H1-2005. This colossal amount followed losses to the tune of US$28 million and $36 million recorded in 2004 and 2003, respectively. Closing down of these facilities will result in one- time costs of US$13-17 million before taxes. These one- time costs include payment of contractual obligations, employee severance costs and decommissioning costs. In addition, Q3 2005, Sterling will record an impairment charge of around $3 million before taxes, related to its acrylonitrile and derivatives operations. Reduction of work force will result in approximately US$1 million for severance payments.