Solvay Announces Capital Structures and Financial Policies for
SpecialtyCo and EssentialCo
Solvay Announces Capital Structures and Financial Policies for
SpecialtyCo and EssentialCo
- Strengthened balance sheet supports separation into two
strong industry leaders
- Both companies to pursue financial policies consistent with
investment grade ratings
- Target capital structures to support superior value
creation
- Liability management process planned prior to
separation
- Conference Call with analysts and investors to be held on
June 16, 2023 at 2pm CEST
Brussels, June 16, 2023, 7:00am CEST - Solvay announces the
target capital structures of the independent publicly traded
companies, SpecialtyCo and EssentialCo, that will result from its
planned separation into two industry leaders.
Over the last four years, Solvay has significantly strengthened
its operational and financial performance. The magnitude of the
transformation provides the foundations to separate and create two
global leaders. Each will start with balance sheets and liquidity,
reflecting both their improved past performance and their robust
business outlook. As a result, each is poised and resourced to
create superior and sustainable value for their
stakeholders.
Dr. Ilham Kadri, CEO of Solvay, said “Today marks a new
milestone in the separation project we announced over one year ago.
Having both companies target investment grade ratings with
distinctive and appropriate financial policies is a great
achievement. With the optimized capital structures, each company is
well equipped to operate independently to achieve their goals and
create more compelling value for all.”
Solvay has developed targeted capital structures for each
independent company based on their respective growth trajectories,
investment objectives, and dividend policies.
SpecialtyCo - A Specialties Leader with Superior Growth
Potential
SpecialtyCo develops innovative, value-added solutions that
support a more sustainable world. SpecialtyCo will seek to drive
above-market growth, industry-leading margins and compelling
returns.
- SpecialtyCo will maintain disciplined capital allocation and
will be committed to a strong investment-grade rating.
- The current dividend level of Solvay for the 2023 financial
year will, after completion of the separation, be apportioned
between the two companies, with SpecialtyCo assuming 40% of the
dividend share.
- SpecialtyCo is expected to adopt a dividend policy that enables
the Company to invest in the growth that will deliver sustainable
value creation to shareholders, whilst preserving a structural
capacity to deleverage over time.
EssentialCo - An Essential Chemicals Leader with Resilient
Cash Generation
EssentialCo masters technologies that have proven essential
across a number of attractive and resilient end markets. With a
focus on enhancing its cost leadership, EssentialCo will seek to
maximize its cash generation.
- EssentialCo will be committed to an investment grade
rating.
- The current dividend level of Solvay for the 2023 financial
year will, after completion of the separation, be apportioned to
EssentialCo for 60% of the dividend share.
- EssentialCo is expected to maintain Solvay’s current dividend
policy of stable or increasing dividends.
Additional Information and Next Steps
EssentialCo is expected to issue around €1.5bn in new bonds in
the period following the separation. As previously indicated,
existing Solvay SA bondholders will be offered the opportunity to
transfer obligations to SpecialtyCo before the separation,
consistent with the expectation that it will enjoy a strong
investment grade rating.
By contrast, hybrid bonds are not, at this point in time,
expected to be a permanent part of the capital structures of either
company. Solvay plans to call the PNC 2023 Hybrids (€800m) at their
first call date and plans a tender of the PNC 2024 Hybrid (€500m)
ahead of the separation.
The implementation of these transactions and their terms will
depend on market conditions and will be announced to all
bondholders in August. Further, Solvay reserves the right to change
the approach to planned transactions prior to their
implementation.
The targeted indicative capital structures1 to support value
creation of EssentialCo and SpecialtyCo are summarized in the table
below.
|
(€ Bn) |
EssentialCo |
SpecialtyCo |
Profit |
Underlying EBITDA2 |
1.3 |
1.9 |
Financial Debt |
Underlying Gross debt |
-2.5 |
-2.8 |
Underlying Net debt |
-1.9 |
-1.6 |
Other Liabilities |
Net pension liabilities |
-0.7 |
-0.3 |
Environmental liabilities |
-0.4 |
-0.3 |
1 Financial debt indications are based on projections at
the end of 2023 whereas Other Liabilities indications are based on
end 2022 unaudited figures.
2 Underlying EBITDA: 2022 unaudited figures
Disclaimer
The contemplated separation is subject to general market
conditions and customary closing conditions, including final
approval by Solvay’s Board of Directors, consent of certain
financing providers and shareholder approval at an extraordinary
general meeting, and is expected to be completed in December 2023.
There can be no assurance, however, regarding the ultimate timing
of the separation or that the separation will actually be
completed. The Company will keep the market informed if and when
appropriate.
Certain statements contained herein may be forward-looking
statements including, but not limited to, the statements about the
potential separation of the Company into EssentialCo and
SpecialtyCo, as well as other statements that are predictions of or
indicate plans, strategies, goals, future events or intentions.
Undue reliance should not be placed on such statements because, by
their nature, they are subject to known and unknown risks,
uncertainties and assumptions. Should one or more of these risks
and uncertainties materialize, or should any underlying assumptions
prove incorrect or any other factor impact those statements, the
Company’s and the Solvay Group’s actual results, plans and
objectives, as well as the timing and consummation of the
transactions described herein, may differ materially from those
expressed or implied in the forward looking statements. The
inclusion of such statements should not be regarded as a
representation that such results, plans or objectives will be
achieved. Important factors that could cause actual results, plans
and objectives to differ materially from those expressed in such
statements include, among others, the Company’s ability to satisfy
the necessary conditions to consummate the contemplated separation,
or that such separation will be completed, within the expected time
frame, on the expected terms or at all; the Company’s ability to
realize the anticipated benefits of the potential separation, in
full or at all; the expected tax treatment of the potential
separation; potential uncertainty during the pendency of the
contemplated separation that could affect the Company’s financial
performance; the possibility of disruption, including changes to
existing business relationships, disputes, litigation or
unanticipated costs in connection with the contemplated separation
and related transactions; uncertainty of EssentialCo’s and
SpecialtyCo’s financial performance and ability to succeed as
standalone publicly traded companies following completion of the
separation; negative effects of the announcement or pendency of the
separation and related transactions on the market price of the
Company’s securities and/or on its financial performance; general
economic factors, such as interest rate, currency exchange rate
fluctuations and changing market conditions; competition, including
technological advances, new products and patents attained by
competitors; challenges inherent in new product research and
development; the impact of business combinations, divestitures and
restructurings, including any reorganizations to be carried out in
connection with the contemplated transaction; adverse litigation or
government action, including related to product liability claims;
changes to applicable laws and regulations, including tax laws and
import/export and trade laws; the impact of products withdrawals;
regulatory approval processes; all-in scenario of R&I projects.
The Company undertakes no obligation to publicly update or revise
any of these forward-looking statements, whether to reflect new
information, future events or circumstances or otherwise, except as
required by applicable laws and regulations.
This press release is for informational purposes only and is not
intended to, and does not, constitute an offer or invitation to
sell or solicitation of an offer to subscribe for or buy, or an
invitation to purchase or subscribe for, any securities of the
Company, EssentialCo or SpecialtyCo, any part of the business or
assets described herein, or any other interests or the solicitation
of any vote or approval in any jurisdiction in connection with the
transactions described herein or otherwise, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
contravention of applicable law. This press release should not be
construed in any manner as a recommendation to any reader
thereof.
This press release is not a prospectus or other offering
document for the purposes of Regulation (EU) 2017/1129 of June 14,
2017 (as amended, the “Prospectus Regulation”), and the allocation
of shares of Specialty Holdco Belgium SRL (“SpecialtyCo”) to
Solvay’s shareholders as part of the contemplated partial demerger
of Solvay is expected to be carried out in circumstances that do
not constitute “an offer to the public” within the meaning of the
Prospectus Regulation. SpecialtyCo is currently preparing a
registration document, which will become a constituent part of
SpecialtyCo’s prospectus for purposes of the admission to trading
of SpecialtyCo’s shares on the regulated markets of Euronext in
Brussels and Paris. The registration document will be made
available to investors at no cost on
https://www.solvay.com/en/investors/creating-two-strong-industry-leaders
and at the registered office of SpecialtyCo, at Rue de Ransbeek
310, 1120 Brussels, Belgium.
The distribution of this press release may be restricted by law
in certain jurisdictions and persons into whose possession any
document or other information referred to herein comes, should
inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
This press release is directed solely to persons in the United
Kingdom who (i) have professional experience in matters relating
to investments, such persons falling within the definition of
“investment professionals” in Article 19(5) of the FSMA (Financial
Promotion) Order 2005, as amended (the “Financial Promotion Order”)
or (ii) are persons falling within article 49(2)(a) to (d) of the
Financial Promotion Order or other persons to whom it may lawfully
be communicated or caused to be communicated, (all such persons
together being referred to as “relevant persons”). This press
release is directed only to relevant persons and must not be acted
on or relied on by persons who are not relevant persons.
Solvay (EU:SOLB)
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