Laporte clears decks with pounds 110m sale

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The Independent Online
The restructuring of Laporte, Britain's fourth-largest chemicals manufacturer, took another big step forward yesterday as it confirmed it was disposing of most of the European adhesives and sealants operations of its 1993 acquisition, Evode.

The deal, which sees the sale of a number of well-known brands, including Evostik, is the latest move in a radical shake-up of the sprawling chemicals business by new chief executive Jim Leng.

Mr Leng joined Laporte in October 1995 and immediately raised eyebrows by issuing a profits warning and clearing out the company's old guard. That was followed within a matter of weeks by a restructuring and asset- write down programme costing pounds 83m. Since then, among other sweeping changes, head office numbers have tumbled from 180 to 60.

Yesterday's disposal to Elf Atochem of France will raise pounds 110m and wipe out Laporte's gearing, leaving the company in better financial shape than when Mr Leng arrived at a business with pounds 200m of debts. Regulatory approval for the deal is expected by the end of the year.

Laporte said yesterday that the businesses to be sold made operating profits of pounds 10.6m in the year to December 1995 from sales of pounds 100m. Net assets at the year-end were pounds 32m so the sale will result in a goodwill write-off of pounds 50m and an exceptional profit of pounds 28m.

Mr Leng said yesterday: "Our strategy is focused on speciality chemicals and performance materials where Laporte can achieve the objectives of market leadership and long term profit growth. This sale is consistent with that strategy."

He added that Laporte had raised pounds 170m from disposals since June and given increased focus to the company by reducing the number of operating locations by nearly a third. Disposals had included deals in Australia and New Zealand, the US, Malaysia, Brazil, Peru and Thailand.

The businesses being sold represent all the European activities of the Adhesives, Sealants and Coatings division, except for its timber treatment business and its operations in Italy.

A buyer for the division's Italian operation is being sought and Laporte said it was keeping its options open on the US operations, where it is taking advice from Lazard Freres in New York.

The adhesives and sealants business in North America generated operating profit of pounds 6.5m in 1995 from sales of pounds 59m. The US division is expected to show a "significant" improvement this year.

Before Christmas, Laporte issued a trading statement indicating the second half of the year was running in line with expectations, with sterling's strength having little effect in the fourth quarter, although current rates for a full year, the company said, would have hit 1996 profits by an estimated pounds 6m.

Recent estimates forecast pre-tax profits for the year to the end of December at pounds 120m, well ahead of the provision-hit 1995 figure but slightly lower than the pounds 123m achieved in 1994.