Pilkington plans sale to cut debt

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The Independent Online
PILKINGTON, the world's largest manufacturer of float glass, is negotiating the sale of its insulation division to Owens-Corning Fiberglass of the US.

The disposal, part of Pilkington's stated intention of focusing on core businesses, is expected to raise pounds 50m.

The proceeds of the sale would pay down debts of pounds 780m and provide half of the pounds 100m the company needs to reduce gearing to under 50 per cent of shareholders' funds.

The proposed disposal of the insulation business, foreshadowed by the company's decision no longer to split out its contribution in its report and accounts, is the latest sale in a pounds 200m disposal programme that could include the defence and optronics businesses.

Debt remains high despite the sale last year of Sola, the spectacles business. Group profits have slumped from a peak of pounds 300m in 1990 to pounds 40.7m last year. Analysts expect a bounce to pounds 105m in the year to March 1994, when results are announced next month.

In the year to March 1992, insulation made operating profits of pounds 1.1m from sales of pounds 79.8m and employed net assets of pounds 58.5m. Last year it was lumped in with other trading companies in the accounts, which made a combined loss of pounds 2.6m from sales of pounds 169m.

The disposal of insulation is the latest move in a reshaping of Pilkington by new management headed by Roger Leverton, the chief executive who joined the company from RTZ in 1992.

Pilkington has struggled in recent years with falling demand in the economies in which it operates.

Owens-Corning is an international group specialising in the manufacture of glass-fibre products. Its proposed acquisition of Pilkington Insulation is part of a drive to expand its interests in Europe.

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