Rhodia plays down divestment rumours, again

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Not for the first time, chemicals company Rhodia has played down
reports in the French press that it is considering a sell-off of
its activities in silicon, food additives and phosphates as part of
an asset divestment programme aimed at improving its profitability.

The company said that it would not comment on 'rumours' in the press and would make a statement only when a final agreement on the divestment package has been reached. Rhodia said in October that it is hoping to raise €700 million through the sale of non-core assets by the end of next year, and was assessing businesses with a value of €1.3 billion.

An article in the French newspaper Le Figaro​ said that the company's management had completed several weeks of studies aimed at drawing up a list of disposable assets. The newspaper noted that BNP Paribas has been mandated to sell the company's silicon operations with annual sales of around €400 million, while Credit Lyonnais has been asked to find a buyer for certain elements in the company's food and additives division.

Rhodia​ said "speculation regarding the effect on the group's business portfolio during a process such as this is normal".

The company is selling assets to help bring down debt of €2.13 billion. Talks with its banks on renegotiating covenants on the debt are due to be concluded by the end of the year.

In October this year a restructuring drive at the company coincided with the departure of its chairman and chief executive Jean-Pierre Tirouflet. Tirouflet had been in conflict with minority shareholders who blame him for failing to improve the performance of the company following its split with Rhone-Poulenc, which merged with the German company Hoechst to form the pharmaceutical group Aventis.

The move followed a difficult financial period for the company which posted a first-half loss of €150 million and has said it expects little improvement in the last six months of 2003.

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