LOS ANGELES, June 28, 2000 (PRIMEZONE) -- Occidental Petroleum Corporation (NYSE:OXY) said today that it and its chemical subsidiary, OxyChem, have signed a letter of intent with Olin Corporation to combine the companies' chlor-alkali and related businesses in a joint venture with annual sales of approximately $1.2 billion.
Dr. Ray R. Irani, Occidental's chairman and chief executive officer, said, "The formation of this venture is part of our overall corporate strategy of focusing on core assets. This strategic action brings us one step closer to achieving our primary goal for our chemicals business of becoming the lowest-cost commodity chemicals producer."
The joint venture, to be based in Dallas, Texas, will have an annual capacity of 4 million tons of chlorine, 4.1 million tons of caustic soda and 425,000 tons of potassium hydroxide. OxyChem would own about 66 percent of the venture, and Olin about 34 percent. The alliance will provide both OxyChem and Olin customers with quality products and service while improving operational efficiency.
The venture will be accomplished without incurring new debt and is expected to achieve cost savings of at least $60 million annually as a result of operating and supply-chain efficiencies and consolidation of administrative functions.
Upon formation of this venture and the previously announced sale of certain chemical intermediate operations, OxyChem will manage three cost-competitive businesses: This venture, which produces chlor-alkali products for the international and domestic markets; OxyVinyls (76 percent owned by Occidental), which is an integrated producer of PVC and has separate chlor-alkali operations; and a performance chemicals group that produces silicates, chrome and swimming pool chemicals. Also, OxyChem will continue to own a 29.5 percent interest in Equistar, which supplies ethylene to these units.
The venture will include:
-- Certain of OxyChem's chlor-alkali, ethylene dichloride,
potassium hydroxide and related co-product businesses and
facilities, its interest in an Armand Products partnership in
Alabama and its Carbocloro joint venture in Brazil.
-- Olin's chlor-alkali, sodium and potassium hypochlorite, and
sodium hydrosulfite businesses and facilities in the United
States and Brazil, and its interest in the Sunbelt joint venture
with The Geon Company.
Completion of the transaction is expected by the fourth quarter of 2000, subject to approval by each company's board of directors, completion of definitive agreements and review by regulatory agencies.
Note: This press release may contain forward-looking statements which reflect management's expectations and are based upon data available at the time the statements were made. Actual results are subject to future events and uncertainties, which could materially impact performance.