LOS ANGELES, Oct. 12, 2004 - Occidental Chemical
Corporation (OxyChem), a wholly owned subsidiary of Occidental
Petroleum Corporation ,announced today that it has agreed to
purchase three chemical manufacturing facilities from Vulcan Materials
Company for $214 million in cash, plus contingent payments based upon
the future performance of these businesses. The primary products
produced at the three facilities are chlorine, with a combined annual
capacity of approximately 815,000 tons, its co-product caustic soda,
and 315,000 tons of ethylene dichloride (EDC). OxyChem currently has
the annual capacity to produce approximately 3,100,000 tons of chlorine
and 1,500,000 tons of EDC.
During 2003, the assets being acquired generated adjusted earnings
before interest, taxes, depreciation and amortization (EBITDA) of
approximately $40 million. Current estimated annual capital
expenditures for these facilities are $20 million. Stephen I. Chazen,
Senior Executive Vice President and Chief Financial Officer of
Occidental Petroleum Corporation, said "OxyChem believes it has
significant operational and overhead synergies with the Vulcan
operations which should reduce costs by at least $40 million per year.
We believe this strategic acquisition, which is subject to regulatory
approvals, will enhance Occidental's earnings, cash flow and return on
Note: The reported historic performance of the businesses acquired is
based on information provided by the seller which, while believed to be
accurate, has not been audited. In addition, statements in this press
release that contain words such as "believes", "will" or "expect", or
otherwise relate to the future, are forward-looking and involve risks
and uncertainties that could significantly affect expected results.
Factors that could cause results to differ materially from expectations
include, but are not limited to: global commodity pricing fluctuations,
and supply/demand considerations for chemicals; higher-than-expected
integration or environmental remediation costs; and not successfully
completing (or any material delay in) any expansion, capital
expenditure, acquisition, or disposition. Occidental disclaims any
obligation to update any forward-looking statements.
Occidental has not provided a GAAP measure of financial performance
with respect to the disclosure of EBITDA of the acquired business. Such
a measure is not available because Occidental is acquiring only a
portion of the contracts associated with the business, none of the debt
and all of the joint venture.