CELANESE AND MITSUBISHI GAS CHEMICAL COMPLETE RESTRUCTURING OF KOREA ENGINEERING PLASTICS
Restructured JV will support global growth of Celanese POM products
DALLAS (March 31, 2022) – Celanese Corporation (NYSE: CE), a global chemical and specialty materials company, today announced the completion of the restructuring of Korea Engineering Plastics Co. (KEP), a joint venture owned 50 percent by Celanese and 50 percent by Mitsubishi Gas Chemical Company, Inc. (MGC), as previously announced in December 2020.
KEP will now focus solely on manufacturing and supplying high quality products to its shareholders, who will independently market them globally and without competitive restrictions. Celanese and MGC believe that focusing KEP’s efforts on manufacturing and supplying its shareholders with a leading portfolio of innovative products is a necessary response to the globalization of the engineering plastics industry, the fragmentation of the marketing supply chain, and other changes in industry conditions since KEP was first formed in 1987 to manufacture and market polyoxymethylene (POM) in Asia, with a particular focus on serving domestic demand in South Korea. This restructuring will also allow Celanese greater access to original equipment manufacturers in Asia, as well as more direct participation in key markets outside of China.
“With the completion of this restructuring, Celanese now has access to world-scale POM polymerization capabilities globally, with committed access to approximately 70kta of POM production in Asia and corresponding global marketing rights,” said Tom Kelly, Senior Vice President, Celanese Engineered Materials. “Celanese maintains typical governance rights of the KEP joint venture and is excited to further value from its 50 percent stake in KEP through this restructuring. Celanese will benefit from KEP’s technical manufacturing expertise and broad product portfolio that will be marketed using Celanese’s commercial teams, project model and global supply chain network.”
With the completion of the restructuring, Celanese and MGC will continue to look into additional ways to leverage KEP’s manufacturing strengths, including assessing potential future expansions of its polymer and compounding capabilities. Included in the final terms of the restructuring, Celanese agreed to sell land to KEP, currently leased by KEP, at its Ulsan, South Korea site, at a market value of approximately $10 million, thereby monetizing a non-strategic asset for Celanese and further solidifying KEP’s presence in Ulsan.
POM is one of the world’s most widely used engineered materials, known for its high dimensional stability, hardness and creep resistance. These unique qualities allow POM to be used as a broad replacement for metal parts. Along with its copolymer resins, POM is widely used as an engineering plastic across almost every industry.
Financial Details of the Agreement
In 2021, KEP delivered approximately $30 million in equity earnings to the Celanese Engineered Materials business. Celanese expects the restructuring of the KEP venture to be immediately accretive to adjusted EBIT and adjusted EPS. Incremental adjusted EBIT of $25 - $40 million will be driven by Celanese marketing and synergy realization to give a run-rate adjusted EPS accretion of $0.15 to $0.20 over the next three years.
