Btr Sells Off Taiwan Plastics In 91m Deal

BTR on Monday completed the first phase of its disposal programme with the sale of its controlling share of three plastics joint ventures in Taiwan for $300 million (£191 million).

The disposal of BTR's effective 51 per cent interest in the three companies comes as the manufacturing conglomerate prepares to unveil a strategic redirection alongside its first-half results on Thursday.

Ian Strachan, the chief executive hired from the RTZ minerals group in January, is expected to reveal plans to refocus BTR on its core manufacturing businesses, particularly vehicle parts and packaging, and sell more than £1 billion of assets.

Withdrawing from the Taiwanese ventures brings proceeds from divestments this year to £900 million.

 

The disposal comes just five days after the sale of Tilcon, BTR's US roadstone business, for £211 million.

Shares in BTR rose 3 1 /2p to 265 1 /2p as investors took heart from signs that further decisive action is looming. BTR is selling a 51 per cent interest in Taita Polymer, which makes styrene-based plastics, and a similar sta ke in Asia Polymer, which produces low-density polyethy lene.

It is also selling a 31 per cent interest in China General Plastics, which makes plastic products, including pipes and industrial goods.

The buyer is a consortium comprising two Taiwanese plastics companies, Union Petrochemical and USI Far East Corporation, which will assume management control in place of BTR.

Disposal of the interests had been complicated by the need to reach agreement with Mr James Chao, a Taiwanese entrepreneur who controls the minority stakes in Taita Polymer and Asia Polymer. BTR will initially receive US$120m, and two subsequent annual payments of US$90m. It will be obliged to charge a loss on the disposal of £76m against its interim results. Mr Strachan has sold during a downswing in the chemicals cycle. In the year to December 31, the three groups made total post-tax profits of £16m on sales of £400m. But in the first half of 1996 they made just £6m, against £37m a year earlier. Because returns from the chemicals business are so low, brokers believe the sale will not dilute BTR's earnings. Mr Mark Cusack, analyst at UBS, said BTR had achieved a ''pretty good'' price, although a write-down would still be required. ''This was a business they should never have been in in the first place. The investment cycle in commodity chemicals is totally outside the realm of their expertise.'' BTR said: ''We are very pleased with the price we have achieved.'' The disposal is part of a BTR strategy to concentrate its plastics interests on the manufacture of packaging products. BTR's interest in the three Taiwanese companies was originally acquired in 1986 by its Australian arm, BTR Nylex, then run by Mr Alan Jackson, Mr Strachan's predecessor as chief executive.