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Australian Vinyls Corporation

Summary

The Australian Vinyls Corporation was formed in May 1997 comprising Orica (former ICI Australia) 62.6 per cent and the former Auseon 37.4 per cent (owned by the large US-based Geon Corporation and before that BFGoodrich). (The Geon Company is one of the largest suppliers of PVC resins in North America and is the world's largest provider of PVC compounds. Headquartered in Avon Lake, Ohio, The Geon Company and its subsidiaries have manufacturing plants in the United States, Canada and Australia and joint ventures in Europe and Southeast Asia.) The Geon interest was later acquired by US PolyOne Corp.

The shareholding is in proportion to their production capacities of Auseon's 90 000 tpa at Altona and 140 000 tpa at ICI's Laverton plant. Both operations import vinyl chloride monomer, which is a halocarbon trucked from Geelong conveyed and stored in special vessels at Altona (Geon's former plant) and at ICI's operation at Laverton. It supplies around 90 per cent of the Australian market. In 1998, Australian Vinyls Corp achieved a 26 per cent return on assets.

The polymerisation of VCM is relatively simple and capital intensive but it enables the manufacture of the resin to local market requirements. Its operation is sensitive to remaining tariff and anti-dumping legislation.

ICI had closed its VCM synthesis operations at Botany (in favour of EDC exports) in 1996 and then in 1997 closed its EDC synthesis plant. The joint venture is the inevitable outcome of ICI's stronger position in the plastics resins market that was taking market share from its competitor.Australian Vinyls Corporation. In May 1998, Orica indicated it wishes to sell its shareholding (valued at ca. A$150m - but in July 1998 announced it would defer the sale of its shareholding) and there are plans to float the company on the Australian sharemarket. Orica subsequently wrote off A$70m in 2001.

On 2 Jun 1998, the owners of Australian Vinyls Corp (Orica with 62.6% and Geon with 37.4%) announced the decision to put all of their shares on offer to the public. The offer was not successful.

In February 2001, AVC was sold for one-third its book value at just A$40m to a consortium led by its former CEO Mr Murray Winstanley, and Kerry Packer's investment trust CPH Investment. (Note Kerry Packer's investment in Huntsman Corporation. The sale did not include AVC's compound business that represents about one-third of the business. The Altona plant will close (with loss of 44 jobs) with production concentrated at the Laverton North plant.

Following the sale, the Resins and Specialty Products businesses will continue to operate as Australian Vinyls Corporation Limited. Orica and PolyOne will retain the PVC Compounds business, including production facilities at Mentone, Flemington and Deer Park which will operate as Welvic Australia Pty Ltd.