Solvay Signs Deal To Form London JV With INEOS; Sees Charge In Q2

(RTTNews) - Belgium-based chemical industrial group Solvay S.A. (SVYSF.PK, SVYZY.PK) Thursday announced that it has signed a definitive agreement with chemical company INEOS Group to create a strong player in chlorovinyls, to be named INOVYN.

The company said the joint venture is expected to be effective by year-end following the divestments required by the European Commission.

Until completion, Solvay and INEOS will continue to run their businesses separately.

London-based INOVYN will have proforma 2013 sales of more than 3 billion euros, with 14 sites in eight European countries. Governance will be split equally between the partners.

In the deal, Solvay will receive an upfront payment of 175 million euros at closing and transfer liabilities worth 250 million euros into the joint venture.

It will exit INOVYN after three years, when Solvay will receive additional cash proceeds targeted at 250 million euros. These final cash proceeds at exit will be adjusted based on the joint venture's average REBITDA performance during its three-year period, with a minimum exit payment of 75 million euros, the company said.

The company expects the transaction to result in an accounting impairment of around 420 million euros, impacting Solvay's Group share net income in the second quarter of 2014.