THIS BODES VERY BADLY FOR THE ECONOMY: THESE GUYS ARE AT THE VERY BASE OF THE SUPPLY CHAIN, SO WHEN THEY DRASTICALLY REDUCE THEIR OUTLOOK, WE'RE IN BIG BIG TROUBLE.
FOR: NOVA CHEMICALS CORPORATION
TSE, NYSE SYMBOL: NCX
JUNE 19, 2001 - 16:02 EDT
NOVA Chemicals' Announces New, Flexible Call Rights on
its Preferred Shares and Advises Reduced Expectations for
Second Quarter Earnings
PITTSBURGH, PENNSYLVANIA--NOVA Chemicals Corporation
(NYSE:NCX)(TSE:NCX) announced today a transaction that will give
NOVA Chemicals new, flexible call rights on its outstanding
retractable preferred shares. The company also announced that
second quarter earnings will be lower than expected.
Preferred Shares Transaction
NOVA Chemicals has completed a transaction among a subsidiary of
the Bank of Nova Scotia, a subsidiary of NOVA Chemicals and two
financial institutions resulting in these institutions purchasing
preferred shares of the NOVA Chemicals subsidiary from a
subsidiary of Huntsman Corporation.
"This transaction gives NOVA Chemicals subsidiary, in effect, the
right to call the preferred shares prior to any conversion into
NOVA Chemicals common shares. The carrying costs associated with
these instruments is approximately six-percent per annum after tax
over the two-year term," explained Jeffrey M. Lipton, President
and CEO of NOVA Chemicals.
The NOVA Chemicals subsidiary originally issued $198 million (US)
of preferred shares to Huntsman on December 31, 1998, as partial
consideration for the styrenics assets acquired from Huntsman. The
preferred shares are convertible into maximum of 8.5 million
common shares of NOVA Chemicals on or after April 1, 2001.
As part of the transaction announced today, certain changes were
made to the terms of the preferred shares and to the stockholder
agreement originally executed with Huntsman. The market-based
exchange rate at which the preferred shares may be converted into
NOVA Chemicals common shares (and, accordingly, the effective
price at which the common shares would be issued) will now be
fixed on April 1, 2003. If the holders would be entitled, based on
the market-based exchange rate, to receive more than the maximum
8.5 million common shares, they would receive the difference in
NOVA Chemicals preferred shares. In addition, the transfer,
control restrictions and standstill arrangements contained in the
stockholder agreement were replaced with a provision giving NOVA
Chemicals the option to call the shares on or after December 15,
2001, and, under certain circumstances, prior to that date for a
net cost to NOVA Chemicals of $191 million (US).
Second Quarter Results
In its first quarter earnings release, NOVA Chemicals stated that
it expected results for the second quarter of 2001 to show
improvement over the loss before unusual items of $0.12 per share
reported in the first quarter. Our outlook has changed, and we
expect earnings to decline to a loss of $0.25-to-$0.30 per share
in the second quarter.
Although our olefins/polyolefins business is showing the expected
improvement, our styrenics business is weaker than the first
quarter due to poor demand and lower margins. NOVA Chemicals'
equity investment in Methanex is also expected to yield lower
earnings.
Second quarter results will be released on Wednesday, July 25,
2001 and a conference call will be held at 1 p.m. EDT on the same
day.
NOVA Chemicals is a focused commodity chemical company, producing
styrenics and olefins/polyolefins at 18 locations in the United
States, Canada, France, the Netherlands and the United Kingdom.
NOVA Chemicals Corporation also owns 29 percent of Methanex
Corporation, the world's largest and lowest cost producer of
methanol. NOVA Chemicals Corporation shares trade on the Toronto
and New York Stock exchanges under the trading symbol NCX. Visit
NOVA Chemicals on the Internet at www.novachem.com. |
