BSL for 80 % to Dow

Oct 20, 1997 02:00 AM

Sept. 10,.1997 The Dow Chemical Company and the Bundesanstalt fur vereinigungsbedingte Sonderaufgaben (BvS) have completed the negotiations to privatise the Buna Sow Leuna Olefinverbund (BSL) and the transfer of 80 % of BSL's shares to Dow.
The transfer of shares marks the successful completion of East Germany's largest-ever privatisation initiative and the conclusion of extensive negotiations between the BvS and Dow. Under the terms of the agreement, Dow will own an 80 % share of BSL until 2000, when the company intends to purchase the remaining 20 % from the BvS.
"The privatisation of BSL is a significant step in the economic development of Eastern Germany," said Gunter Himstedt, president of BvS. "In our analysis of the BSL complex, we found that the sale of the formerly state-run facilities to a private company would provide significant value for the Halle-Leipzig region. Privatisation of BSL translates directly into opportunity and growth for the German economy," he added.
"Legal ownership of BSL is the next critical step in implementing this complex and ambitious growth initiative," said William S. Stavropoulos, president and CEO of The Dow Chemical Company. "We appreciate the expertise and guidance of the BvS during the entire privatisation process. We believe our collective efforts will result in tremendous growth and development not only for the BSL complex, but also for the communities and regions that surround it."
Stavropoulos also said that BSL is aligned with Dow's core manufacturing competencies in chlorine- and hydrocarbon-based chemistries and offers opportunities for Dow to enter new businesses, including polypropylene, acrylic acid and synthetic rubber among others. "BSL provides a platform for expanding our reach, from both a geographic and business perspective," he said. "As we integrate BSL into our global manufacturing, research and marketing operations, we will create a world class, market-focused organisation that enhances our competitive position," he added.
The privatisation agreement includes specific provisions of financial support from the German government to BSL. The state aid provisions for BSL include funding for cash flow compensation, construction of new plants, demolition of obsolete facilities, remediation and environmental improvement costs. The restructuring period began on 1 June, 1995, and it will end on 30 May, 2000. After the restructuring period, BSL will receive no further support from the German government.
The legal closing of the privatisation agreement concludes a thorough negotiation and approval process. In Sept. 1994, Dow signed a letter of intent with the Treuhandanstalt to take a major role in the privatisation process. On 4 April, 1995, Dow and BvS signed preliminary privatisation agreements, and Dow assumed economic control of BSL on 1 June, 1995. Since then, Dow and BvS have negotiated the details and conditions for the transfer of ownership, while the German government secured approval of the agreement from the European Commission.
The privatisation initiative will result in 2,200 jobs being maintained at BSL. Efforts to build and refurbish facilities at the site and the addition of other companies that may invest in the industrial park will drive any further employment opportunities. In the long term, Dow and BvS estimate that employees at both BSL and new investors' facilities will total approximately 3,000.
BSL is comprised of the former BUNA GmbH, Sachsiche Olefinwerke GmbH and Leuna Polyolefinwerke, GmbH -- which began working together as a single company in 1994. The organisation was entered in the German register of companies as BSL in August 1995.

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