Koppers Holdings, Inc. Announces Completion of KJCC Sale
Koppers Holdings Inc. (“Koppers”), an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds, today announced the completion of the sale of its Koppers (Jiangsu) Carbon Chemical Company Limited (“KJCC”) to Fangda Carbon New Material Co., Ltd. and C-Chem Co., Ltd., a subsidiary of NIPPON STEEL Chemical & Material Co., Ltd. KJCC is a tar distillation facility located in Pizhou City, Jiangsu Province, China, and was 75-percent owned by the Company with the remaining 25 percent owned by Yizhou Group Company Limited (Yizhou).
In connection with the transaction, KJCC reached agreement with its largest customer in China to resolve the previously disclosed contractual dispute related to application of contractual pricing terms. The settlement of the dispute became effective upon the closing of the transaction.
As previously disclosed, the total purchase price was $107 million, excluding working capital adjustments. Koppers realized approximately $65 million of net cash, after taxes and expenses, and has applied the proceeds toward debt reduction. The net proceeds included $10 million in earnest money received by Koppers in August 2020, which was applied against the purchase price at closing. Koppers expects to record a gain on the sale of KJCC of approximately $30 million to $35 million in the third quarter of 2020.
As a result of applying the proceeds to reduce debt, Koppers estimates that its net leverage will be 3.8 at September 30, 2020, which compares to a net leverage of 4.5 at June 30, 2020 and 4.3 at December 31, 2019.
Commenting on the sale, James Sullivan, Executive Vice President and Chief Operating Officer, said, “Our focus shifted significantly since the KJCC facility was built in the 2012-2014 time period. With our subsequent strategic pivot toward an emphasis on wood treatment technologies, it made sense to consider divesting this business at the right price so we can better focus on core markets and products. I am proud of the stellar safety and environmental record of KJCC employees who truly took our Zero Harm mindset to heart. I wish them the best and thank them for their contributions to Koppers success.”
President and Chief Executive Officer Leroy Ball added, “It’s a credit to our transaction team to get this deal over the finish line amid a global pandemic. It is my expectation that with this sale of another component of our more volatile Carbon Materials and Chemicals business, the investment community will better recognize the higher valuation that Koppers should command in the equity markets.”
Koppers, with corporate headquarters in Pittsburgh, Pennsylvania, is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds. Our products and services are used in a variety of niche applications in a diverse range of end-markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber, and construction industries. Including our joint ventures, we serve our customers through a comprehensive global manufacturing and distribution network, with facilities located in North America, South America, Australasia, China and Europe. The stock of Koppers Holdings Inc. is publicly traded on the New York Stock Exchange under the symbol “KOP.” For more information, visit us on the Web: www.koppers.com.
Michael J. Zugay – Chief Financial Officer – email@example.com – (412) 227-2231
Source: Koppers Holdings, Inc.