Solvay announces the target capital structures of the independent publicly traded companies, SpecialtyCo and EssentialCo, that will result from its planned separation into two industry leaders.
Over the last four years, Solvay has significantly strengthened its operational and financial performance. The magnitude of the transformation provides the foundations to separate and create two global leaders. Each will start with balance sheets and liquidity, reflecting both their improved past performance and their robust business outlook. As a result, each is poised and resourced to create superior and sustainable value for their stakeholders.
Dr. Ilham Kadri, CEO of Solvay, said “Today marks a new milestone in the separation project we announced over one year ago. Having both companies target investment grade ratings with distinctive and appropriate financial policies is a great achievement. With the optimized capital structures, each company is well equipped to operate independently to achieve their goals and create more compelling value for all.”
Solvay has developed targeted capital structures for each independent company based on their respective growth trajectories, investment objectives, and dividend policies.
SpecialtyCo - A Specialties Leader with Superior Growth Potential
SpecialtyCo develops innovative, value-added solutions that support a more sustainable world. SpecialtyCo will seek to drive above-market growth, industry-leading margins and compelling returns.
EssentialCo - An Essential Chemicals Leader with Resilient Cash Generation
EssentialCo masters technologies that have proven essential across a number of attractive and resilient end markets. With a focus on enhancing its cost leadership, EssentialCo will seek to maximize its cash generation.
Additional Information and Next Steps
EssentialCo is expected to issue around €1.5bn in new bonds in the period following the separation. As previously indicated, existing Solvay SA bondholders will be offered the opportunity to transfer obligations to SpecialtyCo before the separation, consistent with the expectation that it will enjoy a strong investment grade rating.
By contrast, hybrid bonds are not, at this point in time, expected to be a permanent part of the capital structures of either company. Solvay plans to call the PNC 2023 Hybrids (€800m) at their first call date and plans a tender of the PNC 2024 Hybrid (€500m) ahead of the separation.
The implementation of these transactions and their terms will depend on market conditions and will be announced to all bondholders in August. Further, Solvay reserves the right to change the approach to planned transactions prior to their implementation.