Venator in US Chapter 11 Bankruptcy Proceedings

22.05.2023 - Venator, the Huntsman spinoff that holds the family-owned business’s former titanium dioxide activities, has filed for protection from creditors under the US Chapter 11 bankruptcy code.

The company, which is UK-registered but managed from the US state of Texas, said it hopes to exit Chapter 11 within approximately two months.

CEO Simon Turner said Venator has reached agreement with the “overwhelming majority” of its lenders and noteholders on the terms of a comprehensive recapitalization plan that would equitize nearly all of its funded debt and strengthen its balance sheet.  

The agreement with creditors will significantly reduce the company’s debt burden and place it on a sound financial footing, enabling it to deliver on its strategy and capitalize on future growth opportunities, Turner added.

As part of the bankruptcy proceedings, Venator expects to be de-listed from the New York Stock Exchange but continue to trade in the over-the-counter marketplace for the duration. Subsequent plans call for the shares to be canceled.

While Huntsman still holds 9% of its former business, SK Praetorian Holdings is currently the largest shareholder with 39.3%, followed by Czech-based private equity investor J&T MS 1 SICAV with 14.3%.

“Unprecedented economic headwinds”

Explaining the conditions that led to the bankruptcy 11 filing, Turner said Venator has faced “unprecedented economic headwinds” since the second half of 2022, including significantly lower product demand and higher raw material and energy costs.

In its financial results for last year’s fourth quarter, the company reported a 44% year-on-year decline in sales, with only rising selling prices averting a more disastrous performance. In parallel, it posted a net loss of $228 million for the quarter after a net profit of $14 million in the 2021 period.

The recapitalization is being funded by a debtor-in-possession (DIP) facility, which includes a commitment for $275 million in new-money financing from supporting creditors.

Venator expects the DIP financing, together with cash on hand — as well as the cash generated from ongoing operations — to provide substantial liquidity to keep the plants running and pay its global workforce, as well as all trade partners.

Additionally, the company said it intends to remain in possession and control of its assets throughout the Chapter 11 process as well as retain its existing management team and board of directors. Reports nevertheless suggest it may have to shed some unprofitable businesses, including European plants in Duisburg, Germany, and Pori, Finland,

TiO2 accounts for an estimated three-quarters of Venator’s overall turnover. As part of an ongoing cost reduction drive, last autumn it sold a US pigment plant in California and signed an agreement to divest its iron ore operations.

One of the smaller globally active players in the global TiO2 market, the company was created in 2017 as Huntsman spun off its pigments and additives business in preparation for a merger with Switzerland’s Clariant.

That deal subsequently was torpedoed by an activist who argued that the Swiss specialty chemicals manufacturer was worth more alone than in a combination with Huntsman.

Author: Dede Williams, Freelance Journalist