Swiss specialty chemicals firm Clariant has announced it will probably tap investors for more cash, as it battles with SFr3.5 billion ($2.59 billion) of debt.This content was published on February 25, 2003 - 18:25
The company also warned it would slash up to 1,700 jobs as part of cost-cutting measures, just two weeks after it posted a net loss of SFr648 million for 2002.
Clariant's chief executive, Reinhard Handte, said on Tuesday that a capital increase would make sense, although no decision has been made.
Beat Alpiger, an analyst for Julius Baer, pointed out that the equity base had declined to an "unacceptably" low level. The firm's market capitalisation is SFr2 billion.
Clariant's chief financial officer, François Note, said that while a capital increase was not necessary in terms of liquidity, it would be suitable in view of the firm's current risk profile.
Clariant's share price plunged more than 12 per cent to SFr10.30 during afternoon trading on Wednesday.
The company has been struggling under a debt load since it bought the British fine chemicals firm, BTP, for £1 billion (SFr2.13 billion) in 2000.
Clariant posted a loss of SFr1.2 billion in 2001, and a further loss of SFr648 million in 2002, linked to write-offs following the acquisition.
After posting its 2002 results, Clariant said that despite difficult business conditions sales growth had been satisfactory.
It said it would proceed with plans to cut costs, increase efficiency and reduce current assets.
Clariant spokesman Patrick Kaiser said on Tuesday that the company would "reduce its workforce by between four and six per cent in the next two years". Clariant currently employs 28,000 people worldwide.
At the same time, regional service centres will be strengthened to reduce distribution, logistics and management costs by ten per cent.
Kaiser said the measures were intended to improve the financial position of Clariant.
The company hopes to achieve most of the job cuts through natural wastage.
As part of a restructuring programme, the firm said it would also sell off non-core businesses, which account for around seven per cent of sales.
It will also scale back capacity in the pharmaceutical and custom synthesis units of its life science and electronic materials division, where growth has been disappointing.
swissinfo with agencies
Clariant will probably seek to increase its capital by SFr600 million.
The company also plans to cut its 28,000-strong workforce by four to six per cent.
It hopes most of the positions will be lost through natural wastage.
Clariant will probably also shed non-core businesses.
The news comes two weeks after Clariant posted a loss of SFr648 million for 2002.
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