ICI slashes debt with sell-off to Huntsman

Huntsmans's £1.7billion purchase of four major businesses from Imperial Chemical Industries brings ICI one step closer to its goal of becoming a bona fide speciality chemicals group.

The deal, which gives Huntsman a significant foothold in Europe, includes ICI's polyurethanes, titanium dioxide and aromatics business, and ICI's share of olefins supply at Wilton, Teesside.

Although ICI's first-quarter profits of £53million were better than expected, industrial chemicals at Runcorn, Cheshire and regional businesses (including a start-up PTA plant in Pakistan), still spoiled the balance sheet. On the plus side, debt is expected to fall sharply this year from £4.5billion to about £2.8billion following the deal with Huntsman. ICI is also selling its acrylics business and Huntsman has expressed an interest.

The ICI assets will be held by a new company, Huntsman ICI (HICI) in which ICI retains a 30 per cent stake. Huntsman insisted on ICI's stake to ensure smooth transition of power while ICI claims it has held on to a valuable share of the highly profitable polyurethane business. This leaves ICI with a 50 per cent share in a refinery and methanol business on Teesside, and its 80 per cent stake in an ethylene cracker.

Two more ICI businesses have also been sold. ICI's German-based equipment specialities coatings business was bought by PPG Industries, the US paints group, and a management buy-out team has bought ICI's trading unit, Chance & Hunt.

And as if these movements were not enough, Sir Ronald Hampel, chairman and architect of ICI's transformation, has stepped down. Hampel is replaced by Charles Miller Smith, and former Guniness executive Brendan O'Neill, takes over from Miller Smith as chief executive.