Rhodia makes €400m from divestments

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French chemicals company Rhodia has announced three new deals which
keep it on track to divest €700 million-worth of businesses by the
end of the year as it aims for a return to profitability in 2006.

The company has already announced the sale of its food ingredients business to Danisco for around €250 million as part of a strategy to focus on its core chemicals and pharmaceuticals operations. The French firm is in the midst of a major restructuring and has been hiving off non-core assets to slice away its heavy debt, up as high as €2.3 billion in 2003.

The new divestments include the firm's 50 per cent share in Chilean company Extractos Naturales Gelymar to Sintex and Algina Inversion, which share ownership of the remaining half of the business. Gelymar makes seaweed derived carrageenans, used as texturants in the food industry and as an emulsifier for some pharmaceutical preparations.

The second transaction is the sale of Rhodia's European specialty phosphates business, which supplies a range of customers across the pharmaceutical, food and chemical industries, to Dutch company Thermphos International. This deal is expected to close in the second quarter of this year.

Finally, Rhodia is selling off its Rhodia Research property located in Aubervilliers, outside Paris to the Compagnie des Entrepots et Magasins Generaux de la Ville de Paris (EMGP). This sale, which is accompanied by a commercial lease for nine years, will enable Rhodia to take advantage of the "very favourable conditions in the Paris real estate market,"​ said the firm.

Along with the sale of its 34 per cent stake in specialty ceramics group Baikowski Chimie, announced in February, Rhodia will have achieved approximately €400 million in divestitures during the first semester of 2004.

There has been speculation that Rhodia will also sell off its silicones business.

Last month, Rhodia announced plans to raise €450 million in a rights issue as part of a €1.7 billion refinancing package to be used to tackle its debt problems.

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