NOVA Chemicals Corporation announced further progress by the INEOS NOVA styrenics joint venture toward the target of U.S. $80 million per year in new joint venture synergies by the end of 2008 as a result of INEOS NOVA's planned closure of its Belpre, Ohio, polystyrene facility.
The Belpre facility closure, announced in an INEOS NOVA news release, will remove approximately four percent of North American polystyrene capacity and reduce INEOS NOVA's fixed costs by approximately U.S. $9 million per year.
Combined with the previously announced closure of the Montreal, Quebec, polystyrene facility, U.S. $14 million of total synergies have been identified and five percent of North American polystyrene capacity has been scheduled for shutdown since INEOS NOVA's startup October 1, 2007.
NOVA Chemicals will take charges totaling U.S. $65 million in the fourth quarter of 2007. The company will take a non-cash asset write-down of approximately U.S. $32 million related to the Belpre closure.
NOVA Chemicals share of Belpre closure and severance costs that will be accrued by the joint venture in the fourth quarter will be U.S. $3 million. These closure costs will be funded by the joint venture from cash on hand.
INEOS NOVA recently acquired the exclusive rights to production from the Sterling Chemicals Texas City, Texas, styrene plant. INEOS NOVA is in the process of transferring Sterlings styrene customers to other INEOS NOVA styrene plants and Sterling has announced plans to permanently shut down the Texas City plant. As a result, NOVA Chemicals will take a charge of approximately U.S. $30 million in the fourth quarter.
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