Sunvic

Sunvic: to lift halt at 3.30pm. Sunvic announced the proposed disposal of its acrylic acid (AA) and acrylate ester (AE) Taixing production facilities for an aggregate transaction value of ~Rmb3.9b. The buyer is a subsidiary of Euronext Paris-listed Arkema, a leading French chemicals producer with market cap of €5b. The latter’s support represents a vote of confidence, and is a strong testament of the quality and competitiveness of Sunvic’s operations and products. Sunvic will receive an initial payment of Rmb1.45b in exchange for Arkema’s initial 55% stake in the facility, and the balance Rmb2.45b and transfer of remaining stake will be completed in subsequent stages. In aggregate, Sunvic will recognise a pretax gain of ~Rmb1.9b (~$0.75 per share, representing ~93% of market cap) from the disposal. The group expects to use the proceeds to reduce its bank borrowings and continue to grow its intermediate chemical business in the PRC through the establishment of new facilities and expansion of new sales channels. The group will seek shareholder approval for the disposal at an EGM. The Taixing facility has production capacity of 320,000 tons of AA and 180,000 tons of AE, with an additional 160,000 tons of crude AA slated to come on stream by 1Q15. Further to the sale, Sunvic has secured an offtake agreement for the supply of AA and AE until Arkema acquires full ownership of the facility. Meanwhile, Sunvic will retain a production facility with annual AA and AE production capacity of 205,000 and 250,000 tonnes respectively in Yancheng City, Jiangsu province. Post sale, Sunvic's 3Q13 NTA per share will rise from $0.83 to $1.49. Based on the last closing price of $0.795, this implies an attractive P/NTA of just 0.5x.