Sterling Chemicals Announces Signing of Acetic Acid Contract Extension With BP
August 22 2008 - 3:47PM
PR Newswire (US)
HOUSTON, Aug. 22 /PRNewswire-FirstCall/ -- STERLING CHEMICALS, INC.
(OTC:SCHI) (BULLETIN BOARD: SCHI) has announced they and BP Amoco
Chemical Company ("BP") have entered into an amended, long-term
Acetic Acid Production Agreement that will be effective
retroactively as of January 1, 2008. The amended agreement contains
the following key provisions: -- the term is extended from July 31,
2016 until December 31, 2031 -- the payment terms were modified in
such a way that Sterling's working capital will be improved by an
average of $16 million per year -- cost sharing provisions were
simplified and modified resulting in an annual Sterling EBITDA
improvement of $1.7 million Concurrently with the execution of the
amended, long-term Acetic Acid Production Agreement, Sterling and
BP also entered into a Mutual Release and Settlement Agreement
which resolves the previous dispute over credits for blend gas. BP
is required to pay Sterling $3.3 million on or before August 27,
2008 and Sterling is entitled to retain all previous amounts it
received from BP related to blend gas credits. As a result,
Sterling is expected to recognize $5.9 million of additional EBITDA
during the third quarter of 2008. "We are excited about extending
our partnership with BP for an additional 15 years," said John V.
Genova, President and CEO of Sterling. "We have had a very positive
and valuable partnership with BP for more than 22 years. The
current and future fundamentals of the acetic acid market remain
strong. Our plant is particularly poised to take advantage as it
ranks in the top quartile for overall efficiency and can be
expanded by another 50% at a fraction of grassroots cost. The first
capacity expansion step will be taken in the spring of 2009 when we
increase our acetic acid capacity by 100 million pounds to
approximately 1.2 billion pounds annually." About Sterling
Chemicals, Inc. Sterling Chemicals, Inc. is a leading North
American producer of selected petrochemicals used to manufacture a
wide array of consumer goods and industrial products throughout the
world. Its primary products are acetic acid and plasticizers. More
information on Sterling Chemicals, Inc. can be found at
http://www.sterlingchemicals.com/. The information in this news
release relating to matters that are not historical facts
constitutes forward-looking information covered by the safe harbor
created by Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. The forward-looking
information is based upon current information and expectations
regarding Sterling Chemicals, Inc. The estimates, forecasts and
statements contained in or implied by the forward-looking
information speak only as of the date on which they are made, are
not guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to evaluate and
predict. Therefore, actual outcomes and results could materially
differ from what is expressed, implied or forecasted by or in the
forward-looking information. Important factors that could cause
actual results to differ materially from what is expressed, implied
or forecasted by or in the forward-looking information include the
timing and extent of changes in commodity prices and global
economic conditions, industry production capacity and operating
rates, the supply-demand balance for Sterling's products,
competitive products and pricing pressures, increases in raw
material costs, federal and state regulatory developments, as well
as the other risk factors discussed in Sterling's filings with the
Securities and Exchange Commission, including Sterling's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q. Sterling
assumes no obligation to update the information contained in this
press release. DATASOURCE: Sterling Chemicals, Inc. CONTACT: John
Beaver of Sterling Chemicals, Inc., +1-713-654-9548 Web site:
http://www.sterlingchemicals.com/
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