(AOF) – Imerys (+5.92% to 29 euros) records one of the largest increases in the SBF 120 after progress on the procedure linked to its talc dispute in the United States. The industrial minerals producer indicates that “more than 90% of the plaintiffs who voted for the reorganization plan of the North American talc entities proposed as part of their Chapter 11 procedure, accepted it”. Imerys thus refers to a procedure under American bankruptcy law. The legally required approval threshold has thus been reached.
Imerys welcomes this progress even if there are still a few steps to take before the conclusion of the Chapter 11 process.
This procedure is now continuing with a view to the Plan confirmation hearing before the competent Court, currently scheduled for the second quarter. Subject to such confirmation, the United States District Court shall then review and also approve the decision rendered.
“The provision made in the consolidated accounts of Imerys is considered adequate to cover the financial consequences of this plan and the resolution of historical liabilities linked to the Group’s talc activity in the United States,” Imerys said in a press release.
Last November, Imerys announced that the competent US federal court had approved the reorganization plan of its North American talc entities and authorized its submission to the vote of the creditors and plaintiffs concerned.
The industrial minerals producer specifies that if the result of this vote was positive, it would allow North American talc entities to move closer to definitive closure of their so-called “Chapter 11” procedure.
In May 2020, Imerys reached an agreement regarding its talc dispute in the United States. The group stipulated that its contribution to the plan will consist of a cash payment of a minimum of $75 million, with an additional amount reaching a maximum of $102.5 million.
LEXICON
Chapters 11 and 7 (law on
“Chapter 11” refers to the bankruptcy law of the United States Commercial Code. When a company declares itself incapable of honoring its debts, it can request to be placed under the protection of this law, which offers it, without canceling its debts, a respite in order to carry out its reorganization and restructure its debt. The company continues its activity and, under the supervision of a committee representing the interests of creditors and shareholders, proposes a rescue plan which must be validated in court. Note that chapter 7 refers to pure and simple judicial liquidation.
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Key Points
– World number 1 in mineral solutions for industry, created more than 100 years ago;
– Turnover of €4.4 billion refocused on 2 businesses – performance minerals (54%) and high temperature minerals (46%) – balanced between Europe-Middle East and Africa for 48%, North America for 29% and Asia-Pacific for 23%;
– Revenue by end market: construction for 35%, consumption for 23%, industry for 13%, steel for 12%, paper for 10% and automobiles for 7%;
– Business model of maintaining the ranks of world number 1 (75% of activities) and promoting mineral solutions by relying on 2 assets: control of supplies (2/3 of the turnover achieved “from the mine to market”) and strength of equity;
– Capital controlled jointly by the Desmarais and Frère families (54.56% of the shares and 68.37% of the voting rights) and Blue Crest 5.07% (5.9% of the voting rights), the board of administration of 12 members being chaired by Patrick Kron, Alessandro Dazza being general director;
– Solid balance sheet, with debt rated investment grade, reduced to €1.2 billion at the end of June 2023, or 36% of equity and 1.7% leverage.
Challenges
– 2023-2025 “Connect & Shape” strategic plan:
– annual organic growth of 3-5%, increase to 18-20% of the operating margin, industrial investments of €400 million per year, including 40% in production capacity,
– debt leverage around 1,
– dividend in line with net current profit and possibility of share buybacks;
– Innovation strategy protected by 2,150 patents and 4,000 trademarks;
– based on the “I-Cube” industrial excellence program,
– focused on natural minerals (replacement of fossil materials), circular minerals and synthetic minerals (niche applications, tailor-made solutions),
– reinforced by industrial partnerships;
– “SustainAgility” environmental strategy, with increase in the 2030 objective of reducing CO2 emissions to 42% for scopes 1 and 2 and to 25% for scope A3 (suppliers) vs. 2021:
– 100% of the biodiversity and rehabilitation program completed in 2021,
– “sustainable solutions” rating for 50% of new products in 2022,
– launch of the first “sustainable” loan;
– Industrial projects in mobility – carbon black in Switzerland and Belgium, specialty talcs in China -, in energy recovery in the Netherlands and in lithium in England;
– Portfolio rotation: disposals to finance investments, acquisitions in minerals useful for the energy transition.
Challenges
– Ambition to be a major player in lithium in Europe via projects in France and Cornwall;
– Adoption of measures against energy inflation -10% of the cost structure- and ability to increase sales prices;
– Ceramic, paper, refractory and abrasive activities affected by customer destocking;
– After a 5.6% decline in revenue but an increase in margin to 16.7% in the first half, 2023 objective of an operating profit between 630 and 650 million.
