LSB Industries Inc. said July 25 that its board of directors has not been presented with a sale transaction that they feel is in the best interests of shareholders. As a result, at this time, the board has made a decision to terminate the formal sale process portion of its strategic review, which it began back in November (GM Nov. 4, 2016).
The company said the board always remains open and willing to engage in these types of discussions. It said that while it is not sharing specific details of the process, it believes that, at this time, the current outlook in the nitrogen chemical industry is adversely affecting any potential transactions. The board will, however, continue to work with its outside advisors on evaluating other strategic, financial, and operational options.
“We remain focused on achieving our major objectives of operating at ammonia plant average on-stream rates of 95 percent, continuing the expansion of product sales into new geographic markets, and positioning our business to capitalize on anticipated improvements and agricultural pricing in 2018,” Dan Greenwell, LSB president and CEO, told analysts July 25. He added that the company plans to pursue improvement in its financial flexibility by refinancing debt by year-end and potentially deleveraging to reduce overall cost of capital.
The company also said it plans to continue to streamline its corporate structure and reduce costs. It is bringing in an outside engineering firm in August to evaluate and recommend additional reliability improvements at its Pryor, Okla., plant.
“The second half of 2017 looks more challenging than we anticipated earlier this year due to the current ammonia pricing environment, which is lower than pricing levels seen at this time in 2016,” he added. “We do, however, remain highly confident in our ability to operate all our plants at on-stream rates of approximately 95 percent or higher. Additionally, recent sales of non-core assets have strengthened our balance sheet and provided us with greater financial flexibility, which we plan to further enhance in the coming quarters.”
LSB completed the sale of its gas assets in June for $16.3 million (GM June 30, p. 24). Overall, the company anticipates non-core asset sales to bring in up to or over $20 million this year, with approximately $3.5-$5 million still to come from real estate and the sale of its legacy Summit Machine Tool business.