Low margins prompt Fiberweb exit

Fiberweb is to exit the hygiene business in order to concentrate on industrial markets with higher operating margins and returns.

Binding agreements have been made for Petropar, the Brazilian owner of nonwovens manufacturer Fitesa, to acquire Fiberweb Hygiene for a total cash consideration of US$286 million.

The sale is conditional on the approval of Fiberweb shareholders at a general meeting, the approval of Petropar shareholders, the completion of Petropar’s funding and completion of a pre-sale reorganisation.

The transaction is expected to close at the end of 2011.

Following the sale, Fiberweb will focus on the growing technical fabrics and construction products markets, where it has leading positions in several attractive niches, notably in filtration, construction specialties, geosynthetics, agriculture and several medical areas.

The disposal will enable the group to repay all its existing debt.

Taking into account Petropar’s assumption of 100% of the FitesaFiberweb joint venture’s debt and certain pension liabilities, the enterprise value of the transaction is approximately £229 million.

In 2010 the Fiberweb Hygiene business recorded sales of approximately £193 million, and EBITDA of approximately £26 million. It had gross assets of £252 million as at 30 June 2011.
In 2010, the remaining Fiberweb Industrial Business would have reported sales of approximately £270 million and EBITDA of £29 million,.

Following completion, Fiberweb will have technical fabrics operations in Berlin and Aschersleben in Germany, Biesheim in France, Terno d'Isola in Italy and Old Hickory, Tennessee in the USA, and geosynthetics operations in Maldon and Aberdare in the UK, Melbourne, Australia and at Old Hickory.

The group will move rapidly to review its cost base, recognising the smaller scale and reduced scope of the business. This review is expected to result in restructuring costs, primarily for severance.