PETpla.net Insider 12 / 2010

REGIONAL MARKET REPORTS 14 PET planet insider Vol. 11 No. 12/10 www.petpla.net April 29, 2010 Artenius PET Packaging Europe (APPE) in Bierne The “new” Artenius PET Packaging Europe (APPE) “The message is: the crisis is over.” Bierne Production leaders with Manufacturing Director Guillaume Foucher (standing up on the right ) We met: Jean-Marc Rostagno , at the time BU Man- aging Director, APPE France, now BU Director Northern Europe. In the course of touring and investigating the French PET business one inevitably comes across the largest pre- form converter in France, located in Bierne - today trading under the name Artenius PET Packaging Europe (APPE) and a subsidiary of La Seda de Barcelona in Spain (LSB). APPE as well as being the largest preform converter in France, has also the longest history and longest experience in the PET business. The site in Bierne was originally con- structed by Schmalbach-Lubeca in 1989 to produce refillable preforms for the German refillable PET bottle market. After a change in ownership from Schmalbach Lubeca to Amcor in 2002, APPE came under the control of the Spanish PET resin producer LSB in October 2007, and hopes were that with an integrated PET producer as a parent, that the company could expand further into the PET market with new resin developments. But instead APPE was drawn into the turmoil connected with the restructuring of LSB. What did happen and why? LSB’s financial difficulties were compounded by the steep rise in crude oil in 2008 followed by the subsequent collapse in pricing and the global economic downturn. LSB had pursued an aggressive strategy of acquisition in order to achieve a market-leading position as a verti- cally integrated business with reference to chemicals (PTA, MEG), PET and PET preforms. Growth was to be achieved by becoming the leading supplier in the PET resin and PET preform markets in Western Europe. This strategy was realised by acquisitions during the period between 2006 and 2008 (see table): Company Year Participation Advanca 2006 100% Selenis Portugal and Selenis Italy 2006 100% Volos 2006 100% Eastman Chemicals Iberia 2007 100% Recuperaciones Plasticos Barce- lona 2007 67% Amcor PET Packaging Europe 2007 100% Begreen 2007 20% Erreplast 2008 60% Recuperaciones Plasticos Barce- lona 2008 33% The implementation of this strategy combined with the global economic downturn culminated in major liquidity problems for LSB. At the end of 2008 LSB therefore found itself unable to raise the funds to meet financing obliga- tions. Problems were further exacerbated by lower performance than had been projected by some of  the acquisitions, deterioration of margins,  decrease in volumes as a consequence of the financial/  economic crisis, and lack of key integration in the business, as well as  delays in achieving the targeted synergies.  As a consequence, and with the help of a new investor from Portugal (BA Vidro), the capital structure of LSB has been revised together with revised financing agreements from the banks. The financial “gift” however is subject to the condition that the company – parent company and all subsidiaries - will be restructured. All activities of the company will be scrutinised. The unwelcome measures under these circum- stances are always the same: concentration on core busi- ness, some plants closed, work-force reduced. The ‘New’ LSB’s revised strategic direction is to become an efficient plastic packaging solution company abandoning the strategy of vertical integration into PTA and MEG. Additional opportunities are seen in the ‘Plastic Packag- ing’ market to grow this business by intensifying commer- cial activities and sustaining levels of investment in R&D. The strategic initiatives are aimed at being appropriate for the current and foreseeable market conditions, namely: Group business to be focussed on Plastic Packaging, PET and recycled PET only. The message is: the crisis is over In summary this means that APPE will emerge from the crisis thanks to their strong and consistent financial results and will come out of the LSB restructuring ready to take on many new challenges.