July 10, 2008 at 3:39 am #3542
GrafTech Acquires Minority Interest in Seadrift Coke L.P.
© Business Wire 2008 2008-07-01 17:40:10 –
http://www.graftech.com – GrafTech International Ltd. (GTI) today announced that it has acquired an 18.9 percent minority interest in Seadrift Coke L.P. (Seadrift), a privately held producer of petroleum needle coke, from Falcon Mezzanine Partners, L.P. for $135 million. Seadrift is the world’s second largest needle coke producer. Needle coke is the primary raw material used to manufacture graphite electrodes and represents approximately 40 percent of GrafTech’s total cost to produce a graphite electrode.
GrafTech will utilize approximately $35 million of cash on hand to fund the purchase price with the remainder to be financed utilizing our revolving credit facility. GrafTech expects to repay the amount drawn on the revolver with operating cash flow within the next 12 months.
“The transaction is expected to be accretive to earnings in 2008 and underscores our belief in the strong graphite electrode industry supply chain fundamentals. Based on market conditions, we expect the supply of needle coke to remain tight for the foreseeable future and our strategic investment in Seadrift will allow us to share in anticipated favorable economic returns”, said GrafTech Chief Executive Officer Craig Shular.
The investment in Seadrift includes minority rights consisting of one out of five Board seats and a put provision, whereby GrafTech can exercise its right to sell its stake in Seadrift for fair market value, exercisable beginning in May 2011. Additional minority rights associated with the investment are detailed in the 8-K filing.
GrafTech does not expect its minority interest in Seadrift to affect its most recently issued guidance for 2008, as its proportionate share of Seadrift’s earnings will be reported as ‘Other Income’, which is excluded from the Company’s operational results and guidance.
About GrafTech International Ltd.
GrafTech International Ltd. is one of the world’s largest manufacturers and providers of high quality synthetic and natural graphite and carbon based products and technical and research and development services, with customers in 80 countries engaged in the manufacture of steel, automotive products and electronics. We manufacture graphite electrodes, products essential to the production of electric arc furnace steel. We also manufacture thermal management, fuel cell and other specialty graphite and carbon products for, and provide services to, the electronics, power generation, solar, oil and gas, transportation, petrochemical and other metals markets. We operate 11 manufacturing facilities strategically located on four continents. For additional information on GrafTech International Ltd., call 216-676-2000, or visit our website at http://www.graftech.com.
About Seadrift Coke L.P.
Seadrift Coke L.P. is the second largest producer of petroleum needle coke. The Seadrift coker was built in 1983 and is the world’s newest petroleum needle coker. The coker’s current capacity approaches 180,000 metric tons per year. The Seadrift plant is almost entirely self-sufficient, requiring only supplies of feedstock and fresh water to run continuously. In addition to calcined needle coke, the operation produces fuel gas, naphtha, gas oil and electricity as by-products.
July 10, 2008 at 3:44 am #6733
Here is update on the “stand-alone” Seadrift Needle Coker & Calciner operation – a minority sale to GrafTech (GTI is subsidiary of UCAR) for $135 MM.
I believe this purchase value is ~ about twice the price that The Needle Coker Co (Unocal-Citgo JV – also a stand alone needle coker/calciner plant in Lemont) originally paid to Questar for 76 Seadrift LLC when Carbide/Graphite Intl. (CGI) went thru its bankruptcy / restructuring in 2001-02. But Seadrift LP was eventually spun off as separate company via Falcon Partners.
The high coker feedstock cost has always impacted the plants economics during low points and even though a used Desulfurizer was purchased for $30 MM by CGI it was not installed before it ran into Chapter 11 problems. The Needle Coker Co continued to buy low sulfur / high priced decant oil instead of installing the desulfurizer. <Not sure if it has ever been installed by new owners/ Falcon Partners>. The coking unit is delayed coker – 3 drum operation that was installed ~1983 and revamped by Foster Wheeler. And the calciner was supplied by Metso. (Plant also includes NG power plant & Waste Heat Steam generation.)
GrafTech is international graphite & carbon products producer that is also involved with Fuel Cell applications. It’s parent UCAR is supplied by number 1 needle coke producer ConocoPhillips on a long term contract and has also picked up the COP Carbon Fibers technology/pilot plant (including new Meso-phase pitch production) when the COP R&D efforts was closed down shortly after the Phillips merger.
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