Corco gets new suitors; Davis resigns top post Commonwealth Oil Refining Co. found itself in an unusual situation last week. It now has no less than four suitors. It also found itself in a situation that is becoming familiar. It lost its president and chief executive officer, Gary W. Davis. Two of the four suitors for Corco are pretty serious in their intentions. Charter Oil, a subsidiary of Charter Corp. of Jacksonville, Fla., is making a proposal that would provide cash, debt, and equity securities for Corco's creditors and equity securities for Corco's stockholders. During the next two months, counsel for both companies will attempt to draft a possible mergor agreement that then will be presented to the Corco board. Corco last week also authorized discussions with a group of private investors represented by Roger E. Tamraz. This group will prepare a proposal for Corco's board to consider. Tamraz says that his proposal will involve a substantial investment in Corco and a restructuring of the company's long-term indebtedness. Tamraz is chairman of First Arabian Corp., a Saudi Arabian-backed company that has been holding talks with Tesoro Petroleum, a 37% investor in Corco. Also getting into the act is Coastal States Gas, which has been supplying Corco's Puerto Rican refinery with crude oil and naphtha feedstocks. Coastal States says that it still is considering whether it should make a proposal to Corco's board. Tenneco is the fourth company that is looking at Corco. A spokesman for Tenneco says that company still is deciding whether to make a proposal. Tenneco's entry is a little surprising. Last year when it was holding discussions with W. R. Grace over a possible acquisition of Grace's Hatco group, one of the conditions of the sale was that the purchase would exclude Oxochem, the Puerto Rican oxo alcohols operation that Grace owns jointly with Corco. The deal between Grace and Tenneco eventually fell through. There also are hints that a few more companies may be interested in acquiring Corco at the right price. The company's huge, potentially cheap assets in Puerto Rico make it very attractive in spite of its huge losses over the past few years. It will be months, however, before a final decision is reached over the ultimate disposition of the company. If the board of directors and Corco's stockholders accept the current proposals, it then must be approved by
Davis: another Corco chief leaves
Corco's creditors and bank lenders. It then would be subject to approval and confirmation by the bankruptcy court that is hearing Corco's case. Esti-
mates are that this process could take as long as a year. The one unexpected announcement came last week when Gary W. Davis resigned as president and chief executive officer of Corco and also resigned from its board of directors. Davis is the second Corco chief executive to resign in the past year. His predecessor, Norman C. Keith, who also was chairman of the board, left last August. Before joining Corco, Davis had been a vice president of the Phillips Chemical part of Phillips Petroleum and general manager for the petrochemical supply division of the parent company. He also was chairman of Phillips Puerto Rico Core, an aromatics-producing subsidiary of Phillips Petroleum. Davis will be succeeded on an interim basis by Edward D. Doherty, who has been vice president, general counsel, and secretary of Corco. Corco says it has been trying to retain a reorganization management team. "•
World butadiene growth olds at 2.5% annually Worldwide butadiene production is moving up slowly. In 1978 output will reach nearly 4 million metric tons, up about 2.5% from 1977, excluding production in communist-bloc countries. This gain will be about the same as in 1977, according to a justreleased annual survey of the world's butadiene industry by Ericsson Chemical Services of Houston. U.S. butadiene production will account for about 40% of world production, accounting for some 1.6 million metric tons this year. U.S. consumption, however, will be greater than production with the net of imports over exports making up the difference. Last year 314,000 tons of butadiene were imported, mostly from Western Europe, the Ericsson survey discloses. In 1977 for the first time, U.S. production of coproduct butadiene from ethylene plants exceeded the production of dehydrogenation butadiene. The ratio of coproduct to dehydrogenation was 55:45. This shift resulted primarily from nearly fullyear production of three steam crackers fed heavy hydrocarbon streams—naphtha in gas oil, and a low average operating rate of PetroTex Chemicals, which has the largest capacity for dehydrogenation butadiene. Even though Petro-Tex has returned to a high operating rate for its capacity, new steam crackers being started up will cause further declines in the share of butadiene made in dehydrogenation units. However, these units still will be needed for
several years to help provide sufficient butadiene for U.S. demand. U.S. consumption of butadiene fell slightly in 1977 from 1976 by about 30,000 metric tons. And demand currently is running slightly lower than last year. The causes for a decline in U.S. butadiene consumption are difficult to pinpoint, says Ralph L. Ericsson, president of Ericsson Chemical Services. They include a cutback in both synthetic rubber production and inventories, and a prolonged shutdown of Du Pont's hexamethylenediamine (HMDA) unit at Orange, Tex., which uses butadiene feedstock. Even so, U.S. butadiene output has been increasing during the past six months. The result has been a softening of the U.S. market and a plateau for prices. As the year opened, contract prices ran between 20.5 and 22 cents a lb. Prices held in the second quarter and no important change is expected for the third quarter. If U.S. demand picks up, some slight increase in price could occur in the fourth quarter, Ericsson predicts. Outside the U.S., the butadiene supply situation is one of tightness. Western Europe production rose 9% in 1977, but little increase is expected during 1978, Ericsson forecasts. Demand is expected to jump significantly because of startup of several new butadiene-consuming units, the largest being Butachimie's HMDA plant in France. This could reduce quantities available for exports from Western Europe. • May 29, 1978 C&EN
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