Cytec plans to move all production operations from its Costa Mesa, Adelanto and Huntington Beach, California sites, all acquired from the Umeco acquisition, into its Winona, Minnesota and Tulsa, Oklahoma locations. Approximately 120 employees will be impacted by this move.
The estimated total cost of this initiative is approximately $27 million. Product resites and re-qualifications will begin immediately with final completion by year-end 2014 and once completed, annual savings are expected to be $3-4 million.
Final closure of the California facilities is expected by mid-2015.
Chinese joint venture shut down
Cytec and its joint venture partner have also exited and shutdown their Process Materials joint venture in China. The joint venture, which served the Chinese wind market, was operated under the Industrial Materials business and was acquired as part of the Umeco acquisition.
Cytec's share of the venture's operating losses were approximately $0.6 million annually. The closure will result in a second quarter pre-tax charge of approximately $3.3 million.
Sale of Umeco distribution business
Cytec has completed the sale of the former Umeco distribution product line, currently part of the Industrial Materials segment, to Cathay Investments for total consideration of £5.5 million cash ($8.6 million based on a 1.56 exchange rate) subject to customary post-close adjustments. (See: Cathy Investments acquires Umeco Distribution from Cytec.)
The sale is expected to result in a second quarter pre-tax loss of approximately $12.5 million. The Distribution product line had revenues of approximately $20 million in the first five months of 2013.
