Synetix sell-off lined up by ICI

The company announced the plans to sell the business, which employs 400 staff in Billingham, as well as 170 at a site in Lancashire, along with a rights issue aimed at reducing its near £3bn debt.

The business has brought forward the reporting of its financial results from next Thursday, to Monday, to give more details of a proposed rights issue aimed at raising £800m.

Anthony Platt, assistant director at stockbrokers Wise Speke in Stockton, said: "ICI has been forced into this rights issue and the sale of the Synetix business to tackle its debts.

"ICI currently has a market value of £2.5bn, and debts of approximately £2.9bn. You know something needs to be done when the business is worth less than its debts."

He said: "I believe there are a number of overseas buyers already lined up to take over Synetix. I don't think the sale will lead to any job losses as the business is a solid and profitable one."

A statement from ICI said it believed it was in the best interests of the business and shareholders to take action now to strengthen its balance sheet and improve its financial flexibility.

It said: "The board believes that this positions ICI to realise the growth potential offered by its technology, creativity and geographic reach, for the benefit of both its customers and shareholders."

ICI said talks with credit ratings agencies had led it to conclude it was likely to have a credit rating downgrade if action was not taken.

It said proceeds resulting from its actions would enable it to achieve debt refinancing on significantly better terms.

Analysts have predicted pre-tax profits for the year at £394m to £401m, compared with £450m in the previous year and £376m in 1999.

ICI itself expects to report pre-tax profits, after one-off costs and goodwill, to come in at £401m.

In November, ICI reported a fall in third-quarter profits, and said it would axe 1,300 jobs in Europe, the US and Asia, including 275 in the UK, in order to cut costs.