Phelps Dodge sells some downstream assets

In two separate transactions, copper producer Phelps Dodge (PD-N) is selling all its specialty-chemicals business and part of its wire operations.

The specialty-chemicals division, Columbian Chemicals, will be sold to a private-equity group affiliated with J.P. Morgan Chase & Company and to South Korean chemical company DC Chemical. Columbian, which produces carbon black, has 12 carbon black plants in nine countries, including the United States, Canada, and South Korea.

DC and the private equity firm, One Equity Partners, will pay US$600 million, including US$115 million in Columbian’s cash balances.

The other sale sees the magnet-wire business of Phelps Dodge Wire & Cable sold to privately-held Rea Magnet Wire for US$125 million in cash. There will be an adjustment to the price based on the business’s working capital at the time the deal closes.

Rea Wire has also agreed to an offtake deal for copper rod from Phelps Dodge. Phelps Dodge said it expected most of the employees in its magnet wire plants (which are in Ft. Wayne, Ind., and Monterrey, Mexico) would continue with Rea, but it has allowed for some severance costs.

Phelps Dodge keeps its technology centre in Ft. Wayne and a magnet-wire plant in Suzhou, China.

Phelps Dodge estimated it would take a US$60-million loss on the Columbian Chemicals sale and a US$20-million loss on the magnet wire sale at year-end.