Cabot Proposes European Restructure
The Board of Directors of Cabot Corporation has authorized management to proceed with exploring a number of European restructuring initiatives. These proposed initiatives, which are subject to certain regulatory approvals and consultation processes with Works Councils, include closure of Cabot's Carbon Black manufacturing facility in Zierbena, Spain, the consolidation of administrative services for all European businesses in one Shared Service Center to be located in Belgium, and the implementation of a consistent staffing model for manufacturing facilities in Europe. When the legal procedures have been completed, implementation would begin immediately in certain locations and conclude within a period of approximately 18 to 24 months. It is anticipated that the closure of the Zierbena plant, which has a stated capacity of approximately 60 thousand metric tons, could occur as early as the fall of 2003. In addition to these initiatives, the Company has decided to discontinue an energy project that was in process at Zierbena and at one other European carbon black manufacturing facility.
Kennett Burnes, Cabot's Chairman and CEO stated, "We recognize that these actions create difficult situations for some of our employees and the associated communities. However, we believe these steps are necessary to address over-capacity in our rubber blacks manufacturing system resulting from low-priced imports and migration of tire production out of Western Europe."
This market situation was further impacted by the EU Member States' decision not to adopt the recommendation made by the European Commission to impose anti-dumping duties on carbon black imports into the EU from Russia and Egypt.
The Company expects that these initiatives could result in a pre-tax charge to earnings of approximately $60 million over the next 18 to 24 months. Approximately $30 million of the charge is expected to be recorded during fiscal year 2003. Total cash outlays related to the program over the 18 to 24 month period are expected to be approximately $25 million.
Cabot's major products are carbon black, fumed silica, inkjet colorants, and capacitor materials. Cabot has approximately 4,500 employees in 45 manufacturing plants located in 23 countries around the world.
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