M&G files for bankruptcy, selling assets

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Photo by BL Harbert International Early construction at the M&G plant in Corpus Christi.

Financial turmoil is leading materials firm M&G USA Corp. to seek a buyer for its unfinished PET resin and feedstock plant in Corpus Christi, Texas.

Officials with Houston-based M&G revealed the sale attempt in a 30 Oct filing with US Bankruptcy Court in Delaware. Its M&G Polymers unit filed for bankruptcy protection on 24 Oct.

The filing was made "to access $100m (€85m) in debtor in possession financing and conduct a sale process for the Corpus Christi plant and certain other US assets," officials said in the filing. The unit's other big US asset is a PET resin plant in Apple Grove, West Virginia.

Market sources say the Apple Grove plant recently stopped production. The site has annual production capacity of about 800 million pounds.

Cost overruns in Corpus Christi resulted from design and technical problems, weather delays, missed deadlines and cost projections by subcontractors, engineering audits and delays in equipment delivery, officials said in the filing.

As a result, they added, the Corpus Christi complex is less than 85 percent complete, and M&G has incurred almost $1bn (€850,000) in funded debt obligations in the last three years. The plant initially was expected to be fully operational in January 2016.

M&G Polymers' 24 Oct filing came one week after its parent firm, Mossi Ghisolfi Group, took the same step in in its home nation of Italy. In the US filing, M&G listed liabilities of between $100m and $500m and assets of between $500m and $1bn.

The 30 Oct filing added some names to M&G's list of its largest unsecured creditors. Industrial & Commercial Bank of China Ltd. — based in Beijing — now tops that list with a bank loan of almost $356 million. Second on the list is financial firm Och-Ziff Management Europe Ltd. of London, with a bond debt of $110m.

The list also includes PET and feedstock supplier Indorama Ventures of Montreal, which is owed almost $57m, and petrochemicals supplier Shell Chemical LP of Houston, owed almost $20m.

M&G also owes $49m to Mexican conglomerate Alpek SAB de CV for supplies of purified terephthalic acid, a PET feedstock. In September, Alpek announced that it was stopping shipments of a PET feedstock to two plants operated by M&G in Mexico and Brazil as a result of the debt.

Alpek made the unusual move of announcing the stopped shipments and the unpaid debt in a news release. According to published reports, M&G also has stopped PET production at its 1.2-billion-pound capacity plant in Altamira, Mexico.

Alpek, which also owns North American PET maker DAK Americas, had agreed to distribute more than 1 billion pounds of PET made at the new M&G unit. In its third quarter financial filing, Alpek said it had $643m of asset impairment exposure from M&G, as well as a $223m tax credit.

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