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March 18, 2002
Volume 80, Number 11
CENEAR 80 11 p. 9
ISSN 0009-2347
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What's A Company To Do With $1.7 Billion?


Last week, Hercules Chairman and CEO William H. Joyce provided an answer as he described how the company will allocate the money it is getting from the sale of its BetzDearborn water treatment business to General Electric. In short, it will pay down the mountain of debt it took on when it acquired BetzDearborn.

Of the approximately $1.8 billion that GE will pay for the business, Hercules will net about $1.67 billion. Of that, about $1.59 billion will go toward reducing debt to about $1.30 billion, including preferred securities. The remaining $75 million will be used as collateral for currently outstanding letters of credit.

With the sale of BetzDearborn, the focus at Hercules is on improving shareholder value, including continuing the company's cost reduction program. The sale will reduce Hercules' revenues by about 36%, but it is expected to enable annual cost savings of $25 million by simplifying work processes and the overall corporate structure needed to support a less complex organization, according to Joyce.

Restructuring efforts apparently have replaced the sale of the company as the prime goal at Hercules. Joyce says, "We're looking at all sorts of alternatives, and one of these clearly has to be running the company as it stands right now." The sale of BetzDearborn leaves Hercules with four main businesses: Aqualon aqueous systems; Fibers-Visions synthetic fibers; pulp and paper chemicals, including paper process chemicals retained from BetzDearborn; and resins and terpenes.

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