Rockwood repays debt, agrees to sell two businesses for expected cash proceeds of $2.4 billion

By Lisa Kerner

Charlotte, N.C., Aug. 5 - Rockwood Holdings, Inc.'s second-quarter net sales rose 8% from the prior year period due primarily to the acquisition of certain crenox GmbH assets in July 2012, said chairman and chief executive officer Seifi Ghasemi during the company's earnings call on Monday.

Ghasemi provided an update on the company's initiatives announced six months ago.

"On the share repurchase front, as of the end of June we had bought 3.41 million shares at an average price of $63.45 spending about $222 million of the $400 million authorized," he said.

Rockwood increased its dividend by 15% to 40 cents per share per quarter.

"On the debt pay down front, we did pay down $512 million of our debt as compared to the $600 million indicated six months ago," Ghasemi said.

The company also entered into agreements for the sale of its Advanced Ceramics business for €1.49 billion, which should be completed by the end of August, and its Clay-based Additives business for $635 million, which is slated to close in early October.

According to Ghasemi, Rockwood expects a "minimum of tax leakage" from the two transactions. Rockwood should receive $2.4 billion of cash from the sales.

When asked about the acquisition pipeline, the CEO declined to comment on specifics but said, "There is no lack of opportunity for spending the money once we have it."

Ghasemi also said "remains optimistic" about the company's performance.

Chief financial officer Bob Zatta said Rockwood continues to deleverage in accordance with its plan.

"As noted last quarter, we repaid all of our outstanding borrowings under the TIO2 facility agreement which was $512 million in March of 2013," he said.

We generated free cash flow of $19.8 million in the second quarter and $14.3 million in the first half of the year."

Free cash flow for the second quarter of 2012 was $39 million.

Adjusted EBITDA was down 25% for the quarter at about $166 million.

The company reported net income of $32.3 million, or $0.41 per share for the second quarter of 2013, as compared to $224.9 million, or $2.81 per share for the same period in the prior year.

For the six months ended June 30, net income was $51.2 million, or $0.64 per share, versus $300.7 million, or $3.76 per share, a year ago.

Rockwood is a Princeton, N.J.-based specialty chemicals and advanced materials company.

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