KMG Chemicals, Inc. (Houston; www.kmgchemicals.com), a global provider of specialty chemicals in select markets, has announced that it has sold its creosote distribution business to Koppers Inc., a wholly-owned subsidiary of Koppers Holdings Inc. Assets included in the transaction are KMG’s rail car and tank terminal leases, and creosote inventory. KMG estimates that cash proceeds from the sale will be approximately $15.5 million, which includes approximately $3 million worth of inventory. The asset sale closed concurrently with the signing of the asset purchase agreement.
KMG fully retains its North American pentachlorophenol (penta) manufacturing operations, and the company will continue to produce and supply this important wood preservative used for the treatment of wooden utility poles and cross-arms.
Chris Fraser, KMG’s chairman and chief executive officer, said, “As always, we are committed to maximizing cash flow to drive long-term shareholder value. While our creosote distribution business was fundamental to KMG’s development and early success, changing market dynamics limited its growth potential for KMG in recent years. In today’s environment, our creosote distribution assets are more strategically advantageous for Koppers, a vertically integrated global producer of carbon compounds and supplier of treated wood products.”
“The sale of our creosote distribution business does not affect our penta manufacturing operations, which remain a key asset for the Company. We are dedicated to providing the highest levels of product quality and service to our valued customers in the penta market,” Mr. Fraser stated.