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Mexicana Mexichem awaits evaluation to define partnership with Pemex after plant explosion

Mexico City, Mexico — The fate of the association between industrial conglomerate Mexichem and state-owned Pemex will be defined once the insurers’ assessment of the damage after an explosion at a vinyl chloride plant is received in April 2016, said the director of Finance of Mexichem.

The explosion at the Clorados III plant of Petroquímica Mexicana de Vinilo (PMV), where Mexichem has 56 percent and Pemex 44 percent, located within the Pajaritos complex in the eastern state of Veracruz, left a balance of 32 people dead. Extensive damage to the plant forced its closure.

“We need to know how much we have to be able to make an investment decision,” Mexichem CFO Rodrigo Guzmán said at a press conference, adding that the evaluation could be delivered as soon as next month, although a business decision would take months.

Among the options that Mexichem will have once the insurance payment is received are the reconstruction of the chemical complex, the construction of a new plant or the dissolution of the alliance, the executive said.

The amount that PVM will receive from insurers is estimated between $220 and $310 million USD, but this could vary depending on the level of damage that the evaluation throws, Guzmán said.

“This was the biggest accident in the history of insurers in Mexico,” he estimated.

In the short term, Mexichem will focus its efforts on integrating its latest acquisition, the Israeli irrigation company Netafim, as well as paying the debt it requested to carry it out, Guzmán said. The acquisition of Netafim is the largest ever made by the Mexican conglomerate and raised its debt level 2.5 times from EBIDTA, which it aims to reduce by approximately 18 months, Guzmán said.

From 2008 to date, Mexichem has acquired approximately 26 companies.

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