Sir Jim Ratcliffe's Ineos group is reportedly in early-stage talks to sell portions of its business, with the goal of generating hundreds of millions of pounds to manage escalating debts. This move comes as the global chemicals industry faces a prolonged downturn, described by Ratcliffe as potentially "unsurvivable" for European plants due to increasing carbon costs and weak trade defenses.
Focus on Inovyn Assets and Debt Challenges
According to sources cited by the Financial Times, discussions have centered on assets from Ratcliffe's vinyls business, Ineos Inovyn. The conglomerate is actively working to reduce costs and lower its debt burden, which has grown significantly. At the end of last year, the two largest entities within the empire, Ineos Group Holdings and Ineos Quattro Holdings, collectively held over £18 billion in borrowings, marking a nearly £3 billion increase from the previous year.
Financial Pressures and Refinancing Efforts
Ineos is also engaged in talks with credit firms to refinance bonds set to mature next year. In recent weeks, shareholders have injected €200 million (£175 million) of new equity into the business, alongside raising an additional €300 million in financing. However, the group faces looming debt repayment deadlines and scrutiny from credit ratings agencies, which have expressed concerns about its financial outlook.
S&P Global recently downgraded the credit ratings for two Ineos companies and assigned a negative outlook, citing fears of further earnings declines. The agency warned that further downgrades could occur if Ineos fails to reduce its £18 billion debt pile to below six-and-a-half times its underlying profits.
Industry-Wide Struggles and External Factors
The challenges for Ineos are compounded by broader economic factors, including Europe's surge in energy costs following Russia's invasion of Ukraine in 2022. Additionally, stiff competition from chemicals manufacturers in the Middle East and Asia, which face fewer environmental costs and taxes, has intensified the pressure. This difficult environment has led many companies within the Ineos group to report losses.
Ratcliffe, who relocated his tax residency to Monaco in 2020, has been vocal in criticizing Europe's climate agenda and trade policies, labeling carbon taxes as "the most idiotic tax in the world." His recent controversial comments on immigration and public benefits have also drawn attention, though he has since apologized.
As Ineos navigates these turbulent times, the outcome of the asset sales and refinancing efforts will be crucial in determining its ability to stabilize finances and compete in a challenging global market.
