From the Experts
SIP Trunking News
[September 18, 2009]
A future at Flint Hills?: Former Rexene head looks to reopen plant
Sep 18, 2009 (Odessa American - McClatchy-Tribune Information Services via COMTEX) -- A blast from the past is trying to become a big part of Odessa's future.
Bill Gilliam, former chairman of Rexene Corp., told a group of about 25 former Flint Hills resources employees Friday that he is putting together financing to try to buy and restart the Odessa chemical plant Flint Hills shut down earlier this year.
Gilliam, who is now senior advisor for Novato, Calif.-based Constellation Capital Management LLC, said he looks to restart the plant, which had 395 employees and more than 100 contract workers when its closure was announced last November. The plan is to restart the plant in six to eight months.
"I could not be more thrilled with the fact that I get a chance to do it over again," said Gilliam, who oversaw the plant with Rexene from the time it bought the Odessa Petrochemical Complex in 1988 until his resignation in 1992.
Gilliam looks to return the entire plant to operations with the exception of the parts being restarted by REXtac LLC, which bought four polypropylene lines at the plant, one of which it looks to restart next month.
And he has big plans for rehiring workers. Gilliam said the plant could have more than 1,000 employees within a year.
Officials with Flint Hills, a division of Wichita, Kan.-based Koch Industries, said the facility wasn't financially viable in the worldwide commodities market. Gilliam said he intends to direct the plant to focus on specialty polyethylene and polypropylene polymers, which continue to fetch premium prices in down times.
That's how he said he operated Rexene, which Gilliam said went from bringing in $7 million in 1986 to $78 million in 1987 to more than $130 million in 1988.
While he would settle for purchasing just the Odessa plant, Gilliam said he is interested in buying all of Flint Hills' polymers division, which includes plants in Longview and Marysville, Mich.
Gilliam intends to take the company public and has identified a number of "shell" companies with no assets other than cash that could invest.
Richard From, chief executive officer of Peyton, Chandler & Sullivan, a broker and dealer company, said he has located a number of public vehicles with between $25 million to $150 million in cash on their balance sheets that are looking for a public company.
"We have a lot of interest from a lot of different fund managers," From said.
Because of the size of the project, Gilliam said the new company should be able to immediately be posted on the New York Stock Exchange.
"And what will the new company be called?" asked one former employee in the hastily assembled conference room Friday at the MCM Elegante Hotel.
"Rexene!" Gilliam said to applause from the audience.
Many former employees said restarting the plant would be made more difficult because of deteriorating physical conditions, as well as outdated equipment there.
Gilliam estimated the cost of repairs to the plant to be around $100 million.
Then there is the question of whether Flint Hills would be willing to sell the property.
Flint Hills spokeswoman Katie Stavinoha said Friday that the company had yet to speak with Constellation, but it would be willing to talk with any "qualified entity." "The company is actively marketing our assets in Odessa," she said. "We'll certainly discuss a sale with anybody who's interested in pieces of the plant or the plant in its entirety." But Mark Johnson, who worked at the plant for 31 years (and hoped to stay there for 50), said it wouldn't be Gilliam's fault if the sale doesn't go through.
"It seems that Flint Hills, they are not willing to sell, for what reason I don't know," he said.
But he still was optimistic.
"I'm going to be positive," Johnson said. "I think it will happen, and it will be good for the city of Odessa." Credit for bringing the management company into the picture went to Michael DeShazo, a former research specialist at the chemical plant, and the Rexene Employees Association he headed. The employee stock ownership plan used $5,000 it had left over from when Rexene owned the complex to hire Benefit Capital Southwest, a company that sought investors for the plant.
Rexene sold the plant to Huntsman Corp. in 1997. Huntsman owned the plant until it sold to Flint Hills in 2007.
Gilliam said he hadn't heard about the 52-year-old plant's closing until he talked to DeShazo and Benefit Capital President Kenneth Winslow a few weeks ago.
"When Michael called me, I was surprised, but I wasn't surprised," he said.
After trying to find investors for months, DeShazo said he decided to find Gilliam after talking with a securities broker.
While he can't be sure that the deal will go through, Gary Vest, economic development director for the Odessa Chamber of Commerce, said it's the "best possibility" he's seen since the plant's closing was announced.
"I had pretty much given up on it," he said. "Mike DeShazo is the one who didn't give up on it. He put together the right people to possibly make this happen." DeShazo said he started the effort because it didn't make sense to have a plant that had constant demand for its product shut down.
He is hopeful that a deal will go through.
"I think that Flint Hills and Koch Industries are a very intelligent bunch of folks," he said. "The economy has not been very kind to this business. I think we have an opportunity to do them a favor and for them to do us one." While he admits he was excited about the possibilities of redeveloping the Flint Hills site, Vest said that with assets including the largest rail yard between El Paso and Fort Worth and several hundred undeveloped acres in the area, companies related to the plastics industry could set up shop around the petrochemical complex.
"I'm not so sure that's totally gone," Vest said of redevelopment. "These guys are entrepreneurs." Eugene Smith, who worked at the plant for 37 years, said he is excited about the possibilities.
"We've had letdowns about this, but this is the best news yet," he said.
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