Victoria Chemicals Case

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Global Executive MBA – FGV (2015) * COURSE 201: CORPORATE FINANCE IN A GLOBAL ENVIROMENT PROFESSOR: Richard Saito * Session #3: July 19, 2014 Victoria Chemicals Local Team 4: Yasmin Pastore Abdalla Claudio Lorenzetti Mark Hollenstein Fabio Maiello Glasson Antonio Fonseca Junior July 17, 2014 | * | * | * | * | * | History Background Victoria Chemicals, a major competitor in the worldwide chemical industry, was leader in polypropylene production and sales. They had two production plants one located in Mereyside, Liverpool and the other in Rotterdam, Netherlands. By 2008 they were facing a big dilemma, and a huge pressure of their investors to improve its financial performance. Their plant was very old, and the operation had lot to improve and Frank Greystock the controller was taking care of a project of modernization of the entire plant. Capital Renovation Proposal As soon as Lucy Morris assumed the management of the Merseyside plant in 2007 she easily discovered several that needed efficiency improvements in polypropylene production. The equipment was suffering of a deferral of maintenance for the last five years and the plant design was antiquated. Other improvements were to relocate and modernize tank cars unloading areas, refurbish the polymerization tank for quicker throughput and to renovate compounding plant in order to save energy. Her proposal for restructuring had an estimated cost of £12 million and they would have to shut the plant down for 45 days. This measure was a problem because considering the fact that the sister plant in Rotterdam was operating almost in full capacity and could be that the clients had to buy from another competitor during this period. Frank Greystock believed this would be a short lapse in customer satisfaction and loyal customers would return preventing permanent

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