Company History

Sterling Chemicals, Inc., or Sterling, is a North American producer of selected petrochemicals used to manufacture a wide array of consumer goods and industrial products. Presently, our primary products consist of acetic acid and plasticizers and we benefit from long-term requirements contracts with BP Amoco Chemical Company for acetic acid and BASF Corporation for plasticizers.

History:

• Sterling was founded in 1986 to acquire and operate Monsanto Company’s petrochemical plant in Texas City, Texas. The purchase was completed on August 1, 1986.
• Sterling was founded on the premise that there was a "window of opportunity" for the chemicals produced at the Texas City complex because of rising demand and no planned new manufacturing capacity on the horizon. Gordon A. Cain, leader of Sterling Group Inc., the investor group that founded Sterling and chairman of Sterling’s board, was a retired chemical industry executive who acquired several chemical complexes from major companies during the recessionary period of the early 1980s. J. Virgil Waggoner was president and chief executive officer of the Sterling from its inception.
• The new company had an anchor customer in Monsanto, which was paying Sterling a fee and a share of the profits to convert its petroleum feedstocks. The Texas City facility was the only one in the United States producing synthetic lactic acid, a preservative, and tertiary butylamine, used significantly by Monsanto in rubber production.
• 1988 was a year of spectacular success for Sterling. We ranked first for the year among all Fortune 500 companies in return on assets and second in return on sales. The company attributed its outstanding performance to a favorable supply/demand situation, availability of raw materials at reasonable costs, the relatively weak dollar, lack of easily substitutable materials and a healthy world economy. Shortly before October 1988, Sterling Chemicals became a publicly traded company, with its stock listed on the New York Stock Exchange.
• In August 1992, Sterling purchased the pulp-chemical division of Albright & Wilson, a division of Tenneco Canada, Inc., for about $302 million. The acquisition included four Canadian facilities for the production of sodium chlorate, used in the bleaching of pulp for the manufacture of paper. It also included ERCO Systems Group, which was licensing and constructing large-scale generators to convert the sodium chlorate into chlorine dioxide as an environmentally preferred alternative to elemental chlorine in pulp bleaching.
• In 1995, Sterling Chemicals achieved its highest revenues and net income since it became a public company. Strong worldwide demand and market growth from global economic expansion benefited sales of both styrene monomer and acrylonitrile. Under construction at Texas City in 1995, in conjunction with BP Chemicals, was an expansion of acetic acid capacity. A partial-oxidation unit by Praxair, Inc. was constructed which converted natural gas into carbon monoxide and hydrogen for use in the production of acetic acid and plasticizers.
• Despite its attempts to control costs, Sterling Chemicals found itself in a precarious financial situation at the start of the new millennium. Losses in fiscal 1999 had been significant and forced the company to lay off employees. High raw material and energy costs, as well as faltering petrochemical demand, left the company struggling under a $1 billion debt load. Unable to make its interest payments, Sterling Chemicals had no choice but to declare Chapter 11 bankruptcy protection in July 2001.
• By the time the company emerged from Chapter 11 in December 2002, private investment firm Resurgence Asset Management LLC had made a $60 million equity investment in Sterling Chemicals. Restructuring efforts also included the sale of its pulp chemicals business for $375 million in cash.
• Sterling Chemical’s management was confident that the reorganization put the company on track for future growth. Two years later, the company announced that it would shutter its unprofitable acrylonitrile and derivative businesses. By this time, Sterling Chemicals was focused on its core petrochemical products--styrene, acetic acid, and plasticizers.
• In September 2007, after experiencing negative cash flows over a five-year period and in anticipation of future market conditions for styrene, the company entered into a long-term exclusive styrene supply agreement with NOVA Chemicals Inc., or NOVA, that ultimately resulted in Sterling exiting the styrene business.
• 2008 was a new start for Sterling. After the shutdown of the styrene facility, we greatly strengthened our balance sheet and focused on our two core businesses, acetic acid and plasticizers. The financial strength has greatly enhanced Sterling’s ability to consider future growth strategies and various strategic initiatives and M&A opportunities.