Jim Ratcliffe's Ineos group is reportedly in discussions to sell parts of its business, aiming to raise hundreds of millions of pounds to address mounting debts during a prolonged downturn in the global chemicals industry. According to a report from the Financial Times, citing sources familiar with the matter, these talks are at an early stage but focus on assets from Ratcliffe's vinyls business, Ineos Inovyn.
Financial Pressures and Debt Concerns
The conglomerate is scrambling to cut costs and reduce its debts, which have become a significant burden. The two largest companies within the empire, Ineos Group Holdings and Ineos Quattro Holdings, together had more than £18 billion in borrowings at the end of last year, marking an increase of nearly £3 billion from the previous year. This debt pile has raised alarms among credit ratings agencies, with S&P Global recently downgrading its credit rating for two Ineos companies and issuing a negative outlook due to fears of further earnings declines.
Refinancing and Shareholder Support
In response to these challenges, Ineos is in talks with credit firms to refinance bonds maturing next year. Additionally, shareholders have injected €200 million (£175 million) of new equity into the business in recent weeks, alongside raising another €300 million in financing. However, the group faces looming deadlines for debt repayments, and pressure from ratings agencies could make borrowing from major lenders more difficult and costly.
Industry Challenges and Ratcliffe's Criticisms
Ratcliffe, the UK's seventh richest person, has described the current downturn as "unsurvivable" for chemical plants in Europe, attributing it to rising carbon costs and weak trade defence. He has been vocal in blaming Europe's climate agenda and trade policies for the struggles faced by his business, once calling carbon taxes "the most idiotic tax in the world." The surge in energy costs following Russia's invasion of Ukraine in 2022 has exacerbated issues, compounded by steep competition from chemicals makers in the Middle East and Asia, which face fewer green costs and taxes.
Broader Economic Impact
The difficult economic environment has led many companies within the Ineos group to plunge into losses. S&P Global has warned of further downgrades if Ineos fails to reduce its £18 billion debt pile to below six and a half times the level of its underlying profits. This situation highlights the broader pressures on the chemical industry, where global downturns and regulatory changes are forcing significant restructuring.
Ratcliffe, who shifted his tax residency to Monaco in 2020, recently faced controversy for comments on immigration and benefits, adding to the scrutiny on his business dealings. As Ineos navigates these financial and operational hurdles, the outcome of the asset sales and refinancing efforts will be closely watched by industry observers and investors alike.
