Methanex Corp. (MEOH), the world’s biggest methanol producer, will decide by the end of the year whether to place its U.S. assets into a tax-advantaged partnership that would be spun off to shareholders.
The new U.S. company may be called Methanex Partners Ltd. and would consist of methanol plants that the Vancouver-based company is relocating from Chile to take advantage of abundant and low-cost natural gas, Chief Executive Officer John Floren said yesterday in an interview. An initial public offering of shares in the partnership could occur by mid-2015, he said in Colorado Springs, Colorado, where the American Chemistry Council is holding its annual meeting.
Methanol is derived from methane, a component of natural gas, and is used in motor fuels and to make other chemicals. Methanex, which has previously said it’s considering creating a master limited partnership, would be following in the footsteps of Westlake Chemical Corp. (WLK) and Williams Cos., both of which have separated their ethylene assets into MLPs after the Internal Revenue Service cleared the way with an October 2012 ruling. The partnerships, common in the pipeline industry, generally don’t pay income taxes at the corporate level.
Methanex rose 0.2 percent to C$62.25 at the close in Toronto.
Methanex would be able to grow the MLP by adding more assets from Chile, Floren said.
Methanex has begun commissioning the first of its plants that were relocated to Geismar, Louisiana, Floren said. Production should start by the end of the year and operate at full capacity shortly after that, he said. The second disassembled plant has begun arriving in Geismar and should start by the first quarter of 2016.
The third of four plants in Chile also may be relocated if gas supplies remain in short supply, Floren said. A decision on the third plant will be made within about 12 months, after Methanex secures gas supplies for the second Geismar plant, he said. Methanex would need more land to locate a third plant to the Louisiana site, he said.
Methanex still needs to pursue an IRS ruling on the proposed partnership, he said. Methanex would report six months of partnership earnings before selling shares in the new company, he said.
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