SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 22, 1998
VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)
New Jersey
(State or other jurisdiction of incorporation)
1-4033 63-0366371
(Commission File Number) (I.R.S. Employer Identification Number)
One Metroplex Drive, Birmingham, Alabama
(Address of principal executive offices)
Registrant's telephone number, including area code (205) 877-3000
Item 5. Other Events
On June 22, 1998, Vulcan Materials Company issued the following press
release:
VULCAN ANNOUNCES FORMATION OF
JOINT VENTURE WITH MITSUI & CO., LTD.
AND COMMENTS ON CURRENT BUSINESS CONDITIONS
Birmingham, Alabama, June 22, 1998 - Vulcan Materials Company (NYSE:VMC)
today announced that it has formed a joint venture with Mitsui & Co., Ltd.,
for the purpose of constructing a new chloralkali plant and expanding the
ethylene dichloride (EDC) capacity at Vulcan's current manufacturing site in
Geismar, Louisiana. EDC is a precursor to vinyl and polyvinyl chloride (PVC)
products.
The joint venture will construct and operate a chloralkali plant at
Vulcan's Geismar facility, which will add annual capacity of approximately
210,000 tons of chlorine and 230,000 tons of caustic soda per year. In
addition, the joint venture will acquire existing Vulcan EDC production assets
and purchase rights to use existing supporting utilities and facilities at
Geismar. The joint venture will expand the existing EDC capacity to 270,000
tons per year. Vulcan will continue to own and operate its existing
chloralkali plant and other related facilities at the Geismar location.
Vulcan is a 51% owner of the joint venture and Mitsui is a 49% owner.
In addition to the contribution of its existing EDC plant, Vulcan expects
to invest approximately $90,000,000 in the joint venture, including working
capital. The joint venture is expected to begin production in early 2000.
Mitsui will buy all of the EDC output at the Geismar facility. Mitsui
is the largest EDC trader in the world and holds equity positions in several
Asian vinyl and PVC producers.
Vulcan will operate the joint venture facility; also, through its existing
domestic sales and distribution network, Vulcan will market for the joint
venture all caustic soda produced by the project. Most of the chlorine
produced by the joint venture will be delivered by pipeline to customers
within the Geismar area who will return anhydrous hydrogen chloride (HCl) to
the joint venture. The HCl will be used by the joint venture as feedstock in
the expanded EDC facility. The remainder of chlorine produced by the joint
venture will either be purchased by Vulcan for internal consumption or
marketed by Vulcan for the joint venture.
Donald M. James, Chairman and Chief Executive Officer of Vulcan said,
"We are extremely pleased to be entering this new relationship with Mitsui.
Vulcan and Mitsui have been doing business together for over 20 years. This
new project is structured to provide relatively stable returns to the joint
venture and Vulcan over chloralkali business cycles and the life of the
project. It focuses each of us on what we do well: Vulcan as a producer of
chloralkali products and Mitsui as an international marketer of EDC. As an
added benefit of this project, we will be able to achieve a net reduction of
emissions at the Geismar plant."
Mr. James also commented on current business conditions as they affect
Vulcan's two segments, chemicals and construction materials. "After an
outstanding first quarter for the Chloralkali Business Unit, it has become
apparent during the second quarter that improving caustic soda prices have not
yet overcome the cyclical decline in demand for chlorine and some chlorinated
derivatives. The current Asian financial crisis certainly plays a role in
this decline for the industry. In addition, the Company's Performance Systems
Business Unit has been adversely affected by weaknesses in the pulp and paper
and textile sectors, and margins have not yet improved to anticipated levels.
While it is difficult to project chloralkali pricing in this environment, we
currently expect chemicals' results to approximate last year's results.
"On the other hand," Mr. James continued, "The final enactment of the new
highway bill during the second quarter sets the stage for increased demand for
construction aggregates over the next six years. Construction Materials Group
shipments have remained strong thus far in the second quarter even though the
impact from the new highway bill has not yet begun. We continue to believe
the Construction Materials segment and the Company as a whole will experience
record results in 1998."
* * * * * * * * *
Mitsui & Co., Ltd., based in Tokyo, is Japan's largest general trading
company. Mitsui combines more than 100 years of international trading
experience with an overseas network linking 200 cities worldwide.
Vulcan is a producer of industrial materials with significant positions in
two industries. It is the nation's foremost producer of construction
aggregates and a leading chemicals manufacturer, supplying chloralkali and
other industrial chemicals principally to the chemical, pulp and paper, water
management, food processing and textile industries.
Certain matters discussed in this release contain forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those projected. These include general
business conditions, competitive factors, pricing, energy costs and other
risks and uncertainties as detailed from time to time in the Company's SEC
reports, including the report filed on Form 10-K for the year.
-END-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VULCAN MATERIALS COMPANY
/s/ E. Starke Sydnor
Assistant General Counsel
Chemicals and Environmental
Date: June 25, 1998
