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Downstream Refining & Petrochemicals

Companies involved in the production of petroleum-based chemicals are facing challenging problems and opportunities — the shift from regional to global production and marketing; the impact of inexpensive energy sources such as shale gas; the unprecedented volatility in energy markets; competition from biochemical innovations; and industry consolidation, with the inevitable M&A litigation and arbitration fallout. The highly integrated nature of the chemical industry and the complex nature of supply agreements mean that changes in ownership, strategy, pricing, profitability and company management require expert advisory services. FTI Consulting Energy professionals are refining and chemical industry experts. We don’t have to learn the industry at our clients’ expense. Rather, our decades of experience and hands-on expertise make us valuable partners — as business strategists and as expert witnesses.

Our Service Offerings

Disputes

Petroleum refining and petrochemical industry growth in Europe have lagged growth in North America, largely because of the availability of inexpensive feedstocks in the U.S. However, lower oil prices have recently been a net positive for refiners and petrochemical producers in Europe and elsewhere, albeit that many producers have passed the lower raw material costs along to their customers in the form of lower prices, with little to no margin improvement. Industry consolidation has occurred, which has led to a number of post-M&A disputes as well as contractual disputes associated with underperforming plants, etc. Other disputes involving commercial arrangements such as supply contracts, tolling arrangements and joint ventures continually arise. FTI Consulting understands the issues involved and provides experienced counsel and expert testimony. There is no learning curve for us to climb.

Intellectual Property

Particularly in specialty chemicals, the secret to success is performance. Performance is fuelled by intellectual property (IP), and there are frequent IP disputes, e.g. arising from alleged patent infringement on product design and on production processes and methods. FTI Consulting professionals combine financial, competitive and industry information with our in-depth understanding of IP value to provide litigation support and damages quantification.

Investigations

Many investigations in the petrochemical arena are rooted in regulations such as the U.S. Foreign Corrupt Practices Act. In addition, because of the challenging shale oil market conditions in North America, there may be players that do not play by the rules, in an effort to gain competitive advantage. Drawing on regulatory and industry experience, FTI Consulting Energy professionals are extremely proficient in building and analysing extremely large databases. This gives us a pivotal vantage point in conducting successful investigations.

Strategic Communications

Producers of commodity and specialty chemicals are facing heightened regulatory scrutiny, and face an ever-increasing need to communicate corporate stories and positions — investor relations, recruitment, employee retention, public affairs or community relations. FTI Consulting Communications professionals bring critical perspective to our clients, drawing upon experience working with regulators in the EU, covering the industry from both the buy and sell sides, and working on policy issues.

M&A/Antitrust/Carve-out/Spin-off/Divestiture

In the global chemicals arena struggling companies are looking to jettison underperforming divisions or businesses, sometimes due to pressure from activist investors. Successful companies are looking for ways to grow. There is a robust market for these kinds of assets, e.g., companies looking to add to their portfolios and private equity firms looking to buy those businesses, improve their performance and then sell them back. FTI Consulting and its subsidiary, Compass Lexecon have Energy professionals who have worked for commodity or specialty chemicals companies or in financial services and investment banking. We have participated in many of these transactions, on both the buy and the sell side, and are well positioned to help our clients complete their deals successfully.

Restructuring

Restructuring is an option often used to meet the challenges of poor business conditions. This can translate into the rationalisation of plants and other assets that usually leads to selling off some of those resources. FTI Consulting has teams of experts who understand the capital structure of chemical companies. We have the methodological framework and are well-versed in the financial analytics that support a chemical company’s restructuring.

Strategic & Business Consulting

FTI Consulting is experienced in providing analysis of supply/demand and manufacturing cost curves for different chemical types, growth forecasts, technical innovation, return on investment, competitive outlook and market segmentation. Such analyses help our clients evaluate possible growth strategies, current positions within product lines, the decision of whether or not to expand that position, or the decision of whether or not to invest elsewhere. Commodity market participants are continually examining growth options that were not available prior to the shale gas and oil revolution. Petrochemical companies that had the vision to see the impact of this revolution on their operations seized the moment, built new capacity and expanded operations. The Energy professionals at FTI Consulting have helped many companies do that.

Environmental

Many petrochemical and chemical companies are wrestling with Maximum Achievable Control Technology. This requirement, designed to limit emissions, can place extreme economic pressure on individual assets due to the energy intensity of the processes being impacted. In many instances, it also requires petrochemical and chemical facilities to switch from coal-based to gas-based boilers in order to comply with emissions standards. The experienced Energy professionals at FTI Consulting are well-positioned to help our clients navigate the regulatory environment, analyse engineering and conversion options, and provide viable solutions.

Interim Management

The success of a restructuring, merger, acquisition, carve-out, spin-off or divestiture may depend on how quickly management voids can be filled once the transaction is completed. The seasoned Energy professionals with C-level experience at FTI Consulting are prepared to fill the voids when client companies face leadership, financial or operational challenges. In a moment’s notice, our experienced and credentialed senior executives assume C-level roles, providing the leadership and strategic decision-making ability to maintain momentum, establish corporate priorities, build morale and provide critical continuity. Our C-level executives serve in the following roles: chief executive officer, chief operating officer, chief financial officer, chief restructuring officer, controller and treasurer.

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