Atanor S.A

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Atanor S.A.

Albarelloa 4914
Munro, Buenos Aires B1605AFR
Argentina
Telephone: (54) (11) 4721 3400
Fax: (54) (11) 4721 3413
Web site: http://www.atanorsa.com.ar

Public Company
Incorporated: 1943 as Atanor Compania Nacional para la Industria Quimica S.A.M.
Employees: 768
Sales: 618.17 million pesos ($183.43 million) (2002)
Stock Exchanges: Buenos Aires; Over the Counter (OTC)
Ticker Symbols: ATAN; ANOR
NAIC: 325110 Petrochemical Manufacturing; 325192 Cyclic Crude and Intermediate Manufacturing; 325193 Ethyl Alcohol Manufacturing; 325211 Plastics Material and Resin Manufacturing; 325320 Pesticide and Other Agricultural Manufacturing

Atanor S.A. is one of the leading manufacturers of chemicals, petrochemicals, and polymers in Argentina and is the largest producer and exporter of agrochemicals in Latin America, especially of herbicides. Indeed, most of the company's chemical products are used in the manufacture of its agrochemicals. Atanor is the only company in the world that manufactures all three of the leading types of herbicides: 2,4-D acids, triazines, and glyphosates. The company sells its goods to about 2,000 customers, many of them abroad. It is 51 percent-owned by Iowa-based herbicide manufacturer Albaugh Inc.

1938: 40 Years of Production for Industry and Agriculture Begin

Atanor was founded by Argentine industrialists and technicians in 1938, its name taken from a small furnace used by ancient alchemists. With offices and a production facility in Munro, some 15 miles from Buenos Aires, the company began producing hydrogen peroxide. The company introduced oxygenated water to the market in 1940, followed the next year by acetic acid and acetic aldehyde. In 1942, Atanor began exporting its products.

By 1944, with World War II well underway, the government took a share of the company as a security measure, providing about one-third of its capital through a military agency whose function was to assure that Argentina had the raw materials and finished products needed for its defense. As a result, Atanor began producing catalysts for the production of synthetic rubber and stabilizers for explosives. In 1948 the company opened a second plant in a military zone outside Rio Tercero, Cordoba. Its power supplied by hydroelectric energy, the facility began producing methanol there and assumed responsibility for oxygenated water in 1950.

The Postwar period was characterized by expansion. Atanor established a joint venture with Monsanto Chemical Co. in 1951 to manufacture, in Munro, molded phenolic powders and synthetic resins. Four years later, it acquired Monsanto's share of the enterprise and continued its activities under the name Atanor Plastics. The work there made possible the development of important industries dedicated to the manufacture of abrasives, foundry resins, laminated materials, paper, and textiles.

Atanor established a branch office in Rosario in 1953 and later added others covering almost the entire nation. From these offices agents sold and distributed Atanor products, while technical personnel provided support, especially to farmers. In 1956 the company installed, at Rio Tercero, a new plant to provide Argentina with four to six tons of pure DDT daily, as a joint venture with the Swiss pharmaceutical company Geigy. This was quickly followed by the development of other insecticides such as hexachlorocyclohexane and lindane and herbicides such as MCPA and 2,4-D acid. In 1957, with Olin Mathieson Chemical Corporation, Atanor established a joint venture to further these activities. In 1963 the company purchased Mathieson's share and founded Agroquimicos Atanor S.A.I.C., located in Munro. Atanor was Argentina's largest chemical company in the late 1950s and the only one of its kind that was totally Argentine-owned. Company shares were being traded on the Buenos Aires stock exchange by 1964.

Atanor formed a partnership with Hooker Chemical Corporation in 1960 to establish Duranor Industrias Quimicas S.A.I.C. as a manufacturer of phenol and monochlorobenzene at Rio Tercero. Atanor Plastics became part of Duranor in 1962. A new electrolytic plant at Rio Tercero in 1964 raised production of caustic soda, and in the same year the methanol plant was modified to take natural gas as its fuel. In 1971 the first oxygenated-water plant in Latin America using the autooxidation process was inaugurated at Rio Tercero with technology from the German firm of Degussa A.G. The previous plant was dismantled. Duranor was producing phenol, phenolic acids, and urea-formaldehyde glues in 1978, when Atanor purchased Hooker's 49-percent interest in the company. Duranor also had a cumene-based phenol plant under construction at this time and also was involved in a project to build a paranitrophenol plant in Argentina to supply feedstocks for malathion and parathion herbicide plants planned for Bolivia.

In the early 1970s industrial chemicals accounted for more than half of Atanor's sales. Agrochemicals comprised the vast bulk of the remainder, with home products making up the rest, about 10 percent, through an associated firm, Hoganor. Direccion General de Fabricaciones Militares, an agency under the control of the nation's ministry of defense, held a 21-percent stake in the company. In 1974 Atanor took a 51-percent share of Petroquimica Rio Tercero S.A., a new plant that initiated the nation's production of toluene diisocyanate (TDI), a prime material for urethane foam. The state-owned energy company YPF and Fabricaciones Militares were Atanor's partners. In 1982 Petroquimica Rio Tercero S.A. brought onstream a $170 million plant capable of producing 16,000 metric tons a year of TDI, 12,000 tons of liquid chlorine, and 13,000 tons of caustic soda.

As of 1978, Atanor's Munro and Rio Tercero complexes were producing not only a variety of final industrial and agricultural chemicals but also important intermediate materials for varnishes, resins, plastics, paints, textiles, hides, paper, metals, and pharmaceuticals. The principal intermediate products included ethyl acetates, butyl and isobutyl, acetic acid, oxygenated water, liquid chlorine, formol and its derivatives, phenol, caustic soda, phenolic resins, and vinyl emulsions. At Rio Tercero, work was underway on a new plant to produce chlorine and caustic soda, with the U.S. company Diamond Shamrock Corporation providing the basic engineering and electrolytic cells. Associated firms under the Atanor banner—besides Petroquimica Rio Tercero, Duranor, and Hoganor—included Fadecor (pyrethum insecticide powders, sprays, and spirals), Abetos Atanor (forestry and recuperation of arid lands), and Tecnor (engineering services).

Restructurings and Changes in Ownership: 1980–97

By 1980, however, it was clear that Atanor could not function profitably without scaling back in size. Accordingly, the company closed the only plant producing phenol in Argentina and eliminated other unprofitable lines, such as home products. A greater emphasis was then placed on exports such as solvents and herbicides. By the end of 1981 Atanor's workforce had been reduced by half, with many positions being eliminated and line managers assuming complete responsibility for decisions. The company now felt itself healthy enough to acquire Rhodia Argentina, a chemical complex at Baradero, located in the province of Buenos Aires about 90 miles from the capital. This facility was producing acetic acid, acetic aldehyde, acetic anhydride, ethyl acetate, butyl, isobutyl, ether, sorbitol, and triacetylene. In 1985 Atanor acquired the majority share of Dericel S.A., the only producer in Argentina of CMC (carboximethylcellulose). During 1987 the Rio Tercero facility opened the first Argentine unit for the production of 3,5 Dinitro, the principal material for the manufacture of trifluraline, used in certain herbicides. Shortly after, work was authorized for a new oxygenated-water plant. During this period Atanor was not only the sole Argentine producer of oxygenated water but also of acetic anhydride, acetic acid, ethyl acetate, and other acetates. Chemical products accounted for about 60 percent of its sales. The growing agrochemical range of products, accounting for 22 percent, included Ipersan, a herbicide for soybeans; EPTC, a herbicide for corn; and monocrofotos, a wide-spectrum insecticide.

In 1986 Argentinian President Raul Alfonsin pledged to relieve the government's budgetary problems by selling off some government holdings, beginning with petrochemicals. Atanor was one of the firms scheduled for privatization. The Bunge y Born group, a large food manufacturer and grain merchant in Argentina, anticipated the coming privatization by acquiring a 34-percent stake in the company from Grupo Roberts (a private holding company prominent in textiles). The purchase was made through Compania Quimica S.A., a Bunge y Born enterprise which was working with Atanor to produce herbicides and intermediate materials in the manufacture of fertilizers.

The 21-percent stake held by Fabricaciones Militares was sold in 1988 to Compania Quimica, giving it effective ownership. By this time Atanor was manufacturing a wide range of chemicals at three locations. The Munro plant was producing 35,000 metric tons a year of acetaldehyde, acetic acid, agrochemical formulations, ethyl butyl, formaldehyde, isobutyl acetates, phenolic resins, and other products. At Baradero, also in the province of Buenos Aires but about 90 miles from the capital, the company had the capacity to produce 15,000 tons a year of similar products, including sorbitol. The Rio Tercero complex had the means to turn out 80,000 tons a year of chloralkali, hydrogen peroxide, methanol, and other products. A distillery in Mendoza was producing 400,000 liters a month of ethyl alcohol.

Company Perspectives:

The pioneering businessmen and scientists who started the company endowed it with the name ATANOR in remembrance of the small furnace used by alchemists of yore. It represents both the tradition of a science, and the constant search for new technologies.

The government sold its 40-percent share in Petroquimica Rio Tercero to Egerton Finance in 1992. Atanor continued to hold the majority stake in this enterprise, and a Chemical Week supplement in 1994 called Atanor's one of the most successful privatizations in Argentina, with a reduction in the workforce and an increase in manufacturing capacity. Rio Tercero was exporting about half of its output to Bolivia, Chile, Paraguay, and Uruguay. The parent company, however, was floundering, nearly going bankrupt in 1993 before refocusing its efforts on herbicide production. After modest improvement, Bunge y Born sold Petroquimica Rio Tercero to a bedding manufacture named Pieso in 1996 for $29 million. The 51-percent interest in the rest of Atanor was sold to Iowa-based Albaugh, Inc.—one of its clients—in 1997 for $58.6 million.

Late 1990s and Beyond

Atanor had five major production facilities and annual sales of $168 million by 1997. However, local authorities shuttered the Munro plant for a month that year when it was discovered that several people living near the plant were suffering severe health problems and were carrying unusually high levels of heavy metals in their bodies. In a statement presented to federal courts, the rector of the University of Quilmes, which had been contracted to design an environmental monitoring system, accused Atanor of tampering with the study. Atanor claimed it was complying with all environmental legislation but began shifting many of the factory's activities to the four other plants as part of a policy of transferring operations to non-urban areas.

Of Atanor's sales in 1999, chemicals accounted for 48 percent, agrochemicals for 28 percent, and petrochemicals for 24 percent. Seventy percent of the company's chemical products were being used in the production of its agrochemicals. Twenty-six percent of its sales were exported, and 81 percent of its exports were agrochemicals. Brazil and the United States were the chief markets. Atanor's labor costs fell from 22 percent of sales in 1993 to 13 percent in 1999.

At the end of 1999 Atanor added a plant in Pilar, Buenos Aires, that was producing the herbicide Glyphosate. Early the next year it purchased a sugar refinery in Marapa, Tucuman, converting it into a production plant for ethyl alcohol, with further production of acetic acid, anhydrous acetic, and acetates foreseen.

In 2003 Atanor purchased a company named Moonmate S.A. for $11 million, receiving two sugar plantations and a sugar refinery with the goal of augmenting its production of ethyl alcohol. Atanor also was planning to build two new plants: one for chlorine and caustic soda, the other for a byproduct of these, hydrogen peroxide. Although Argentina passed through its third consecutive year of recession, Atanor's sales increased by 15 percent in 2000, and its net profit rose five-fold.

The economic crisis that gripped Argentina in 2001 and resulted in a devaluation of the peso at the beginning of 2002 proved greatly beneficial to Atanor, because the company's costs were now in cheaper pesos, enabling its products to be more competitive in export markets, with sales made in hard currencies. Wisely anticipating the devaluation of the peso, the company had pressed its clients to pay quickly while stretching out payments to its suppliers, thereby accumulating the funds it needed to pay $50 million in foreign debt before devaluation could make these debts even larger. Revenues rose by 70 percent in 2002, and net income tripled to 45.14 million pesos ($13.39 million). Production came to 245,081 tons, or 76 percent of capacity. Agrochemicals accounted for 77 percent of total sales. D.A. International, a company controlled by Albaugh president Dennis Albaugh, owned two-thirds of Atanor by the autumn of 2003, and made a tender offer of $57 million to purchase the remainder of the publicly traded outstanding shares of stock. Some 95 percent of these shares were tendered.

Atanor's agrochemicals in 2002 consisted of 11 herbicides, 3 insecticides, and a chemical for the treatment of worms in livestock. Two herbicides—2,4-D acid and Glyphoste—accounted for 35 percent and 34 percent, respectively, of its agrochemicals sales in 1999. Atanor's 23 chemical and petrochemical products in 2002 were ethyl acetate, butyl acetate, isobutyl acetate, acetic acid, hydrochloric acid, hydrogen peroxide, salicyclic acid, liquid chlorine, caustic soda, sorbitol, ethyl hexylacetate, isopropyl acetate, acetic anhydride, isobutylic alcohol, H-butylic alcohol, formaldehyde, phenol, concentrates of urea formaldehyde, hexamethylentetramine, sodium hypochlorite, methanol, and triacetin. The company's polymers were phenolic pure liquids and solids and modified resins, uric resins, uric-melaminic resins, phuramic resins, resorcinol-formaldehyde resins, and melamine-formaldehyde resins.

The Munro plant was producing formaldehyde, other methanol derivatives, phenolic resins, and uric glues. The Pilar plant produced glyphosates. The Baradero plant was the only one in Argentina producing the following six chemicals: ethyl acetate, butyl acetate, sorbitol, ethyl hexylacetate, acetic anhydride, and acetic acid. A plant in San Nicolas was producing triazines. The one in Rio Tercero was turning out numerous products.

As the company looked to the future, it sought to increase sales of products with higher added value, particularly herbicides. It also pledged to focus efforts on exports to Brazil and the United States, while seeking to keep abreast of technology and making further inroads in vertical integration.

Key Dates:

1938:: Founding of Atanor, in a suburb of Buenos Aires.
1944:: A military agency takes a share of the company.
1948:: A second company plant opens outside Rio Tercero, Cordoba.
1957:: Atanor has added insecticides and herbicides to its products.
1960:: Atanor establishes Duranor as a joint venture with Hooker Chemical Corporation.
1974:: The company takes a 51-percent stake in Petroquimica Rio Tercero.
1978:: Atanor buys Hooker's share of Duranor.
1981:: The company purchases Rhodia Argentina, a chemical complex in Baradero, Buenos Aires.
1988:: The Bunge y Born Group assumes majority ownership of Atanor.
1996:: Atanor sells its holding in Petroquimica Rio Terecero.
1997:: Bunge y Born sells its stake in Atanor to Iowa-based Albaugh Inc.