News from Notch Consulting, Inc.

April 25, 2010

Cabot to Shut Down Indian Carbon Black Plant

Filed under: Carbon Black — Notch @ 5:57 pm

On April 22, Cabot issued a Form 8-K filing announcing that the company planned to cease manufacturing operations at its carbon black plant in Thane, India by June 30, 2010.

On April 19, 2010, Cabot Corporation committed to cease manufacturing operations at its carbon black manufacturing facility in Thane, India. The decision, which will affect approximately 120 employees, was made as a result of a broad reaching analysis of the manufacturing assets including cost structure, ability to expand and a variety of other factors. It is anticipated that manufacturing operations at the facility will cease by June 30, 2010. The Company will continue to maintain a presence in India through its fumed metal oxides manufacturing joint venture and its continuing business operations in carbon black and other products.

The Company expects the closure plan will result in a pre-tax charge to earnings of approximately $24 million over 2 years, with approximately $23 million of this amount expected to be recorded during fiscal year 2010. Pre-tax estimates of the total amount the Company expects to incur for each major type of cost associated with the closure plan are: (i) costs relating to personnel of $5 million, (ii) accelerated depreciation and impairment of facility assets of $16 million, and (iii) demolition and site clearing costs of $3 million. These amounts exclude any potential gain that may be realized on the sale of certain assets related to the manufacturing facility.

Net cash outlays related to this action over the next 2 years are expected to be $8 million, approximately $7 million of which is expected to be paid during fiscal 2010. Cabot expects the operating cost benefits from the closure to offset the charge to earnings within approximately 2 years.

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