Page 37 - Plastics News March 2021

Business news

Resource Label Group acquires RIL outlines plan for O2C

New England Label business spin off

S-based label manufacturer Resource Label Group I L propose s t o
Uhas broadened its portfolio by acquiring label design Rtr ansf er all its
company New England Label.The acquisition is in line with refining, petrochemicals
Resource Label Group’s continued growth strategy across and marketing assets to
North America.Operating from Andover, Massachusetts, the O2C entity, which
New England Label offers flexographic, digital and screen includes the 51:49 fuel
printing for custom label solutions aimed at the food, marketing joint venture
beverage, health and beauty, industrial, medical and with BP, 74.9% elastomer
pharmaceutical sectors.Resource Label Group president JV with Sibur, Recron/RP
and CEO Mike Apperson said: “We are proud to welcome Chemicals Malaysia, trading
the New England Label team members to the Resource subsidiaries, ethane pipeline
Label family. They have established an impressive business and all other related assets.
and we look forward to building upon their success.”The According to the report in the Financial Express, the
financial details of the deal have not been disclosed.New O2C scheme becomes effective with appointed date
England Label is Resource Label Group’s 18th acquisition of January 1, 2021. Reliance Industries (RIL) is in the
and will be the company’s fourth location in the Northeast. process of carving out its oil-to-chemical (O2C) business
Following the deal, New England Label president Steve into a separate new subsidiary with a $25-billion loan
Dunlevy will continue to hold his position at the company. from the parent. The move is directed towards unlocking
Dunlevy said: “Our team has always focused on building value in the business with a possible stake sale and
strong customer relationships through innovation and embarking on the next level of investment cycle with
addressing the ever-changing needs in the packaging a focus on clean energy. With approvals from Sebi and
space. I’m excited about this next part of the journey stock exchanges in place, RIL will seek a nod from
with Resource Label, as their beliefs greatly match shareholders and creditors in the first quarter of the
our drive to innovate and focus on customer service.” next financial year. The company will transfer $40 billion
Resource Label Group provides pressure-sensitive label, of long-term assets, $2 billion of net working capital and
$5 billion of non-current liabilities to the O2C entity for
a consideration of $25 billion of long-dated loan and $12
billion of equity from RIL, it said in a presentation. RIL
expects the separation to be completed by September.
RIL’s rationale behind creating a standalone company is
to let the new entity pursue opportunities across O2C
value chain through self-sustaining capital structure and
dedicated management team. The company further said
that the management control of O2C will continue to
be with RIL, while there will be no dilution of earnings
or any restriction on cash flows and the company
expects to retain its investment grade international
shrink sleeve and RFID/NFC technology for the packaging and domestic credit ratings. O2C re-organisation results
industry. The company is headquartered in Franklin, in no change in shareholding of RIL and no impact on
Tennessee, and employs approximately 1,400 people in consolidated financial position. While the O2C demerger
the US and Canada. It is a subsidiary of New York-based is not expected to have any impact on consolidated
private investment firm First Atlantic Capital and TPG numbers, it should improve outlook on stake sale in
Growth, a middle market and growth equity investment O2C business and the new foray into green energy will
platform of TPG. be liked by investors.

37 March 2021 Plastics News