Wellman: No Major Damage at Mississippi Plant
Tuesday September 6, 12:55 pm ET
Wellman Says No Major Damage at Miss. Plant but Declares Force Majeure on Supply Disruptions
SHREWSBURY, N.J. (AP) -- Chemical maker Wellman Inc. said Tuesday that its Pearl River facility in Mississippi sustained no major structural damage from Hurricane Katrina, but the company declared "force majeure" because of supply disruptions.
The company said it is "difficult" to estimate when the plant, located three miles inland in Hancock County, will resume production because all of the local utility and transportation infrastructure has been damaged.
PET resin sales are projected to decline in the third quarter even though Wellman is continuing to deliver products from its Darlington, S.C., plant. Until supply interruptions subside, Wellman said it will allocate its diminished product supply and pass on increased costs to customers.
Wellman added it expects its losses from the hurricane will be covered by its insurance policy after a $20 million deductible.
Force majeure is a contract clause that allows a company to miss requirements due to events out of its control.
In a separate statement, Wellman said it will raise the price of polyester staple fiber products by 16 cents per pound, effective with Sept. 7 shipments. The company cited its need to recover higher chemical and energy costs that have been exacerbated by Hurricane Katrina.
Shares of Wellman surged 45 cents, or 6.8 percent, to $7.04 in midday activity on the New York Stock Exchange. The stock recently hit an all-time low of $6.25, and is down 33 percent so far this year.
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