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Nova Chemicals stalls layoffs after IPIC's $500m offer

The Canadian firm cancelled 400 layoffs in anticipation of better days ahead under ownership.

A Canadian chemicals firm set to be bought by Abu Dhabi's International Petroleum Investment Company (IPIC) has cancelled 400 layoffs as it looks to the sale to improve its finances. IPIC offered to buy Nova Chemicals for more than US$500 million (Dh1.83 billion) last week, leading the firm to shelve plans to restructure its plastics operations, a company spokeswoman told Reuters. "That was all in the context of our previous reality, but in the context of this situation with the IPIC agreement, we're going to take a new look," the spokeswoman said.

Nova officials said the takeover by IPIC was the company's best option in the face of insurmountable debts. But the deal was viewed with suspicion in some circles. One letter published in the Edmonton Journal on Monday depicted the sale as a "loss to Canada", warning job cuts and plant closures could follow. Some financial analysts suggested IPIC had offered too little for Nova, and warned of more takeovers of ailing North American firms by foreign funds.

The Canadian industry minister, Tony Clement, is required by law to review the details of the proposed takeover. It will be subjected to the "net benefit test" under the Investment Canada Act, but analysts expect it will pass. IPIC offered to acquire all of Nova's stock at $6 a share, substantially above the $1.38 price on the New York Stock Exchange at the time of the announcement. The shares have fallen from about $30 since September.

IPIC also said it would provide a $250m credit facility for Nova and assume $1.3bn of the company's debt. It promised to leave Nova's management in place. "This acquisition will provide enhanced balance-sheet strength for Nova Chemicals and facilitate Nova Chemicals' growth internationally," Khadem al Qubaisi, the managing director of IPIC, said at the time of the offer. "We can provide stability and allow Nova Chemicals to meet its operational and financial requirements while continuing to expand and invest in its business."

IPIC officials could not be reached for comment yesterday. * with agencies @Email:cstanton@thenational.ae

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