Albemarle Accelerates Towards De-Levering; Growth Story On Track Citi Says

Albemarle Corporation (NYSE: ALB)'s Chemetall sale "accelerates path to de-levering." Citi Bank's P.J. Juvekar reiterates his Buy rating on Albemarle, the top pick on Citi's focus list, with a price target of $89.

The company's surface treatment (Chemetall) business was bought at a fair price, Juvekar noted. The sale produced roughly $2.8 to $2.9 billion after tax proceeds. The extra cash should allow the company to meet its goal to de-lever from 3.6x EBITDA to 2.25 EBITDA by the end of 2017 by reducing its $1.2 billion of debt.

With the extra cash flow the company's "next priorities for cash deployment would be: returning cash to shareholders through buy-backs or cash dividends and reinvesting the net proceeds into its Lithium business," Juvekar stated. The analyst sees the growth story to be ahead of schedule and the sale of Chemetall improves Albemarle's race to corner the Li market.

Nimbler To Capture Li Growth

• Albemarle is planning to start a third 26kta Li carbonate plant in La Negra, Chile.The original start date was set for sometime in 2020, but could not accelerate this timeline.
• The company is also planning on bringing online a spodumene conversion facility with 50kt Li carbonate and Li hydroxide capacity.