Transformed Rhone-Poulenc To Take $1.6 Billion Charge

French chemicals and health care group Rhone-Poulenc is to take anexceptional charge of 9.5 billion French francs ($1.6 billion) in 1997 as a result of its restructing plans announced earlier in the year (Marketletter July 7). The bulk of the charge will be linked to the creation of Rhodia, which will combine the group's chemicals, fibers and polymers activities. The charge is broken down into a cash impact of 1.5 billion francs in 1998 and 1999, and 8 billion francs due to the depreciation of tangible and intangible assets.

$7 Billion Charge On New Firm The creation of the new company, which is to be organized into five divisions, will involve an exceptional charge of 7 billion francs. It includes 4 billion francs from the acceleration of the amortization of some goodwill and 2 billion francs which correspond to depreciation of certain assets. The remainder of this includes costs linked to environmental issues brought about by withdrawing from these businesses.

R-P notes that in its life sciences businesses, the acquisition of the minority interest in Rhone-Poulenc Rorer (Marketletter September 1) will lead to the amortization of approximately 2 billion francs in goodwill related to R&D, while a provision of 500 million francs will be retained in 1997 to take account of reorganization costs. The cash impact of 1.5 billion francs is linked to environmental costs and various restructuring measures which R-P claims will lead to annual savings of 600 million francs.