When DuPont (DD) spun off its chemicals business -- now called Chemours (CC) -- what exactly did investors get?
So far, it would seem not much. Shares of Chemours trade in the single digits, having fallen 82% since being issued.
Late in 2013, DuPont announced that it planned to spin off its performance chemicals business by mid-2015. (The announcement came roughly around when active investor Nelson Peltz announced his stake in DuPont.)
At the time, former CEO Ellen Kullman said the spinoff was "clearly the best option to deliver enhanced value for our shareholders" and the split would result in "two strong, highly competitive companies."
While Chemours' shares have since plummeted, DuPont's shares are down 12.7%, which is slightly more than the S&P 500, which is down 10% over the same period.
Suffice to say, Chemours is looking less competitive than DuPont, which recently announced plans to merge with Dow Chemical (DOW). (Dow Chemical is part of TheStreet's Action Alerts PLUS portfolio.)
In a Chemours investor presentation dated June 2015, DuPont shareholders were told they would receive one share of Chemours for every five shares of DuPont. In the event that shareholders held fractional shares of DuPont, they received cash.
Cash may have been the best part of the deal.
Chemours shares were issued on June 19, 2015, and reached a high of $22.25, according to data provided by Thomson Reuters. As of Thursday's close, the stock is priced at $3.87, representing an 82% decline.
Chemours didn't come into the world unblemished either. Its debt was rated BB by Standard & Poor's, placing it just below investment grade. It has total debt load of $3.9 billion, and a $1.35 billion note coming due in 2023 currently trades for 61 cents on the dollar as its price has fallen 14% since the first of the year.
The company is also financially on the hook for payments resulting from personal injury and wrongful death claims arising from DuPont's handling of PFOA, a chemical used in the production of Teflon. While DuPont is the defendant in the trials, Chemours agreed to indemnify the company for payments resulting from the cases, which are estimated to be between $800 million and $1.5 billion, according to Bloomberg.
Given Chemours' other problems, its ability to meet addtional financial obligations appears questionable. So much for emerging strong and competitive.