Item 1.02. Termination of a Material Definitive Agreement.
On November 11, 2009, Sterling Chemicals, Inc. ("Sterling") received notice
from BASF Corporation ("BASF") that, pursuant to the terms of that certain Third
Amended and Restated Plasticizers Production Agreement, dated as of April 1,
2008, between Sterling and BASF, as amended (the "Production Agreement"), BASF
is exercising its right to terminate the Production Agreement, effective
December 31, 2010. Under the terms of the Production Agreement, Sterling sells
all of its plasticizers to BASF, and in exchange, BASF provides Sterling with
most of its required raw materials and markets Sterling's plasticizers.
Additionally, BASF is obligated to make certain fixed quarterly payments to
Sterling, while reimbursing Sterling monthly for its actual production costs and
capital expenditures relating to its plasticizers facility. In connection with
the termination of the Production Agreement, there will not be any early
termination penalties for Sterling, but BASF will be required to pay to Sterling
an early termination fee on December 31, 2010. Revenues from Sterling's
plasticizers segment were $31.0 million for the year ended December 31, 2008 and
$20.2 million for the nine months ended September 30, 2009, representing
approximately 19.2% and 23.6%, respectively, of Sterling's total revenues for
such period. Other than the Production Agreement, Sterling and its affiliates do
not have any material relationships with BASF.
Notwithstanding BASF's election to terminate the Production Agreement,
Sterling is continuing to explore and evaluate all available opportunities with
respect to its plasticizers business and its plasticizers facility.
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