Classification as held for sale
Assets are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition. Amongst other conditions, management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. However, in some cases, an asset may remain classified as held for sale for a period exceeding one year if it remains unsold due to events or circumstances beyond the Group’s control.
On September 19, 2017, Solvay announced that it had entered into a binding agreement with German chemical company BASF for the sale of its Polyamides business. In this context, management concluded that the conditions to classify the business as held for sale and as a discontinued operation were met as of that date. In particular, management considers the Polyamides business as a separate major line of business and expects the transaction to be completed during the second half of 2019.
Under the proposed terms of the agreement, the transaction is based on an enterprise value of € 1.6 billion. The expected net cash proceeds are estimated to be around € 1.1 billion. As a result of the discontinuation, the retained Latin American polyamide business incurred an impairment of € (91) million recognized at the end of September 2017. This impairment is expected to be more than compensated by the capital gain on the transaction at the closing.
Further details are provided in note F30 Assets held for sale.