Viscose Unveiled

If the market looks right next week, U.S. investors will get a chance to buy the U.S.'s No. 1 rayon company--American Viscose. Owned by tight-lipped Britons until the British Treasury's Sir Edward Peacock sold it to a group of Manhattan investment bankers in March (TIME, March 24), Viscose has long been the Madame X of U.S. corporations.

Last week the veil was snatched away when Morgan, Stanley & Co. made public the SEC registration statement. Viscose was revealed as a $122,000,000 company. Since 1931 it has made $62,000,000. Only in one year did it show a loss ($1,873,000 in 1938). Last year's profits totaled $7,885,000--up 60% over 1931.

But in 1910 when potent Courtaulds, Ltd., British thread & textile makers, acquired an American subsidiary (then Genasco Silk Works) for $130,000, rayon was little more than an idea. The next year the subsidiary sold 308,000 pounds of its honey-colored product for a profit of $230,000. As costs went down (from $1.10 a pound to about 60(0-c-), the price went up (from $1.85 in 1911 to $10 during the war). In 1919 Viscose made over $25,000,000. Reason: it had a patent monopoly.

In 1920 the patent ran out and Du Pont ran in. Competition drove the price down, widened the market. By 1927 rayon had passed silk in the U.S. market, grew steadily while other textiles didn't. Figures in millions of pounds consumed:

_______Raw Cotton__Wool_____Silk____Rayon 1926--3,215--343--66--61 1929--3,423--368--81--133 1932--2,463--230--71--155 1935--2,755--418--62--259 1938--2,904--285--52--327 1940--3964--41--36--488

Today American Viscose accounts for 31% of the rayon produced in the U.S. Biggest customer is Burlington Mills of Greensboro, N.C. Total net sales have gone from a 1932 low of $30,743,035 to the 1940 high of $62,771,895.

Courtaulds, Ltd. lost Viscose when it needed it most. Last year when Viscose made $7,885,000, Courtaulds (which owned 96.1% of Viscose common stock) reported only a $6,160,000 profit. This meant that the parent company would have shown a loss of $1,725,000 had it not been for Viscose. But Courtaulds still has an interest in next week's stock sale. Besides making an outright payment of $36,456,000, the bankers promised the British Treasury to try to sell the company to the public within six months, split on a 90-10 basis all proceeds above the initial payment. The Treasury will then keep the dollars, pay Courtaulds their equivalent in pounds. Should a weak market interfere with the sale, the bankers still get a bargain. American Viscose's current assets (including $34,454,594 in cash and marketable securities) exceed current liabilities by $45,731,436.

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