Discontinued Operations and Disposal Groups

9 Months Ended

Sep. 30, 2020

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

DIVESTITURES

Divestiture of Rail Infrastructure Operations and Assets

On July 2, 2020, TDCC entered into a definitive agreement to sell its rail infrastructure operations and assets at certain sites in the U.S. and Canada to an affiliate of Watco Companies, L.L.C. ("Watco affiliate") and the transaction closed September 30, 2020. As part of this transaction, UCC sold its related operations and assets, including existing agreements to provide rail services to unrelated third parties, located at its sites in St. Charles, Louisiana, and Seadrift, Texas, with a net book value of $9 million, to the Watco affiliate. UCC retained ownership of the sites and underlying real property where the divested operations are located. UCC and the Watco affiliate entered into mutual long-term service agreements designed to ensure the continuation of rail services for UCC's existing operations at the impacted sites. The rail-service agreements include variable fees that have an initial term of 25 years. As part of the sale, UCC received proceeds of $95 million from TDCC, subject to customary post-closing adjustments, and recognized a pretax gain on the sale of $86 million, included in "Sundry income (expense) - net" in the consolidated statements of income. See Note 15 for more information on the cash management process.

The Corporation evaluated the divestiture of the rail infrastructure operations and assets and determined it did not represent a strategic shift that had a major effect on the Corporation’s operations and financial results and did not qualify as an individually significant component of the Corporation. As a result, the divestiture is not reported as discontinued operations.

Divestiture of Marine and Terminal Operations and Assets

On September 14, 2020, TDCC entered into a definitive agreement to divest certain U.S. Gulf Coast marine and terminal operations and assets for expected cash proceeds of $620 million. Included in the transaction are certain operations and assets located at UCC's site in St. Charles, Louisiana, and therefore, the Corporation will receive a pro rata share of the expected cash proceeds. In addition, TDCC has entered into mutual long-term service agreements with the buyer, effective upon closing of the transaction, designed to ensure the continuation of marine and terminal services for existing UCC operations at the impacted site. The transaction is expected to close in the fourth quarter of 2020, subject to customary regulatory approvals and other closing conditions, and the Corporation expects to record a gain on the transaction.