December 2, 2008 / 7:45 PM / 9 years ago

UPDATE 2-Nova Chemicals cutting spending to weather slump

* Nova to cut capital spending in fourth quarter of 2008

* Expects 2008 spending $160 million

* Plans to cut 2009 capital expenditures to $100 million

* Shares up 0.8 percent at C$9.26 on the TSX (Adds details; in U.S. dollars unless noted)

TORONTO, Dec 2 (Reuters) - Nova Chemicals NCX.TO said on Tuesday that it plans to cut capital spending for the rest of this year and through 2009 as it tries to cope with a crushing downturn in the global economy.

The Canadian maker of ethylene, polyethylene and styrene expects 2008 expenditures to total $160 million, down dramatically from its original target range of between $200 million and $225 million.

Christopher Pappas, Nova’s president and chief operating officer, also told an investor conference in New York that the company plans to drop its capital spending to $100 million next year.

Overall, the company expects to improve its 2009 cash position by about $410 million.

That includes a reduction in business and corporate costs of $50 million, savings at its Ineos Nova joint venture of $40 million and completion of a key crude deal for savings of $110 million.

A weaker Canadian dollar, which has hovered around the 80 U.S. cent mark in recent weeks, is expected to account for $150 million of total cash improvement.

Pappas said Ineos Nova, the styrene and polystyrene ventures, is expected to run at “break even” next year.

The company, which recently said it will temporarily close its Beaver Valley plant in Monaca, Pennsylvania, because of weak demand for the plastics, also said it would delay Ontario polyethylene projects by 12 to 18 months.

“We will focus only on the projects that are critical to continued safe, reliable and environmentally responsible operation of our plants,” he said.

“Our new and modernized plants and ongoing reliability investments allow us to defer nonessential products without much risk.”

Shares in plastics producers have suffered as the ailing U.S. economy cuts demand for raw plastics. Nova shares, which have dropped about 72 percent so far this year, were up 0.8 percent at C$9.26 on the Toronto Stock Exchange.

Pappas also expects to end 2008 at the high end of its target range for liquidity. Nova had earlier set a target of between $450 million and $650 million.

The company also expects to be in a good position to repay $250 million in notes due April 2009.

$1=$1.25 Canadian Reporting by Scott Anderson; editing by Jeffrey Jones

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