Materials Select Sector

Russell 2000

The Balanced Allocator

Comparable Companies - CE

The report covers 14 discretionary insider purchases and no sales. Institutional ownership is led by Dodge & Cox at 14.02% and BlackRock at 11.79%. Short interest as of 2025-12-15 was 8,131,284 shares, representing 7.5% of the float.

CEO & PRESIDENT

SVP & CFO

DIRECTOR

SVP - ACETYLS

The shares reported herein are invested on behalf of the Government of Norway.

The clients of Dodge & Cox have the right to receive or power to direct the receipt of dividends from, and the proceeds from the sale of, CELANESE CORPORATION.

The securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer.

The Vanguard Group, Inc.'s clients have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities reported herein.

The interest of 1 such person, iShares Core S&P Small-Cap ETF, in the common stock of CELANESE CORP is more than five percent of the total outstanding common stock.

The securities as to which this Schedule is filed are owned of record by clients of one or more investment advisers identified in Item 7 directly or indirectly owned by Wellington Management Group LLP.

Scott A. Richardson

Chuck B. Kyrish

Mark C. Murray

Thomas F. Kelly

Lori J. Ryerkerk

Edward G. Galante

Bruce E. Chinn

Timothy Go

Kathryn M. Hill

David F. Hoffmeister

Dr. Jay V. Ihlenfeld

Deborah J. Kissire

Michael Koenig

Christopher J. Kuehn

Ganesh Moorthy

Kim K.W. Rucker

Scott M. Sutton

Scott A. Richardson's career progression within Celanese, from various senior leadership roles including EVP and COO, to his current position as CEO and President, demonstrates a deep understanding of the company's operations and strategy. His tenure in finance as EVP and CFO, followed by operational leadership, suggests a well-rounded executive profile prepared for leading the company forward.

Chief Executive Officer and President

Chuck B. Kyrish brings extensive financial leadership experience, including his recent role as CFO of Hubbell Incorporated and prior positions at Danaher Corporation, to his current role as SVP and CFO of Celanese. His background suggests a strong command of financial strategy and execution, crucial for guiding Celanese's financial operations.

Senior Vice President and Chief Financial Officer

Mark C. Murray's career at Celanese, progressing to SVP of Acetyls, is complemented by his prior leadership experience in the chemical industry at LyondellBasell and Shell Chemicals. This background suggests a deep operational understanding within the acetyls sector, positioning him to drive performance in his current role.

Senior Vice President, Acetyls

Thomas F. Kelly's tenure as Senior Vice President of Engineered Materials at Celanese provides a focused period of leadership within a key business segment. His experience in this role offers insight into the strategic and operational aspects of Celanese's engineered materials division.

Former Senior Vice President, Engineered Materials

Lori J. Ryerkerk's leadership as Chair, CEO, and President of Celanese Corporation from 2019 to 2024 marks a significant period of executive stewardship. Her tenure likely encompassed strategic decisions and operational oversight that shaped the company during those years.

Former Chair, Chief Executive Officer and President

Edward G. Galante's extensive experience at ExxonMobil, culminating in a senior leadership role on the Management Committee overseeing global downstream operations, provides a strong foundation for his current role as Chair of Celanese's Board. His background in engineering and extensive board service suggests a strategic and governance-focused leadership style.

Chair of the Board

Bruce E. Chinn's leadership at Chevron Phillips Chemical, overseeing a global operation with significant revenue, highlights his extensive experience in the petrochemical industry. His background, which includes roles at Chevron and DuPont, combined with his current directorships, suggests a strong focus on operational excellence, safety, and strategic growth within the chemical sector.

Independent Director

Timothy Go's leadership experience as CEO of HF Sinclair Corporation and prior executive roles in the energy sector, combined with his diverse background in media and entrepreneurship, provides a unique perspective. His ability to navigate complex industries and ventures suggests a strategic and adaptable leadership approach.

Kathryn M. Hill's extensive experience at Cisco Systems, particularly in technology and strategic planning, brings valuable insight to Celanese's board. Her directorships at other major technology companies further underscore her expertise in innovation and corporate strategy.

David F. Hoffmeister's extensive financial expertise, honed as CFO of Life Technologies and a senior partner at McKinsey & Company, provides a robust foundation for his role as an independent director at Celanese. His experience across healthcare, private equity, and chemical industries, coupled with his audit committee chair roles, indicates a strong focus on financial oversight and governance.

Dr. Jay V. Ihlenfeld's extensive career at 3M, including senior leadership roles and international postings, combined with his academic background in chemical engineering, provides a strong technical and strategic perspective. His board service at Celanese and Ashland indicates a continued engagement in the chemical industry with a focus on governance and innovation.

Deborah J. Kissire's extensive career at Ernst & Young, including senior leadership positions and a focus on strategic initiatives, provides a strong foundation in accounting, financial reporting, and governance. Her current board memberships at diverse companies like Axalta Coating Systems, Omnicom Group, and Cable One demonstrate her broad expertise in corporate oversight.

Michael Koenig's leadership experience as CEO of multiple industrial chemical companies, including Nobian, Elkem, and China National Bluestar Group, demonstrates a strong track record in global chemical manufacturing and executive management. His background in chemical engineering further supports his expertise in the sector.

Christopher J. Kuehn's financial leadership at Trane Technologies, marked by significant revenue and EBITDA growth, demonstrates a strong ability to drive financial performance. His extensive experience across various finance roles at major corporations, including Whirlpool and SPX, combined with his CPA designation, highlights his deep expertise in financial management and strategic capital allocation.

Ganesh Moorthy's leadership as President and CEO of Microchip Technology, a prominent semiconductor company, highlights his significant contributions to innovation and market expansion within the technology sector. His extensive career, including his tenure at Intel, underscores a deep understanding of the semiconductor industry and a proven ability to drive growth and technological advancement.

Kim K.W. Rucker's background as a former EVP, General Counsel, and Corporate Secretary, combined with her extensive experience on multiple public company boards, provides a strong foundation in legal, governance, and strategic oversight. Her diverse board roles indicate a broad understanding of corporate operations and risk management.

Scott M. Sutton's leadership experience as CEO of Olin Corporation and Prince International Corporation, coupled with his COO role at Celanese, demonstrates a strong capability in driving operational excellence, financial performance, and strategic transformations. His extensive background in the chemicals and materials sectors positions him as a valuable asset for corporate governance and strategic direction.

Eastman operates as a global specialty materials company leveraging an innovation-driven growth model. It focuses on leveraging world-class scalable technology platforms, delivering differentiated application development, and relentlessly engaging the market to solve complex problems through material science.

Produces and markets polymers, films, and plastics with differentiated performance properties for transportation, durables, electronics, building and construction, medical, and consumables end-markets.

Provides specialty additives and ingredients for a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care, and pharmaceutical.

Produces and markets acetyl products, olefins, and other intermediates used as starting materials for colorants, paints, adhesives, coatings, and pharmaceuticals.

Provides acetate tows and flakes for use in filter products applications, leveraging vertical integration and technology platforms.

LyondellBasell is a major producer of olefins, polyolefins, and intermediates, leveraging a large-scale, integrated operating model and an advantaged cost position from North American natural gas feedstocks. The company is focused on reshaping its portfolio towards more resilient and higher-return businesses.

Produces and markets olefins and co-products, polyethylene, and polypropylene in the Americas.

Produces and markets olefins and co-products, polyethylene, and polypropylene in Europe, Asia, and other international markets.

Produces and markets propylene oxide and its derivatives, oxyfuels, and intermediate chemicals such as styrene monomer and acetyls.

Produces and markets polypropylene compounds and engineered plastics, as well as advanced compounds and alloys.

Cabot is a global leader in specialty chemicals and materials, focusing on reinforcing materials (carbon black) and performance chemicals. Its business is built on technical expertise and innovation in particle science, serving diverse end markets including tires, automotive, and industrial applications.

Produces reinforcing carbons (carbon black) primarily for use in tires and industrial rubber goods.

Produces specialty carbons and compounds, fumed silica, inkjet colorants, and aerogel for use in industrial, automotive, and consumer applications.

Ashland is a global additives and specialty ingredients company with a focus on sustainability. It serves customers in consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care, and pharmaceuticals.

Provides specialty additives and ingredients for pharmaceutical, food and beverage, and nutraceutical applications.

Offers biofunctionals, microbial protectants, skin care, sun care, oral care, and hair care solutions.

Provides rheology and performance-enhancing additives for architectural coatings, construction, energy, automotive, and various industrial markets.

Produces intermediate chemicals used in a variety of applications.

The company owns or leases numerous production and manufacturing facilities throughout the world, including in Belgium, Canada, Greater China, Germany, Italy, Japan, Mexico, Netherlands, Singapore, South Korea, Switzerland, the United Kingdom, and the U.S. The corporate headquarters is located in Irving, Texas.

Celanese's management team is executing a credible and aggressive turnaround plan that is appropriately tailored to the company's severe financial distress. The financial narrative is one of crisis and response: a massive goodwill impairment, negative margins, and a highly leveraged balance sheet have forced a complete strategic pivot. The current leadership, led by CEO Scott Richardson, has responded decisively by slashing the dividend, cutting costs, and prioritizing debt reduction above all else. The capital allocation discipline is exemplary for a Turnaround Candidate, earning a top score. The board has been skillfully refreshed with directors who have the right experience for this challenge. While the team lacks a publicly documented history of prior turnarounds, their actions since taking charge have been exactly what is required. The primary risks are the unproven nature of the new CEO in a crisis and the lack of explicit debt-reduction targets in the compensation plan, but the overall quality and alignment of the team are strong.

The company is subject to financial, regulatory, physical, and transition risks associated with climate change. Operations are subject to extensive environmental, health, and safety laws and regulations. Compliance costs are complicated by varying international approaches to climate change regulation. Potential future regulations include restrictions on GHG emissions, cap and trade systems, taxes on emissions/fuel/energy, and carbon import charges. Physical risks include increased frequency and severity of hurricanes and floods, particularly affecting sites located in areas exposed to weather events and changing sea levels such as the Texas Gulf Coast.

The company has approximately 11,000 full-time employees. The company notes an increasingly competitive hiring environment for skilled employees, particularly in technical manufacturing roles.

The company is exposed to potential product liability, warranty, and tort claims. They handle volatile and hazardous materials, subjecting them to risks including pipeline and storage tank leaks, explosions, fires, and discharges of toxic substances. The company is subject to regulations regarding chemicals such as formaldehyde, which may require reformulation of products or affect demand.

The company faces risks related to supply chain disruptions, including those caused by physical impacts of climate change on key suppliers. The company also has obligations related to an indemnity agreement for environmental matters arising out of certain divestitures prior to the demerger.

The company is in a severe earnings recession, with FY 2024 operating margins turning negative (-7.0%) and a $1.5 billion goodwill impairment charge recorded, reflecting a collapse in profitability following the M&M acquisition.

The stated strategy is to reduce CapEx to a maintenance level. Management guided in the Q1 2025 transcript to CapEx of $300-$350 million for 2025, a reduction of ~$100 million from FY 2024. The P14 Innovation Dossier confirms CapEx is focused on 'required maintenance projects and productivity improvements' rather than growth. Major projects are limited to debottlenecking (UHMW-PE in Bishop, Texas) and targeted expansions in China (LCP plant).

The 10-K explicitly discloses a $1.5 billion non-cash goodwill impairment loss in the Engineered Materials segment and a $117 million impairment on trade names. The auditor identified the 'Evaluation of the fair value of the Engineered Materials reporting unit' as a Critical Audit Matter. The Material Events Appendix confirms the closure of the Mechelen site and Uentrop nylon unit in FY 2024, and the planned Lanaken closure in 2026.

The negative ROIC is a direct result of the M&M acquisition. The capital invested ($11B+) has generated a return well below the cost of capital, leading to the $1.5B goodwill impairment. The P14 Innovation Dossier notes that current CapEx is focused on maintenance and productivity, not growth, indicating that new capital is not expected to generate high returns until the existing overhang is cleared.

Dodge & Cox

BlackRock, Inc.

The Vanguard Group

Norges Bank

Capital International Investors

Capital Research Global Investors

Wellington Management Group LLP

Pollution Control and Industrial Revenue Bonds

November 2024 U.S. Term Loan Credit Agreement

CNC Three Year Working Capital Loan Agreement

P/Tangible Book Value

Normalized EV/EBITDA

EV/EBITDA

Decades of operational and commercial experience in petroleum and chemical manufacturing; former Lead Independent Director.

Deep operational expertise with two decades at Celanese; former EVP & COO; combines business management, financial, and commercial skills.

Former CEO of Chevron Phillips Chemical Company; extensive chemical industry experience.

Former CEO of HF Sinclair Corporation; significant experience in energy and refining sectors.

Former SVP at Cisco Systems; expertise in technology, innovation, and strategic planning.

Former CFO of Life Technologies; deep knowledge of chemical and life sciences industries via McKinsey and corporate roles.

Former board member of Ashland, Inc.; extensive experience in chemical manufacturing and operations.

Former Vice Chair and Regional Managing Partner at Ernst & Young; extensive audit and governance experience.

CEO of Nobian Industrial Chemicals; extensive global chemical manufacturing and leadership experience.

EVP and CFO of Trane Technologies; expertise in risk management and financial oversight.

Former CEO of Microchip Technology; expertise in technology and global operations.

Former Lead Independent Director; extensive public company board experience (HP, Marathon, GE Vernova); legal and governance background.

Former CEO of Olin Corporation and former Celanese executive; deep chemical industry and strategic planning experience.

• CEO: 6x base salary
• Other NEOs: 4x base salary
• Directors: 5x annual retainer ($625,000)
• Compliance required within 5 years of hire/promotion.

Ashley Duffie

Aaron McGilvray

Celanese Corporation is a global chemical and specialty materials company. It is a global producer of high performance engineered polymers used in a variety of high-value applications, as well as one of the world's largest producers of acetyl products, which are intermediate chemicals for nearly all major industries. The company engineers and manufacture a wide variety of products essential to everyday living, with a broad product portfolio serving diverse end-use applications including automotive, chemical additives, construction, consumer and industrial adhesives, medical, consumer electronics, energy storage, filtration, paints and coatings, paper and packaging, industrial applications and textiles. The company operates principally through two business segments: Engineered Materials and the Acetyl Chain.

Develops, produces, and supplies a broad portfolio of high performance specialty polymers for automotive and medical applications, as well as industrial products and consumer electronics. This is a project-based business driven by a pipeline model to commercialize new projects. It includes the company's strategic affiliates and participates in the global specialty polymers industry.

Includes the integrated chain of acetic acid, vinyl acetate monomer (VAM), acetic anhydride, acetate esters, emulsion polymers, ethylene vinyl acetate (EVA) polymers, redispersible powders (RDP), and acetate tow businesses. It operates as an integrated business with the flexibility to sell solutions across the segment and global geographies.

Held WACC (11.5%) and Terminal Multiple (6.0x) constant, and solved for the Year 5 Operating Margin required to justify the current enterprise value.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - CE

The chemical industry is in a 'Bust' phase. Peer companies like LyondellBasell are aggressively cutting CapEx and reporting compressed margins, signaling a broad industry retreat. While a supply-side rationalization is underway, the timing of a recovery remains uncertain, and Celanese's high leverage leaves it with no margin for error.

Celanese is at a critical juncture following its downgrade to junk status and the implementation of a 95% dividend cut. The next 12 months will determine if the company can avoid a liquidity crisis as it faces a $3.6 billion maturity wall in 2027.

Closing of the Micromax Divestiture The sale of the Micromax portfolio to Element Solutions for $500 million is expected to close in Q1 2026. This is a critical first step in management's $1 billion divestiture plan and is essential for meeting 2026 debt maturities.

Realization of $120 Million Cost Savings Management has targeted $120 million in annualized cost reductions for 2025, including SG&A cuts and footprint optimization such as the Lanaken facility closure.

Existential Liquidity and Solvency Risk The company's high leverage (Net Debt/EBITDA > 5.0x) and negative interest coverage (-3.0x) create a 'race against time.' Failure to generate sufficient free cash flow or execute asset sales could lead to a covenant breach or inability to refinance the $3.6 billion due in 2027.

Structural Oversupply and Margin Compression Excess capacity in China for acetyls and standard-grade nylon continues to exert downward pressure on global pricing, preventing the margin recovery required to service the debt.

The current asset base for Celanese Corporation's Property, Plant & Equipment (PP&E) as of December 31, 2024, includes land ($240 million), land improvements ($91 million), buildings and building improvements ($1,059 million), machinery and equipment ($7,745 million), and construction in progress ($700 million), totaling a gross asset value of $9,835 million with accumulated depreciation of $4,562 million, resulting in a net book value of $5,273 million. The company operates 56 global production facilities and 20 strategic affiliate production facilities. Recent asset base changes include the full cessation of operations at the Uentrop, Germany Polyamide 66 and High-Performance Nylon polymerization units and the Mechelen, Belgium facility during 2024. The Lanaken, Belgium Acetate Tow facility is also scheduled for closure, with anticipated savings in 2027. Additionally, the company divested its food ingredients joint venture (Nutrinova) in September 2023, which included PP&E, for $503 million. The Fairway Methanol LLC joint venture, a consolidated entity, holds $491 million in PP&E as of December 31, 2024.

Celanese divested its food ingredients joint venture, Nutrinova, to Mitsui & Co., Ltd., for a purchase price of $503 million. This transaction included the contribution of receivables, inventory, property, plant and equipment, and other assets.

Cash & Equivalents

Accounts Receivable

Celanese Corporation's inventory valuation is grounded in a comprehensive assessment of its nature, turnover, and the prevailing market conditions for industrial chemicals and polymers. The inventory, valued at a book value of $2,284 million as of December 31, 2024, comprises a diverse mix of raw materials, work-in-process, and finished goods, ranging from commodity chemicals to highly specialized engineered polymers. The inventory turnover of approximately 3.28 times per year, or 111 days on hand, indicates a moderate sales cycle, but management's consistent focus on inventory reduction to generate cash, as highlighted in the P7 transcript analysis, suggests a proactive effort to manage potentially slow-moving or excess stock. The liquidation logic therefore incorporates a blended recovery rate that prudently discounts the book value, reflecting the challenges of liquidating specialized and partially processed materials, while acknowledging the marketability of more fungible raw materials and finished goods. The 'Turnaround Candidate' status further necessitates a conservative stance, as a liquidation would likely prioritize speed over maximizing individual asset values, leading to deeper discounts across all inventory categories.

Inventory

Tax Assets

Other Current Assets

**Primary Transaction Comps:**
- Celanese divested its food ingredients joint venture, Nutrinova, to Mitsui & Co., Ltd., for a purchase price of $503 million. This transaction included the contribution of receivables, inventory, property, plant and equipment, and other assets. (Not directly quantifiable as a per-unit value for PP&E due to the bundled nature of the sale, but represents a market transaction for a segment of Celanese's asset base.)

**Replacement/Scrap Data:**
Published valuation guidelines for specialized chemical manufacturing facilities and equipment typically indicate replacement costs significantly higher than book values, but these are not directly applicable in a liquidation scenario where market demand for specialized assets is limited. For a conservative liquidation, replacement cost serves as an upper bound for potential value, but is not a direct valuation method.

Net PP&E

Intangibles

Long-Term Inv.

Other Non-Current

Accounts Payable

Current Debt

Tax Liabilities

Other Current Liabilities

Non-Current Debt

Other Non-Current Liabilities

Document

UNITED STATES

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Piper Sandler Downgrades Celanese (CE) to Underweight

RBC Capital Upgrades Celanese (CE) to Outperform

Exhibit 99.1

DUPONT ANNOUNCES AGREEMENT TO DIVEST MAJORITY OF MOBILITY & MATERIALS SEGMENT TO CELANESE

Celanese upgraded to Buy from Hold at Jefferies

Celanese resumed with an Equal Weight at Morgan Stanley

Celanese price target raised to $48 from $43 at RBC Capital

Celanese price target raised to $50 from $49 at UBS

Celanese downgraded to Equal Weight from Overweight at Wells Fargo

Celanese price target lowered to $60 from $70 at Alembic Global

Celanese price target lowered to $43 from $45 at RBC Capital

Celanese price target lowered to $48 from $49 at UBS

Celanese price target lowered to $57 from $60 at Wells Fargo

Situation: Celanese is facing a severe solvency crisis following the catastrophic $11 billion Mobility & Materials (M&M) acquisition, which has left the company with $12.6 billion in debt and a negative tangible book value of -$35.29 per share. Debate: Management is promoting a 'coiled spring' recovery narrative based on $120 million in cost cuts, while the credit markets have downgraded the company to junk status (S&P: BB) due to persistent demand weakness in automotive and construction end-markets. Conclusion: Our analysis suggests the equity is significantly impaired; with a probability-weighted fair value of $8.17, the current market price fails to account for the high risk of a zero-recovery outcome in a failed turnaround.

Executive Summary

Celanese is attempting a high-stakes strategic pivot to repair a balance sheet where Net Debt/EBITDA exceeds 5.0x and interest coverage has turned negative at -3.0x. While management has cut the dividend by 95% and slashed capital expenditures to maintenance levels of $300 million to $350 million, the path to solvency is narrow and dependent on a cyclical recovery that has yet to materialize.<ul><li>Driver: Aggressive deleveraging and asset rationalization</li><li>Catalyst: Execution of the $1 billion divestiture program, starting with the $500 million Micromax sale</li><li>Protection: Net Liquidation Value (NLV) floor of $12.92 per share</li></ul>Our variant perception is that the market has priced this company for a standard cyclical recovery, ignoring the reality that the balance sheet is now a distressed debt situation. While management points to a 'coiled spring' of earnings power, our analysis of the $12.6 billion debt load and the $1.5 billion goodwill impairment suggests that the equity is a low-probability call option on survival rather than a value investment.This is therefore not a bet on an operational turnaround by current management, but a special situation, asset-based investment with a clearly defined catalyst path that is currently failing to offset structural value destruction.

Core Investment Rationale

Celanese operates as a global producer of high-performance engineered polymers and acetyl products. The business is split into two primary segments: Engineered Materials (54.5% of revenue) and the Acetyl Chain (46.3% of revenue). The Engineered Materials segment follows a project-pipeline model, developing specialty polymers for automotive, medical, and electronics applications. The Acetyl Chain is a vertically integrated business producing intermediate chemicals like acetic acid and vinyl acetate monomer (VAM). The current strategy has shifted from growth to defensive cash preservation, characterized by a 95% dividend reduction and a pause on all share repurchases to address a $12.6 billion debt wall. Revenue quality has deteriorated significantly, with TTM revenue declining 7.3% to $9.71 billion. The company is currently operating at a consolidated loss, with operating margins collapsing from 15.1% in FY 2023 to -7.0% in FY 2024. This decline is driven by a combination of cyclical weakness in European automotive builds (down 14% in Q3 2024) and structural oversupply in standard-grade nylon and acetyl products from Asian competitors.The company's core assets include the world's three largest acetic acid plants located in Clear Lake (Texas), Jurong Island (Singapore), and Nanjing (China). Following the $11 billion M&M acquisition, the company added 29 manufacturing facilities and approximately 850 patents. However, the quality of these assets is under pressure; the company recorded a $1.5 billion goodwill impairment in the Engineered Materials segment in FY 2024 and has ceased operations at facilities in Mechelen, Belgium, and Uentrop, Germany. Tangible assets are currently valued at a significant discount to total liabilities, resulting in a negative tangible book value of -$3.43 billion.Celanese competes in a fragmented and increasingly destructive global chemical market. Primary rivals include LyondellBasell (LYB), which possesses superior scale with $32.6 billion in TTM revenue, and Eastman Chemical (EMN). The competitive environment is characterized by a 'Bust' phase in the capital cycle, where industry-wide CapEx is contracting faster than revenue. Celanese's gross margin of 21.3% now lags the peer median of 24.1%, indicating an eroding moat as standard-grade products become commoditized by excess capacity in China.The current crisis is the direct result of the $11 billion acquisition of DuPont's Mobility & Materials (M&M) business in 2022. This transaction, intended to be a transformative growth engine, was executed at the peak of the cycle and funded with massive debt. As global demand for automotive and construction materials softened, the expected synergies were overwhelmed by margin compression and high interest costs. The situation reached a breaking point in late 2024, leading to a 95% dividend cut, the departure of CEO Lori Ryerkerk, and a downgrade of the company's credit rating to junk status by S&P (BB) and Moody's (Ba2). Currently, the company is under the leadership of Scott Richardson, who assumed the CEO role in January 2025. The boardroom has been refreshed with directors possessing deep turnaround experience, including Scott Sutton (former CEO of Olin) and Christopher Kuehn (CFO of Trane Technologies). Despite these changes, the company remains in a race against time to refinance $3.6 billion in maturities due in 2027 while navigating a demand environment where visibility is as low as two weeks.

Business & Situation

<ul><li>Bull Case: Management successfully executes $120 million in cost savings and divests $1 billion in non-core assets to reach a 3.0x leverage target; the Engineered Materials pipeline commercializes high-value wins in EVs and medical applications, driving a 'J-shaped' earnings recovery.</li><li>Bear Case: Persistent oversupply in China and weak European demand prevent margin recovery, leading to a covenant breach or a highly dilutive equity raise to address the 2027 maturity wall; the equity value is wiped out in a formal restructuring.</li></ul>The prevailing market narrative is one of deep skepticism. Investors view Celanese as a 'falling knife' where the structural damage to the balance sheet from the M&M acquisition has permanently impaired the equity. This is reflected in the stock's -49.4% alpha versus the market over the last year and a rising short interest of 7.5% of the float. Macro headwinds are severe, with Western Hemisphere acetyl demand at 20-year lows and a destructive pricing environment in standard-grade polymers. While management argues that the business is a 'coiled spring,' the market is focused on the $12.6 billion debt load and the negative interest coverage ratio of -3.0x.The chemical industry is in a 'Bust' phase. Peer companies like LyondellBasell are aggressively cutting CapEx and reporting compressed margins, signaling a broad industry retreat. While a supply-side rationalization is underway, the timing of a recovery remains uncertain, and Celanese's high leverage leaves it with no margin for error.Our differentiated view is that the market is pricing in bankruptcy while ignoring the value of the assets and the probability of a forced catalyst. However, unlike a typical value play, the governance friction here is high. The recent credit downgrades to junk status have triggered interest rate step-ups on senior notes, further squeezing cash flow. While insiders are buying stock-CEO Scott Richardson purchased $158,042 in December 2025-this alignment is reactive to a crisis rather than a signal of underlying business strength. The governance friction prevents 'value drift' by forcing management to pursue aggressive divestitures, but it also increases the risk of a forced liquidation where equity holders receive nothing.We conclude that the bear case is more probable. The combination of a negative tangible book value, junk-rated debt, and a destructive industry cycle makes the current market price of $42.85 unsustainable. The equity is functionally a call option on a perfect macro recovery that the current data does not support.Our analytical edge stems from a forensic analysis of the balance sheet and creditor agreements, giving us higher conviction in the impaired nature of the equity. We recognize that the $1.5 billion goodwill impairment is an admission that the M&M acquisition destroyed significant value, a factor the market is only beginning to fully digest.

Core Thesis

CEO Scott Richardson is an internal promotion with 16 years at Celanese, having served as both CFO and COO. While he possesses deep institutional knowledge, he lacks a verifiable external track record of leading a distressed turnaround. His appointment followed the departure of Lori Ryerkerk, whose tenure was defined by the value-destructive M&M acquisition. The board has been significantly refreshed to support this transition, though the success of this new team remains unproven in a crisis context.Historical capital allocation has been poor, evidenced by an M&A effectiveness score of -0.2x and the destruction of $2.0 billion in tangible book value since 2021. However, current management has pivoted to an 'Exceptional' survival-first mandate, cutting the dividend by 95% and reducing CapEx to maintenance levels of $300 million to $350 million to prioritize debt reduction.Management's credibility is low due to a history of missing guidance; the company hit its revenue targets only 40% of the time over the last five years. Recent transcripts show a shift toward 'controllable actions,' but the 'coiled spring' narrative is viewed by analysts as overly optimistic given the lack of volume visibility.<ul><li>Board Independence: 92% (12 of 13 directors)</li><li>Chairman/CEO Roles: Separate (Edward G. Galante is Independent Chair)</li><li>Chairman Tenure: 1 Year</li><li>Insider Ownership: 0.425% (Meaningful recent purchases by CEO/CFO)</li><li>Shareholder Rights: Declassified Board, No Poison Pill, Proxy Access</li></ul>The Governance Outcome Tree suggests three paths: 1. Status Quo (Management executes $1B in divestitures, stock stabilizes at NLV of $12.92); 2. Compromise (Board grants seats to a value-oriented activist, accelerating asset sales); 3. Reset (Refinancing fails, leading to a debt-for-equity swap where current equity is wiped out). Given the junk credit rating and negative interest coverage, the 'Reset' scenario carries a high 30% probability.

Leadership & Governance

We rely on the Net Liquidation Value (NLV) of $12.92 per share, which provides a tangible backstop based on the orderly sale of the company's core acetyl and engineered materials assets.The base case assumes a slow recovery where revenue declines 2.2% in Year 1 before stabilizing. Margins recover to 10% by Year 5 as $120 million in cost savings take hold. This results in an implied equity value of $0.00 due to the massive debt overhang.The bull case assumes a rapid cyclical recovery and successful $1 billion divestiture program, leading to a Year 5 EBITDA of $2.2 billion and a target price of $22.39.The Bear Case Fair Value is anchored to the Net Liquidation Value of $12.92 per share, reflecting the tangible recovery value of the asset base in a distressed wind-down scenario. We do not use a DCF multiple for this scenario as it assumes a failed turnaround and a zero-equity outcome.

Valuation Context

<ul><li>Closing of the Micromax Divestiture The sale of the Micromax portfolio to Element Solutions for $500 million is expected to close in Q1 2026. This is a critical first step in management's $1 billion divestiture plan and is essential for meeting 2026 debt maturities.</li><li>Realization of $120 Million Cost Savings Management has targeted $120 million in annualized cost reductions for 2025, including SG&A cuts and footprint optimization such as the Lanaken facility closure.</li></ul>Celanese is at a critical juncture following its downgrade to junk status and the implementation of a 95% dividend cut. The next 12 months will determine if the company can avoid a liquidity crisis as it faces a $3.6 billion maturity wall in 2027.

Catalyst Path & Context

<ul><li>Existential Liquidity and Solvency Risk The company's high leverage (Net Debt/EBITDA > 5.0x) and negative interest coverage (-3.0x) create a 'race against time.' Failure to generate sufficient free cash flow or execute asset sales could lead to a covenant breach or inability to refinance the $3.6 billion due in 2027. S&P and Moody's recently downgraded the company to BB and Ba2 respectively, citing delayed deleveraging and subdued earnings.</li><li>Structural Oversupply and Margin Compression Excess capacity in China for acetyls and standard-grade nylon continues to exert downward pressure on global pricing, preventing the margin recovery required to service the debt. Gross margins have compressed to 21.3%, and management noted that visibility in Engineered Materials has dropped to only two weeks.</li></ul>

Primary Risks

<ul><li>Entry Target: N/A - Recommendation is a Sell.</li><li>Stop Loss: N/A - Recommendation is a Sell.</li><li>Position Size: Sizing reflects a 'None' posture as the recommendation is a Sell. The equity is functionally impaired with an expected return of -80.9%.</li><li>Time Horizon: N/A - Recommendation is a Sell.</li></ul><ul><li>Net Debt/EBITDA ratio progress toward the 3.0x target</li><li>Successful closing and net proceeds of the Micromax divestiture</li><li>Quarterly free cash flow generation relative to the $700M-$800M management target</li></ul>The 'killer' for this thesis is a liquidity event, specifically a failure to refinance upcoming maturities or a dilutive equity raise that wipes out existing shareholders.

Actionable Parameters & Monitoring

Celanese Corporation is a distressed Turnaround Candidate whose equity value has been largely consumed by a $12.6 billion debt load following a failed acquisition strategy. While management is taking the necessary defensive steps to preserve cash, the probability-weighted fair value of $8.17 represents a massive downside from current levels. We recommend a Sell with a valuation target of $8.17, as the risk of a zero-equity outcome in a formal restructuring remains unacceptably high.

Final Conclusion

Aggressive deleveraging and asset rationalization

Driver

Execution of the $1 billion divestiture program, starting with the $500 million Micromax sale

Catalyst

Net Liquidation Value (NLV) floor of $12.92 per share

Protection

Management successfully executes $120 million in cost savings and divests $1 billion in non-core assets to reach a 3.0x leverage target; the Engineered Materials pipeline commercializes high-value wins in EVs and medical applications, driving a 'J-shaped' earnings recovery.

Bull Case

Persistent oversupply in China and weak European demand prevent margin recovery, leading to a covenant breach or a highly dilutive equity raise to address the 2027 maturity wall; the equity value is wiped out in a formal restructuring.

Bear Case

Situation: Celanese is facing a severe solvency crisis following the catastrophic $11 billion Mobility & Materials (M&M) acquisition, which has left the company with $12.6 billion in debt and a negative tangible book value of -$35.29 per share. Debate: Management is promoting a 'coiled spring' recovery narrative based on $120 million in cost cuts, while the credit markets have downgraded the company to junk status (S&P: BB) due to persistent demand weakness in automotive and construction end-markets. Conclusion: Our analysis suggests the equity is significantly impaired; with a probability-weighted fair value of $8.17, the current market price fails to account for the high risk of a zero-recovery outcome in a failed turnaround.

From Growth-at-all-costs to Profitability

Method	Implied Value	Weight	Weighted Value
DCF	$4.48	56%	$2.52
NLV	$12.92	44%	$5.65
Total Weighted			$8.16

CE

Company Overview

Price History