Government Controls Clorox Venezuela

The Venezuelan government is occupying the Santa Lucía and Guacara production facilities of Corporación Clorox de Venezuela S.A. (Clorox Venezuela). Prior to the move, Clorox Venezuela had secured the plants in complete shut-down mode prior to its exit, including removal of all chlorine and lock-down of equipment. Clorox noted that the Venezuelan government's actions raise grave concerns, and Clorox and its affiliates cannot be responsible for the safety of workers and the surrounding communities or any liability or damages resulting from this occupation.

While Clorox Venezuela and its parent, Clorox Spain S.L., reserve their rights under all applicable laws and treaties, Clorox Venezuela is prepared to engage in conversations with the Venezuelan government regarding prompt, adequate and effective compensation.

On Sept. 22, 2014, The Clorox Company reported Clorox Venezuela was no longer viable. As a result, Clorox Venezuela immediately discontinued its operations, and announced it is seeking to sell its assets. While Clorox Venezuela would have preferred to maintain its business in Venezuela and continue supplying its products to the Venezuelans, given the operating restrictions imposed by the Venezuelan government, considerable economic uncertainty, continual supply disruptions, and without significant and ongoing price increases as well as other remedial actions, Clorox Venezuela anticipated considerable operating losses would continue into the foreseeable future.

For nearly three years, Clorox Venezuela was required to sell more than two-thirds of its products at prices frozen by the Venezuelan government. During this same period, Clorox Venezuela experienced cumulative triple-digit inflation resulting in massive increases in Clorox Venezuela's input costs, including packaging, raw materials, transportation and wages. As a result, Clorox Venezuela had been selling its products at a loss, causing ongoing operating losses. Clorox Venezuela repeatedly met with government authorities to help them understand the rapidly declining state of the business, including the need for immediate, significant and ongoing price increases and other critical remedial actions to address these adverse impacts. Based on the Venezuelan government's representations, Clorox Venezuela had expected significant price increases would be forthcoming much earlier this year. However, price increases subsequently approved by the government were nowhere near sufficient and would have caused Clorox Venezuela to continue operating at a significant loss.

The Clorox Company, Clorox Spain S.L., and their respective affiliates had initiated an expedited sale process to facilitate a swift transition of the Clorox Venezuela assets to a new owner. The Venezuelan government had been advised of this expedited sales process.