Image By: GSE Environmental GSE Environmental has started production of polyethylene geomembranes at its new plant in Suzhou, China.
Geomembrane major GSE Environmental is expanding as it nears a deadline for a sale of the company.
GSE of Houston has started up a geomembrane extrusion line in Suzhou, China, its first for the country. The new operation complements an existing plant in Rayong, Thailand, to supply China and other Asian markets, said GSE vice president of marketing Steve Eckhart in a March 28 phone interview.
Separately, the company recently announced an agreement to exclusively distribute Tenax Group geogrids used in mining and environmental applications.
GSE has an April 21 deadline to finalize a sale of the company agreeable to its lenders. Private equity firm CHS Capital LLC of Chicago has been the major shareholder of GSE since 2004. GSE is publicly traded but its public float is less than 50 percent of shares.
GSE sales in 2012 were about $468 million, 62.6 percent higher than in 2004 when CHS bought into the company. When the sale of two subsidiaries in 2009 and 2010 are taken into account, GSE’s sales for continuing operations grew 80.8 percent in the 10-year span.
The company was founded as Gundle Corp. in 1981 and has grown internally and through acquisitions. Its last major acquisition was two manufacturing lines from Poly-America LP of Grand Prairie, Texas, in early 2012. GSE funded the purchase with proceeds from its initial public offering a month earlier.
“Several companies are in the mix and we are evaluating [potential offers],” said Eckhart. “We may have an announcement in a few weeks.”
Eckhart did not reveal which companies are in the hunt for GSE but rivals in the geomembrane industry aren’t party to negotiations. GSE claims to be the biggest company of its type in the world. CHS has occasionally looked to divest its stake in GSE over the last several years but financial markets weren’t encouraging.
GES has a global reach with production plants in the United States, Chile, Germany, Egypt and Thailand. Its U.S. plants are in Houston, Spearfish, S.D., and Kingstree, S.C. As well, it has sales and engineering offices around the world.
Eckhart said the highest growth potential for geomembrane products is in emerging nations. North America and Europe are fairly mature markets but North American demand is gaining from trends in oil and gas fracturing projects, which use geomembranes for drilling pads, fracking fluid flow-back ponds and fresh water ponds.
The China plant produced its first commercial quality roll of geomembrane liner earlier this month. Eckhart said the first roll was high density polyethylene liner made on the flat-cast line. The line can make 25-foot wide geomembranes with up to three layers. China’s market is primarily HDPE but it also requires low density PE types. Eventually Suzhou will add geonets production for the local market
GSE broke ground on the Suzhou plant in January 2013. The operation has capacity to make 44 million pounds of geomembranes annually.
GSE’s Houston plant can make 31-foot wide geomembranes in a blown film process. GSE also can make geotextiles. Markets for GSE products include environmental applications, mining, water, wastewater and aquaculture, wherever there is a need for containment and management of liquids, solids and gases. HDPE geomembranes are its largest single product category.
Tenax based in Vigano, Italy, is a global leader in geogrids used for soil reinforcement and stabilization where soils are weak or are steeply sloped as in landfills, embankments, retaining walls and bridge abutments. They can also contain rock debris in tunneling and mining. Tenax’s other offices are in the United States, Germany, Switzerland and China.
“Over the last several months, with the help of Moelis & Co. LLC, the company has been engaged in a robust process with respect to the [GSE sale],” stated GSE President and CEO Chuck Sorrentino in a news release. The deadline for a sale was extended to April 21 after the firm and its senior lenders agreed to amendments to GSE’s credit facilities.