Fire adds to woes forcing Hedwin into Chapter 11, planned sale

By Jim Johnson
Senior Staff Reporter

Published: April 9, 2014 3:41 pm ET
Updated: April 9, 2014 3:48 pm ET

Image By: Hedwin Corp. Hedwin's Cubitainer collapsible packaging for liquids have been on the market for more than 60 years.

Related to this story

Topics Mergers & Acquisitions Packaging Blow Molding
Companies & Associations

A generations-old industrial plastics packaging company, which has been owned by employees for the past decade, is under bankruptcy court protection as a sale to long-time associate is in the works.

Hedwin Corp. of Baltimore lists debts of slightly more than $18 million and assets of $15 million, according to a Chapter 11 filing this month in the U.S. Bankruptcy Court in Baltimore.

Hedwin, which dates back to 1946, makes products including pail and drum liners, blow molded containers and a trademarked collapsible liquid container called the Cubitainer.

But a June 13, 2013, fire at the company’s Baltimore facility helped push Hedwin to the financial brink. “The fire negatively affected the debtor’s operations, causing a shutdown in certain assembly lines,” the bankruptcy court filing states

“A combination of factors and events has negatively impacted and continue to adversely affect the debtor’s business operations and its financial condition,” the filing states.

“Fluctuating and higher resin prices,” “margin compression” and “delayed capital investment in equipment and production processes, resulting in increased production costs and inefficiencies” all contributed to the company’s problems, the filing states. “As a result, the debtor is suffering a liquidity crisis and continues to suffer major cash flow problems.”

Tokyo-based Fujimori Kogyo Co. Ltd. is the leading candidate, at this point, to purchase Hedwin.

Fujimori Kogyo’s interest in Hedwin is not entirely out of left field. The company has produced Cubitainers, now called Fujitainers by that company, under license from Hedwin for 50 years. The company also has a presence in the United States through its subsidiary Zacros America Inc., which makes film and packaging.

Hedwin, founded in 1946 by Lenox Burkhed and Tom Winstead, was sold to Solvay SA in 1958 and remained under the control of that global plastics and chemical firm until 2004. That’s when workers took over the site through an employee stock ownership plan.

Coverage of the ESOP a decade ago indicated that most of the company’s 380 workers had an ownership stake in Hedwin.

Hedwin had sales of $44 million and gross profit of $4.5 million in 2012, the bankruptcy court filing indicates. Those numbers slipped to $43.5 million in sales and a gross profit of $3.4 million in 2013.

Facing the liquidity and cash flow problems, the company brought in Charles Deutchman of Shared Management Resources Ltd. of Pepper Pike, Ohio, as chief restructuring officer in October. By December, Mesirow Financial Inc. was hired as an investment banker to explore what the filing called “strategic alternatives.”

“Absent a sale, the debtor would have to immediately terminate its employees and begin the wholesale liquidation of its assets to the detriment of the estate and its creditors,” the filing states.

Chapter 11 gives a troubled company protection from creditors through bankruptcy court and allows operations to continue as reorganization takes place.

Business speak can be dreadfully dull, but Fujimori Kogyo is colorfully described as the “stalking horse” bidder to purchase Hedwin.

Hunters can hide behind so-called stalking horses as cover to allow themselves to get close enough to prey that would otherwise flee out of range if they detected humans.

 So Fujimori Kogyo, by making this initial bid, helps set the market for the sale of the assets and provides a minimum bid, essentially a cover, during the bankruptcy court auction.

Along with its main facility in Baltimore, Hedwin also has a warehouse and assembly location in Reno, Nev.

The company now has about 300 employees, including some 50 salaried workers and 250 hourly workers.


Comments

Fire adds to woes forcing Hedwin into Chapter 11, planned sale

By Jim Johnson
Senior Staff Reporter

Published: April 9, 2014 3:41 pm ET
Updated: April 9, 2014 3:48 pm ET

Post Your Comments


Back to story


More stories

Image

Dow Chemical to merge chlorine operations with Olin

March 27, 2015 12:43 pm ET

Dow Chemical Co. is combining a large part of its chlorine value chain with specialty chemicals and ammunition maker Olin Corp. to create a global...    More

Image

Flextronics launches global injection molding, tooling unit

March 26, 2015 4:29 pm ET

Flextronics International Ltd. (Booth S34125) is officially launching Precision Plastics, a global injection tooling and manufacturing unit, as a...    More

Image

Core Molding buys CPI Binani assets, adds markets, D-LFT capabilities

March 20, 2015 1:20 pm ET

Core Molding Technologies Inc. is expanding its thermoplastics capabilities with the acquisition of substantially all the assets of CPI Binani Inc.,...    More

Image

Proposed Cardia-Stellar merger labeled 'not fair,' but still 'reasonable'

March 20, 2015 10:34 am ET

If the proposed merger of two Australian bioplastics companies goes ahead, the new company will be called Secos Group Ltd. and have annual sales of...    More

Image

Transilwrap buys Clear Focus, expands in advertising films

March 20, 2015 10:03 am ET

Film extruder Transilwrap Company Inc. has bought Clear Focus Imaging, a manufacturer of printable plastic films for large-scale display advertising l...    More

Market Reports

Flexible Packaging Trends in North America

North America represents about 30 percent of the global consumption of flexible packaging. Annual growth in this region is forecast at 4 percent during the next 5 years.

For more insight on growth opportunities, drivers of growth and the outlook for 2015, download this report.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events