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 Packaging, Mergers & Acquisitions, Blow Molding

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

Brown signs California's plastic bag ban into law

September 30, 2014 1:38 pm ET

Gov. Jerry Brown (D) made it official today: plastic bags are banned across the entire state of California.    More

Image

Teens put a cap on watery ketchup

September 30, 2014 1:57 pm ET

Whether you spell it ketchup or catsup, use it on burgers or fries, or prefer Heinz or Hunt's, there is one universal problem for the ages: That...    More

Image

RJG buys UK training group G&A

September 30, 2014 11:10 am ET

G&A Moulding Technology Ltd., a United Kingdom-based training and consultancy group, has been bought by RJG Inc., the U.S.-based training business.    More

Image

Amcor planning more growth in Asia

September 30, 2014 10:24 am ET

Flexible packaging firm Amcor Ltd. is rapidly expanding its presence in the Asian market. The company's top official in the region said it will soon...    More

Image

Uflex to build large flexible packaging plant in western India

September 30, 2014 10:01 am ET

Flexible packaging company Uflex Ltd. is planning a major new plant in the western Indian state of Gujarat.    More

Market Reports

Plastics in Mexico - State of the Industry Report

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

Our industry analysis highlights macro industry trends and micro trends faced by companies that do business in Mexico. The report also provides key industry statistics and forecasts to anticipate future industry expansion.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

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

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

More Events