GSE enters Chapter 11 bankruptcy protection to complete sale

By Michael Lauzon
Correspondent

Published: May 5, 2014 11:50 am ET
Updated: May 6, 2014 2:37 pm ET

Related to this story

Topics Mergers & Acquisitions, Agricultural, Construction, Film & Sheet

Three private equity groups are slated to become the new owners of bankrupt geomembranes firm GSE Environmental if the company’s restructuring proposal is accepted by courts.

The three proposed owners agreed to buy GSE Environment’s first lien debt of about $172 million from a group of first lien lenders. In essence, the new owners would convert the first lien debt to equity. GSE Environmental announced the first lien agreement May 5 a day after it voluntarily filed for protection under Chapter 11 at the U.S. Bankruptcy Court in Wilmington, Del. The first lien agreement is core to GSE Environmental’s filed plan for restructuring.

GSE Environmental’s filing identifies the proposed new owners to be Littlejohn Opportunities Master Fund LP, Tennenbaum Opportunities Partners V LP and Strategic Value Partners LLC. Littlejohn and Strategic Value are headquartered in Greenwich, Conn., while Tennenbaum is based in Santa Monica, Calif.

“We believe the plan will be accepted by the court,” said GSE Environmental vice president of marketing Steve Eckhart in a May 5 phone interview. He said he expects a short bankruptcy process, about three to four months.

GSE Environmental had been looking for a buyer acceptable to its lenders but wasn’t successful by a deadline at the end of April. Private equity firm CHS Capital LLC of Chicago has been its main shareholder since 2004. The company is publicly traded but less than half its shares are held by the public.

GSE Environmental’s product line includes liners, mostly polyethylene, made by flat casting and blown film. It also makes geonets. Such products are widely used in environmental projects, mining, water, wastewater, aquaculture and oil and gas fracturing projects. Demand is rising fastest in emerging countries that lack infrastructure.

Plastic resin costs, mainly PE, represent about 80 percent of GSE Environmental’s product costs.

GSE Holding Inc. logged sales of $417.7 million in 2013, down 16.5 percent from 2012, according to a recent securities filing. It had a net loss of $84.5 million last year, compared with net income of $1.1 million in 2012. Earnings before interest, taxes and depreciation were $15.9 million and $45.7 million, respectively.

In its bankruptcy filing, GSE Environmental blamed stiffer competition, effects of Europe’s recession, a downturn in the mining sector and high capital expenditures on the weaker financial performance in 2013.

Last year, GSE Holding’s sales in North America accounted for 42 percent of the total. Other major markets were Europe/Africa (28 percent), and Asia/Pacific (19 percent).

GSE Environmental said in a news release that offshore subsidiaries are not included in the bankruptcy filing. GSE Environmental, the subject of the filing, is the U.S. subsidiary of GSE Holding Inc. and by far its largest operating company. GSE Environmental’s offshore production subsidiaries are in China, Chile, Germany, Egypt and Thailand. It officially opened its Suzhou, China, facility, its first in that country, in March. GSE Environmental also runs sales and engineering offices around the world.

GSE Environmental’s U.S. plants are in Houston, Spearfish, S.D., and Kingstree, S.C.

Court documents show GSE Environmental’s major unsecured creditors include resin producer Formosa Plastic Corp. USA, owed about $4.1 million. Other unsecured creditors include resin and concentrate suppliers and geogrid major Tenax Group, for which GSE Environmental recently agreed to distribute Tenax products.

GSE Environmental plans to pay off in full those trade vendors who will supply the restructured company under normal trade credit terms, and will provide “a meaningful recovery for other unsecured creditors,” the firm said in a news release.

GSE Environmental said it will continue operations during the bankruptcy process with the help of $45 million in debtor-in-possession financing.


Comments

GSE enters Chapter 11 bankruptcy protection to complete sale

By Michael Lauzon
Correspondent

Published: May 5, 2014 11:50 am ET
Updated: May 6, 2014 2:37 pm ET

Post Your Comments


Back to story


More stories

Image

Bayer launches PC sheet production in Guangzhou, China

December 17, 2014 6:00 am ET

Bayer MaterialScience (BMS) has started its new polycarbonate sheet production plant at its Guangzhou, China, site.    More

Image

Ecolean expanding flexible packaging production in China

December 16, 2014 3:07 pm ET

Flexible packaging maker Ecolean AB is opening a new factory and warehouse in China to increase production.    More

Image

UK recycler Eco Plastics sold to German investment group

December 12, 2014 11:19 am ET

Recycler Eco Plastics has been bought by Aurelius AG, a Grünwald, Germany-headquartered investment firm, for an undisclosed sum.    More

Image

Resin distributor Biesterfeld Plastic buys out partner in Biesterfeld Nordic

December 11, 2014 12:21 pm ET

Hamburg, Germany-based Biesterfeld Plastic GmbH, a distributor for the European plastic and rubber industry, announced that it has bought the shares...    More

Image

End of era for DuPont: Chemical company to sell Neoprene unit

December 10, 2014 11:27 am ET

UPDATED — DuPont Performance Polymers has signed a definitive agreement to sell its Neoprene polychloroprene business to Denka Performance Elast...    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

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

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

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events