K-Tron International Inc. is selling Colortronic GmbH, a German-based manufacturer of materials-handling equipment, to an investment group for $9 million in cash. The investors also will assume about $14 million in debt for the K-Tron subsidiary. Both parties expect the deal to close by the end of the month.
Investors include K-Tron executives Marcel O. Rohr, president and chief executive officer, and Martin Schuler, senior vice president of finance for European operations; and affiliates ofABNamro Ventures BV, a Dutch banking conglomerate, and Alpinvest III BV, a German banking group 48 percent owned by ABNamro (pronounced A-B-N-amro).
Rohr and Schuler have re-signed their K-Tron posts to head Colortronic, according to K-Tron spokesman Don Dunnington. Leo C. Beebe, K-Tron chairman of the board, will assume Rohr's CEO duties, he said.
``It's a friendly split, driven more by the best financial interest of both parties than anything else,'' Dunnington said by telephone from K-Tron's Cherry Hill, N.J., headquarters.
Although both firms make materials-handling equipment, K-Tron's core business is Soder-brand feeders, mainly for pow-ders and difficult-to-handle dry materials used in plastics compounding. Colortronic largely serves the molding, extrusion and blow molding businesses with gravimetric and volumetric blenders, vacuum conveyors, granulators and dryers. K-Tron is divesting the company to focus on its Soder feeders, he said.
For 1994, the public company suffered a loss of $6.8 million, according to a March 31 financial statement. K-Tron reported a fourth-quarter loss of $6.3 million, which put it in default of several U.S. bank loans, the statement said. Much of that loss was due to Colortronic's poor performance in the German market, which plummeted just six months after K-Tron acquired Colortronic GmbH in April 1992, Dunnington said. The now-recovered market in Germany for blending and ancillary equipment, chiefly for injection molding, is a prime market for the company, he said.
This February, K-Tron directors asked Rohr ``to turn that operation around,'' Dunnington said.
He called the decision to buy the company ``a pro-active move on the part of Marcel Rohr and others who had a lot of interest in Colortronic'' and thought they could turn it around ``as a stand-alone business.''
``It's not a management problem; it's not a lack of knowing what to do. But I think our people in that operation found themselves without the re-sources to do what they wanted to do. They looked for a way to get a cash infusion,'' he said.
``I think everybody came out ahead by splitting the two brands off.''
K-Tron does not break out sales by brands, but Dunnington said sales will be cut by one-third as a result of the divestiture. In 1994, K-Tron's sales totaled $104.8 million compared with $108 million for the year before. K-Tron reported it would incur a loss of about $10 million on the sale, primarily a noncash write-off of goodwill. The sale will reduce the firm's bank debt and interest expense. K-Tron's financial outlook has improved considerably. For its first quarter of 1995, it reported a loss of $1.3 million.
``While we are not satisfied, we are making real progress toward a turnaround,'' Beebe said.
``We're well on our way to getting healthy again,'' Dunnington said. ``The level of our business is very good. We're pretty confident about the future.''
Colortronic's' U.S. operations will move from Pitman, N.J., to another, undetermined New Jersey site, Dunnington said.
``That transition will happen fairly quickly,'' he said.
Although the details have not been worked out, K-Tron will continue to offer support for some Colortronic products.
Once Colortronic relocates,K-Tron management will move from its Cherry Hill headquarters back to Pitman, he said. In 1992, K-Tron moved its corporate offices from that site to make room for Colortronic sales and support staff.
In January 1992, K-Tron began a joint venture with Colortronic Inc., a Puyallup, Wash., subsidiary of Colortronic GmbH of Friedrichsdorf, Germany. In April 1992, K-Tron bought the German parent for $12.4 million in cash and about $13 million in debt, Dunnington said. K-Tron closed the Puyallup manufacturing plant and consolidated Colortronic's U.S. operations in Pitman, where K-Tron also makes Soder and Hasler-brand feeders for cement and rock products.
K-Tron also operates manufacturing plants in Niederlenz and Colombier, Switzerland, and in Carapicuiba, Brazil; and an electronics plant for controls manufacturing in Blackwood, N.J.
K-Tron got its start in a Pitman garage in 1948. But the K-Tron name goes back to 1964, when its first digital weigh-belt feeder was developed, he said.
The firm is traded on Nasdaq.