Ivex Packaging Corp. expects to raise about $54.6 million in proceeds from its first public stock offering to reduce long-term debt. The specialty plastics and paper packaging company will put up 4 million shares of its common stock to help repay loans totaling more than $55 million as of June 30. Those loans have kept the Lincolnshire, Ill., firm highly leveraged, racking up interest and keeping it in the red for several years.
Despite steady sales, Ivex reported a loss of $16.3 million, or $5.91 per share, for the first half of 1995, according to a recently released prospectus. Sales rose 22 percent for the same period, to $227.5 million. In 1994, the company recorded a loss of $9.3 million, compared with a whopping loss of $129.1 million for the year before - due in part to a hefty, one-time charge against earnings.
Moody's Investors Service agreed that the initial public offering will ease the firm's strained finances, calling it ``much-needed financial relief,'' according to an Aug. 9 Reuter report. However Moody's did not raise Ivex's debt rating, citing the company's ``very weak pro forma balance sheet'' and continuing ``substantial negative equity balance,'' Reuters said.
Of Ivex's $391 million in sales last year, about $100 million was from thermoformed plastic products, mainly food packaging - hinged and two-piece containers, liners and trays for deli foods, salads, bakery goods and other items. Its chief markets for those products are supermarkets, wholesale bakeries, such as Nabisco and Keebler Co., and food-service outlets, mainly institutional cafeterias and fast-food restaurants, such as McDonald's Corp. Paper products, including single-face, corrugated paper liners and fluted cups for baking, make up a small portion of the consumer business, according to Ivex Treasurer Rick Cote.
On the industrial side, protective paper packaging and specialty papers account for the largest market share, with such plastic products as polyethylene film masking making up the rest, Cote said byphone Aug. 10. Sales are split nearly in half between consumer and industrial packaging.
The company's thermoforming sales placed it third among North American thermoformers, according to Plastics News' February ranking of such firms. It operates four U.S. thermoforming plants, one in Longueuil, Quebec, and a joint venture with Consorcio Industrial Maldonado in Monterrey, Mexico, called MaxPack.
As part of its vertically integrated setup, Ivex extrudes its own sheet through subsidiary Kama Corp., based in Hazelton, Pa. At plants in Hazelton, Avenel, N.J., and Manteno, Ill., Kama makes oriented polystyrene, high-impact PS and PET sheet for Ivex products. Last year Ivex produced about 135 million pounds of OPS sheet, using half of that in-house.
The firm, which claims to be the world's largest producer of OPS sheet, is solidifying that position by spending $16 million to add another 33 million pounds of OPS capacity, due on line this fall at Kama's Manteno plant. About 15 percent of Kama's $150 million extrusion business is in film, such as OPS film for use in envelope windows and labels.
Ivex fills about half its internal PS resin needs, producing 82 million pounds of PS last year, and buying another 75 million pounds from outside sources. The company also produces some PE, according to the prospectus.
Acadia Partners L.P. and related investors, the principal shareholders of Ivex, will own about 40 percent of the firm after the offering, according to the prospectus.
Ivex executives, among them George V. Bayly, chairman, president and chief executive officer, individually will own a small percentage of stock.
Ivex will trade on Nasdaq under the symbol IVEX. CS First Boston Corp.; Bear, Stearns & Co. Inc.; and Dillon, Read & Co. Inc., all of New York, will underwrite the offering.
