Custom injection molder Cimco Inc. of Costa Mesa, Calif., is looking at selling its most profitable business subsidiary, Compounding Technology Inc. in Corona, Calif., as one possible strategy to reduce its debt and return to profitability. CTi is also Cimco's fastest-growing unit, with profit rising 45 percent to nearly $2 million for the fiscal year ending April 30. Sales grew 24 percent to $44.1 million.
Cimco spokeswoman Tammy Trenkmann said selling the CTi business is only one possible scenario.
``Other options are being considered to maximize shareholder value,'' she said.
Last month, the company announced it had hired PaineWebber Inc. to help it refinance its debt and evaluate offers for certain business units.
CTi operates plants in Corona, Singapore, and Charlotte, N.C. Another plant, in St. Etienne, France, near Lyon, is scheduled to start operations early next year, though no date is set for the opening.
The possible asset sale is the latest twist in a jumbled year for publicly held Cimco. Russell T. Gilbert, founder and president and chief executive officer, in May initiated an executive search for his successor, but he aborted the plan in August, choosing to remain at the helm of the 36-year-old firm.
Gilbert's decision to stay on resulted in resignations from two members of the company's board of directors. Trenkmann, however, said no bad blood exists between Gilbert and former board members James L. Dotiand Kenneth E. Hendrickson.
Two fiscal years of losses totaling $2.8 million, combined with the investment to put an additional manufacturing plant in Dayton, Nev., had the company rolling in red ink. Trenkmann said the company has no plans to consolidate the Dayton and Costa Mesa operations. Cimco operates 25 molding presses in a 110,000-square-foot facility in Nevada.
On April 30, Cimco fell into technical default with its primary lender, Wells Fargo Bank. Wells Fargo waived the technical default in August and increased Cimco's line of credit to $7.8 million from $6 million.
Cimco said its custom injec-tion molding business is return-ing to profitability due to re-structuring that consolidated departments in commercial, industrial and medical units.
``We've already seen a savings from that consolidation,'' Trenkmann said.
