TORONTO - Post-consumer plastic film and bottle recycler Resource Plastics Inc. is for sale, the firm announced Sept. 29. ``The board decided that to grow to the next stage the company needs a considerable amount of money,'' said Jim Horn, Resource chairman, in a telephone interview from his company's Brantford, Ontario, office.
Horn said Resource's Brantford plant is running near design capacity at current annual recycling rates of more than 20 million pounds of polyethylene film and 13 million pounds of high density PE bottles. It sells about 80 percent of its output to U.S. customers, mainly large processors. Local municipalities supply most of its feedstock.
Horn described companies such as Resource ``as the pinch in the hourglass,'' that represent a bottleneck between large amounts of available scrap plastic and large potential markets for recycled resin.
``The industry needs large plants,'' said Horn. ``Mom and pop shops are vanishing.''
Tom Rattray, Procter & Gamble Co.'s associate director of environment, said small recyclers have problems with scale and they need to merge to avoid going out of business. Rattray said Resource's capacity ``sounds marginal for ongoing profitability.''
Resource became profitable in 1995 but still carries a high debt load, Horn said. The firm said in a news release that it expects sales of about C$15 million (US$11.3 million) and after-tax cash flow of C$1.5 million (US$1.1 million) next year.
Horn said Resource's board seeks offers ranging from outright purchase to an equity buyer. The company is owned by 10 private investors, including Horn, and an institutional investor. One of the investors is Barry Wood, Resource's former president and CEO, who left the company during the summer. He was replaced by Douglas Matthews, described by Horn as a turn-around specialist who helped the board reach the decision to sell Resource.
Wood's departure was unrelated to Resource's interest in a buyer, according to Horn. He would not disclose reasons for Wood's departure because his exit might become a legal issue. Wood could not be reached for comment.
Resource hired investment banking firm R.G. Shoniker & Associates of Toronto to help find a buyer. Horn said several parties have shown interest in Resource but the board has not set a deadline for a sale.
Horn helped establish Resource in 1989 when he and his partners bought compounding equipment and moved it to a plant in Brantford. Resource was a pioneer in post-consumer film recycling and a key buyer as Ontario's recycling infrastructure grew in the early 1990s.