DETROIT - Regal Plastics Co., recovering from a financially disastrous growth spurt, is negotiating with a team of unsecured creditors, banks and automotive customers for help in returning its business to profitability. The Roseville, Mich.-based company, one of the largest minority-owned molders in the automotive supply industry, is not in danger of failing and has no plans to file for bankruptcy court protection, the company said. In fact, Regal said, it is booking new automotive orders through the end of the decade.
``It's our objective to be the preeminent minority supplier to the Big Three and a world-class supplier,'' said Ray Rogal, president and chief operating officer. ``There's no doubt in my mind. This company is going to be very, very successful.''
But Regal, which did $36.5 million in sales last year, has a problem. About $8 million in past-due bills from 1994-95 have piled up after product launches for major new-car programs at Ford Motor Co. and other auto-makers ran into serious quality and delivery problems.
Regal's largest single unsecured creditor is Ashland Chemical Inc., a resin company, which is owed about $900,000, said Terry Nicholson, Ashland's division credit manager in Dublin, Ohio. He also is chairman of an informal unsecured creditors committee that has been meeting with Regal, most recently on Feb. 14, to discuss working out the debt problem.
Nicholson said it was ``too early in the process'' to determine if Regal and its creditors would come to an agreement, noting that negotiations only started in January.
``Our intentions are to seek a settlement that will pay us in full over time,'' he said.
Regal, with three plants in Michigan and 350 employees, is controlled by majority stockholder William Pickard, whoholds the titles of chairman and chief executive officer.
In August, Regal said it had sold a minority stake in its business to Cambridge Industries Inc. of Madison Heights, Mich., another automotive supplier. When the companies announced the deal, Cambridge President Richard Crawford told Plastics News that Regal was looking for a ``partner that has a little more depth to help them manage their growth.''
However, in an interview last week, Crawford said Cambridge's agreement to purchase a share in Regal was never closed. Cambridge, however, did actively assist in an urgent turnaround effort at Regal beginning in August.
Rogal said the molder is now ``winding down'' its relationship with Cambridge.
Crawford was more hopeful. ``We will continue to be available to assist them, if called upon to help keep the company on course,'' he said.
Rogal is a former Cambridge employee, joining the supplier in January 1995 after a 27-year career at Ford. He was assigned to Regal in August as part of the turnaround plan and soon after joined the molder.
Rogal declined to discuss whether Regal was seeking another partner. In early 1995, news reports had Regal merging with Superb Manufacturing Inc., a minority-owned metal stamper in Detroit. A couple of years ago the molder also had talks with Textron Inc.'s automotive unit about a partnership, according to a source close to Regal who declined to be identified.
Regal's main problem, according to the source, was that it lacked the management depth to handle the rapid growth it was planning.
In ramping up for Ford's Contour/Mystique program, and other contracts, Regal added 25 injection presses, 270 new employees and about 80,000 square feet of manufacturing space. Tooling investment alone totaled $6 million.
``There was going to be huge growth,'' the Regal source said.
As Ford readied the late-1994 launch of the Contour/Mystique models, Regal was in ``severe difficulty,'' according to Rogal. ``When you get yourselves in trouble, it just multiplies on yourself,'' he said.
With production problems mounting, the firm also was coping with an increased debt load it took on for the expansion.
``They were losing a ton of money,'' the Regal source said, ``and their debt was deadly.''
And, as the months pro-gressed, it became clear that the Contour/Mystique was not going to be the huge success that Regal was banking on. Ford sold a total of 237,000 Contours and Mystiques in calendar 1995, according to the Automotive News Data Center. Sales fell slightly below Ford's initial targets.
But the turnaround effort that began in August has begun to produce some positive results, Rogal said. ``The total organization just in the last six months has done an outstanding job,'' he said.
Rogal said the company was profitable in October and November and only failed to turn a profit in December and January because of reduced production schedules from its customers. Regal expects to turn a profit this month.
The firm has slashed its payroll from 470 people in August to the current 350, while also cutting back sharply on overtime. Most importantly, Rogal said, the firm has not lost customers.
``We have not had any defections, and we are quoting and getting new business,'' he said.
Ford also is backing Regal, saying it is ``confident'' the molder will pull through.
``We continue to view them as a long-term supplier to Ford,'' spokeswoman Cheryl Eberwein said.