Equitable Bag Co. Inc. plans to expand its coextruded film capacity now that it has emerged from Chapter 11 bankruptcy protection. Jonathan Canno, chairman and chief executive officer, said in a telephone interview that Equi-table will invest more than $1 million this year in new coextrusion capacity to make security envelopes and mailer bags. It also plans an acquisition. He declined to elaborate on either plan.
Equitable said in a news release that U.S. Bankruptcy Court in Delaware approved its plan of reorganization on June 14. Its creditors earlier voted more than 80 percent in favor of the reorganization, Canno said. The company filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in late 1994.
Canno said most creditors will receive 50 cents on the dollar over five years. Some creditors that provide advantageous credit terms have accepted an option to get paid 50 cents on the dollar over three years. Equitable did not proceed with an earlier offer it had contemplated to pay unsecured creditors 23 cents on the dollar at closing of full settlement of claims. Equitable is now debt-free and has a revolving line of credit of $40 million to $45 million for working capital.
The New York-based, publicly held firm has about 20 extrusion lines and bag-making equipment at its plants in Florence, Ky., and Orange, Texas. Canno estimated its extrusion capacity, mainly for polyethylene, at about 50 million pounds per year. About half of its sales of $100 million last year were from plastic bags, the rest from paper bags. Key plastic bag markets include merchandise, overnight mailers, consumer products and specialty retail.
Equitable announced in late May a labor settlement with 350 employees at its Florence plant. Members of the United Paper Workers International Union accepted a four-year agreement that provides no wage increases in the first two years. In the second year of the contract, starting Jan. 1, 1997, employees will begin sharing in savings from improved productivity and more efficient use of raw materials.
``Wage increases will be tied to the savings that workers control,'' Canno said. A contract with UPWI members at the Orange plant expires in about two years.
Canno is a third-generation member of the family that founded 77-year-old Equitable. Jacques Belet, a turnaround specialist under contract with Equitable since July 1995, will become president and chief operating officer.