DETROIT - Foamex International Inc., tightening its focus on the polyurethane foam market, announced Aug. 28 it was selling its automotive carpeting and fabrics division at a loss two years after acquiring the business. Foamex said it was selling its JPS Automotive L.P. unit to Collins & Aikman Corp. for $220 million, a figure that includes $198 million of debt and about $22 million in cash. Foamex acquired the business in July 1994 from JPS Textile Group Inc. for $287.3 million.
Foamex, based in Linwood, Pa., said it will declare a net loss of $59 million related to the JPS sale in the third quarter of this year.
The shedding of the JPS business follows by a month the sale of Foamex's Perfect Fit Industries Inc. unit, a maker of bedding, mattress pads, pillows and other foam products. The company reported a loss of $40.1 million on the sale of Perfect Fit, a deal that closed Aug. 1.
The sale of JPS and Perfect Fit are in line with Foamex's announcement in November that it would restructure its operations to focus on the PU business and reduce long-term debt. The combined sales are expected to reduce long-term debt from $724 million on June 30 to about $460 million.
Foamex reported 1995 revenue at JPS of $312.1 million and income from operations of $31.1 million. Company spokesman David Bright said the decision to sell the business was ``purely a strategic one.''
For Collins & Aikman, based in Charlotte, N.C., the acquisition of JPS will boost its content on North American vehicles - based on 1995 figures - from $64 per unit to $82.
The JPS deal is the second major expansion into the interior components market for Collins & Aikman in the past year. In January, the company closed on a $174 million deal to acquire Troy, Mich.-based Larizza Industries Inc., parent firm of interior trim maker Manchester Plastics.
Collins & Aikman Treasurer Dennis Mahedy said the JPS acquisition adds to existing carpeting and seating fabrics business the company already has with the Big Three automakers, brings in important new business with Toyota Motor Corp. and other Japanese automakers, and broadens its current product offerings into headliners and airbag fabrics. JPS' biggest customer is General Motors Corp.
``We're just increasing our presence,'' Mahedy said. ``This is another piece of the puzzle.''
Collins & Aikman also may look for synergies between its Manchester Plastics unit and JPS, he said. Manchester, for example, makes instrument panel components which may dovetail with JPS' airbag fabrics business.
Foamex said the sale of JPS is expected to be completed in 60-90 days and is subject to certain regulatory clearances and financing approvals. Upon the closing of the sale, Collins & Aikman and Foamex plan to enter into certain supply pacts that will include products using Foamex's proprietary foam-backed SMT automotive carpet system technology.
JPS, based in Greenville, S.C., has six manufacturing, distribution and sales plants in South Carolina, North Carolina and Michigan. It also has a joint venture based in Mexico City with Enjema, a carpet and textile manufacturer.