BEACHWOOD, OHIO — Lamson & Sessions Co., a perennial top-10 finisher in Plastics News' ranking of extruders, may be looking to sell its $130 million PVC pipe business.
Beachwood-based Lamson & Sessions ran into financial trouble in the third quarter of 1997, and publicly announced it was ``investigating strategic alternatives aimed at strengthening our long-term competitive position.'' One of those alternatives appears to be selling its pipe operations.
In an undated letter obtained by Plastics News, an investment banking firm in Chicago solicits offers to buy Lamson & Sessions' five pipe plants in Pennsylvania, Florida, Oklahoma, Texas and California.
``During the past several years, Lamson has received a number of unsolicited inquiries from large, well-financed entities interested in purchasing part or all of Lamson's PVC pipe business,'' the letter states.
``Based on these inquiries, Lamson has decided to formally and thoroughly investigate and evaluate a sale of its PVC pipe business.''
Lamson Chief Financial Officer Jim Abel on Jan. 22 confirmed the company was evaluating a number of possibilities regarding its business.
``It is very premature to conclude anything,'' Abel said. ``No decision has been made of any kind. None of the projects we're pursuing is close to closure.''
The letter does not mean a sale is imminent, just that the company is ``doing what's appropriate,'' to get better results, securities analyst Saul Ludwig of Cleveland-based McDonald & Co. said in a Jan. 22 telephone interview.
``Because of disappointing results, the company has indicated they are going to examine strategic alternatives,'' Ludwig said. ``The sale of the pipe business appears to be one of the alternatives they may be seeking. There might be other options under consideration that might not have been made public. You have one letter, there may be two others you and I may not have come across.''
Lamson & Sessions' woes began in the middle of last year as the company tried to implement a new management information system.
In news releases and Securities and Exchange Commission filings, the publicly traded company admitted glitches with the new system were causing billing and customer relations problems.
Lamson & Sessions in October reported an $8 million drop in third-quarter sales compared with 1996, with rigid commodity pipe accounting for the bulk of the decline.
The sales decline propelled the company to a third-quarter loss of $5.6 million.
The company also predicts a loss for the fourth quarter of 1997, but those results are not public yet.
Abel said Jan. 22 the problems with the management information system and customer service are easing.
``Things are not where they need to be right now ... but the performance level has improved significantly in the last 30-60 days,'' he said.
Lamson & Sessions ranked as the eighth largest in Plastics News' latest ranking of North American pipe, profile and tubing extruders, with estimated 1996 extrusion sales of $231 million.
In another development, a Denver-based family has acquired a sizable portion of Lamson & Sessions stock.
According to SEC, Farhad Fred Ebrahimi and his family have collectively accumulated 699,200 shares — or 5.2 percent — of the company's outstanding shares. That's enough to trigger the SEC requirements that the family file a Schedule 13D public document stating it owns more than 5 percent of a given class of voting stock.
``The Ebrahimi family is investing with the intention of possibly participating on the board of directors or within the management structure,'' the Ebrahimis' SC 13D filing states. ``They may wish to file additional securities at a later date.''
The family has had no public connection with the plastics industry.
Fred Ebrahimi is president, chief executive officer and half owner of Quark Inc., which makes a computer program popular in the publishing industry.
Abel said Jan. 23 his company had no knowledge of Ebrahimi or the family's intentions regarding Lamson & Sessions. Six other entities own at least as much stock as Ebrahimi, Abel said.
The company's stock has been trading at near $6 per share, down from a high of about $13 in mid-1996. Until the third-quarter 1997 loss, the company had reported 13 straight quarters of profit.
