Envirodyne Industries Inc. plans to sell its thermoforming operation to Whirley Industries Inc. to help pay down debt.
The Oak Brook, Ill., firm announced May 15 a letter of intent to sell its Sandusky Plastics Inc. subsidiary to Whirley for undisclosed terms. The operation in Sandusky, Ohio, thermoforms plastic promotional and vending cups and containers.
Stephen Schuster, Envirodyne vice president and general counsel, estimated Sandusky's annual sales at $30 million, making it Envirodyne's smallest stand-alone operation.
Whirley injection and blow molds insulated mugs, sports bottles and other promotional items for fast-food retailers, convenience stores and bottlers, Whirley President Robert Sokolski said in a telephone interview from his Warren, Pa., office. He predicts Whirley's sales will reach about $75 million this year with the Sandusky acquisition, scheduled to be completed in early June. The combined operations will employ about 700.
Sokolski said Sandusky will expand Whirley's product line and his firm has no plan to change its management or product mix, including sales to delicatessen and dairy customers.
Whirley plans to build a 200,000-square-foot addition to the Sandusky operation this year. The new building mainly will be used for warehousing, but Whirley eventually will add more printing and thermoforming equipment there. Thermoforming is an attractive process because its low-cost tooling and short setup times allow flexible manufacturing, Sokolski said.
Whirley has 15 sales offices across the United States and an extensive art department, and does its own printing and decorating. Sokolski said the firm, majority-owned by his family, traces its origins to 1960. It has had an alliance with Sandusky.
Schuster said Sandusky has been improving its sales and profit since 1993, when it lost a major account at Scott Paper. It then entered deli, dairy and promotional markets. Envirodyne shut down its injection molding container operation in Sandusky last year and moved equipment to its Clear Shield subsidiary plants, which mold and extrude disposable plastic cutlery, custom dining kits and drinking straws. Its Viskase subsidiary makes heat-shrinkable plastic bags, specialty packaging films and cellulosic casings for processed meat.
Envirodyne is highly leveraged with a debt-to-earnings ratio (before interest and taxes) of about 6.5-to-7. The company emerged from protection under Chapter 11 of the U.S. Bankruptcy Code in 1993 Schuster said its sales last year were about $611 million and it had operating profit of about $30 million.