AEP Industries Inc. continues to jettison European thermoforming units that it acquired in 1996 from Borden Inc.
The South Hackensack, N.J., company announced June 29 it has completed its sale of AEP Rigid Packaging Ltd. of Bridgwater, England, to M.Y. Holdings plc, a Bagshot, England, packaging company.
AEP Rigid Packaging makes thermoformed food containers, food trays and disposable food-service products at plants in Edinburgh, Scotland, and Bridgwater. It reported 1997 sales of $41 million, but the plants were unprofitable last year, losing about £1 million ($1.66 million), according to M.Y. Holdings.
Announcing the disposal, AEP Industries stated that total proceeds from the transaction will amount to about $10.5 million. That includes a token payment of £1 ($1.66) for the operations, plus assumption of bank borrowings equivalent to $1.82 million, refinancing and provision for working capital, according to M.Y. Holdings Chief Executive Officer John Monks.
AEP Industries Inc., which acquired Borden Global Packaging in 1996, earlier this month sold two rigid sheet thermoforming operations to RPC Group plc of Raunds, England. Those operations were in Venlo and Beuningen, the Netherlands.
``This is the second step toward achieving our goal of focusing exclusively on our flexible packaging businesses,'' said J. Brendan Barba, AEP Industries' chairman and CEO.
AEP still owns one of the five rigid packaging units that it acquired from Borden. AEP is negotiating the sale of Macaple SA, a French tray and container thermoformer, said Paul Feeney, AEP's executive vice president and chief financial officer.
Monks said the AEP Rigid Packaging deal makes M.Y. the largest supplier of plastic food trays and containers in Britain. AEP Rigid will be renamed M.Y. Plastics, and will form a new group with M.Y.'s existing plastics businesses, Monks said.
M.Y., whose largest shareholder is South African industrial group Malbak Ltd., produces a range of plastic, paper and board packaging aimed chiefly at the food, industrial and health-care sectors.
With 18 sites across England employing 1,600, the group now has annual sales of about $250 million, $83 million of which represents its plastics extrusion and thermoforming business.
Before the purchase, M.Y. ran two plastics packaging businesses in England, M.Y. Sharp Interpack Ltd. of Aylesham and Clarke Packaging Ltd. of Southampton. Sharp Interpack makes PP trays and baskets for soft fruit, while Clarke Packaging, once a money-losing, family-owned thermoformer, has six Keifel lines making trays and other food packaging.
``The acquisition ... will provide additional opportunities for cross-selling with our paperboard businesses serving the [food] sector. [AEP Rigid] is an underperforming business in need of revitalization,'' he said.
M.Y. has a record of acquiring money-losing companies and turning them around, Monks said.
The AEP Rigid plants employ 440 and have 10 extrusion lines, including Welex and Amut units, that make PVC, polypropylene and crystalline PET sheet.
They also run 50 thermoforming lines producing a variety of food trays and containers, including crystallized PET dual-ovenable trays, Monks said.
Monks said the new plants will add plastics packaging capacity for meat, modified-atmosphere, dual-ovenable, confectionery, biscuits and bakery products.
Monks said M.Y. Holdings needs to review its latest acquisition before deciding on changes and new investment. He would not guarantee there will not have to be a reduction in the work force, but he stressed that M.Y. Holdings is not considering layoffs now.
M.Y. Holdings already has begun to invest in the Edinburgh plant, installing two new thermoforming lines at a cost of $500,000 to handle a new contract for chocolate-box inserts, Monks said.
AEP Industries makes flexible plastic packaging at plants in 12 countries.