Plastics recycler Martin Color-Fi Inc. has signed an agreement that could lead it out of Chapter 11 reorganization. The Edgefield, S.C., firm inked a merger agreement with Dimeling, Schreiber & Park, a Philadelphia investment partnership. Martin Color-Fi said in a March 1 news release that if the deal is consummated, it will lead to DS&P owning all of the PET recycler.
DS&P specializes in investments through Chapter 11 reorganizations. Since it was formed in 1982 it has made more than $1 billion in acquisitions. Among its diverse portfolio of transportation and industrial holdings, it owns polyethylene film and bag producer Mohawk Plastics Inc. of Riviera Beach, Fla.
Martin Color-Fi President and Chief Operating Officer Stephen Zagorski said he could not predict how long it might take to finalize the deal with DS&P. His firm will soon file its reorganization plan in U.S. Bankruptcy Court in Columbia, S.C.
The agreement is subject to competing bids, Martin Color-Fi obtaining acceptable debt financing and confirmation of a plan of reorganization. Zagorski said he is confident creditors will support the plan.
James Martin, founder and current majority shareholder of Martin Color-Fi, and other current shareholders would not own any of the reorganized company or receive any compensation for their shares.
"The Bankruptcy Code places the interests of creditors ahead of the interests of shareholders," Martin Color-Fi noted in a news release.
Zagorski said in a telephone interview that the reorganization plan includes continued operation of plants in Trenton, Sumter and Laurens, S.C., and Dalton, Ga. It earlier closed a recycling facility in Edgefield and a pigment plant in Pensacola, Fla.
Martin Color-Fi makes polyester fibers from post-consumer and post-industrial PET. It filed for Chapter 11 protection in November 1998 after struggling to pay a $60 million loan to Nations Bank of Charlotte, N.C.
The company got an extension for its reorganization last summer. Its sales in 1998 were $60 million.
Zagorski said the recent run-up in oil prices could improve his firm's cash flow and lead to more applications for recycled PET as virgin resin prices climb.