Packaging thermoformer and injection molder Packaging Resources Inc. is contemplating a sale of the company. The Lake Forest, Ill., firm said it has retained investment banker Deutsche Bank Securities Inc. to help it explore the potential sale. It said April 20 that it expects to default on a note due May 1 because of liquidity problems.
PRI lost $7.4 million in its fourth quarter ended Feb. 29, and sales slipped 7 percent to $29.1 million. The bulk of the loss reflects a $6.7 million one-time charge from closure of its Kansas City, Mo., plant and discontinued business with an undisclosed customer.
Other factors that hurt results included lower sales to Yoplait USA and Dannon Co. Inc., inefficiencies in launches of certain new products, and expenses to move Kansas City's injection molding to other locations.
PRI injection molds packaging for foods and beverages and molds containers and closures at New Vienna, Ohio, and Mount Carmel, Pa. It also runs a thermoformed packaging operation in Coleman, Mich.
The firm's sales for the year ended Feb. 29 were $146.3 million, up from $136.6 million in the previous year. The 1999 net loss was $4.9 million compared with a profit of $2.5 million in the previous year.
PRI highlighted some bright spots among the negatives. It had higher sales of promotional items, such as its 32-ounce polystyrene Cruiser Cup and the new Twist N' Go beverage container sold to PepsiCo Inc., and higher sales of food-storage containers to S.C. Johnson & Son Inc.
PRI said it continues to be sole supplier of Yoplait's 4-ounce cups but Yoplait did not renew a contract to buy 6-ounce cups from PRI. The 6-ounce account represented about 13 percent of PRI's sales. PRI's contract for 8-ounce cups to Dannon, about 9 percent of PRI's sales, expired Dec. 31.
The company spent heavily to expand capacity for packaging and promotional items, but new business has been slow to develop, according to PRI's news release.
Its anticipated note default will trigger provisions with its senior lender, but PRI will try to get waivers or amendments with its note holders and lenders.
PRI claims to be the largest U.S. producer of shelf-stable, multi-layer containers for nutritional supplements, frosting containers and disposable food storage containers, and the biggest producer of promotional beverage cups. Its injection molding sales were about $88 million in its latest fiscal year and thermoforming sales were about $58 million.
Packaging Resources dates back to the early 1980s, when Chicago lawyer Howard Hoeper started a company called Peck-Lynn Group Ltd. to do midsized leveraged buyouts.
Hoeper made his first plastics acquisition in 1984, buying a captive packaging business from Kraft Inc. He followed with more large-company packaging spinoffs, including businesses from Aluminum Corp. of America, Fina Oil, Owens-Illinois Inc. and, in March 1993, the Louisiana Plastics unit purchased from Bemis Co. Inc.
In 1994 Packaging Resources added Miner Container Inc. of Lenexa, Kan. Miner made injection molded, thin-wall containers, including promotional beverage cups and yogurt containers.