An investor group led by William Flickinger, HPM Corp.'s president and chief operating officer, has signed a letter of intent to buy the company from Los Angeles businessman Parviz Nazarian.
On March 28, HPM officials told employees of the headquarters factory in Mount Gilead, Ohio, about the group's bid to buy the company. Flickinger, who has been traveling frequently to Los Angeles in recent weeks, confirmed the group signed a letter of intent with Nazarian, the majority owner of HPM.
"It's only the first step, but it's a major step because without this step, you can't go further," Flickinger said.
HPM makes injection molding machines, sheet extrusion lines and die-casting machines.
"The letter of intent includes all of the major products of HPM," Flickinger said.
The future of HPM is the talk of tiny Mount Gilead in north-central Ohio, where HPM was founded in 1877 to make apple presses. Recent layoffs at the company's hulking old plant on the outskirts of town have fueled rumors in the village of 3,300 people.
"That's the topic of discussion at the coffee shops," said Kevin Carney, director of the Morrow County Development Office in downtown Mount Gilead. "Everybody here's concerned about the success of HPM. They've been here 125-plus years. They've been a big part of this community for a long time."
With about 300 employees, HPM is Morrow County's second-largest employer, behind an automotive parts supplier, Carney said.
In February, HPM confirmed it had laid off 76 people from November through January. But sources in Mount Gilead said that more recently, HPM has had layoffs nearly every week. Flickinger, who has blamed layoffs on the economic downturn that has hit major automotive customers, would not give specific job-loss numbers.
HPM Stadco Inc., a holding company, bought HPM in 1996 from about 270 general shareholders. At the time, Flickinger, who started working at HPM in 1968, retained his minority stake.
Today, Flickinger and Nazarian are the only two shareholders of HPM Stadco, according to Flickinger.
The group trying to buy HPM includes Flickinger, three other senior managers who still work in Mount Gilead, a former executive who now is retired, a supplier to HPM and a firm that sells HPM machines. Flickinger would not identify any of the members.
With about $100 million in annual sales, HPM is the second-largest U.S.-owned maker of plastics machinery. But the company is a distant second behind Milacron Inc., which racked up $874 million in 2000 sales.
Last year, HPM's sister factory in Germany, HPM Hemscheidt GmbH, filed for bankruptcy, and since has shut down. That fed speculation about the future of the Ohio plant.
Carney said state and local economic development leaders are prepared to help the firm.
"We've been working with HPM for over a year and a half now to see what we could do to help stabilize the company, or assist the company," he said.
Government officials already were informed of Flickinger's interest in buying the company from Stadco: "We have been working with Bill to see what we could do to help," he said.
Carney said it's too early to say what form that assistance may take.
"I think a lot of it is going to be a function of how the deal is going to be structured. That's really going to determine whether we have a role or we don't have a role and what that role might be."
HPM Stadco has the same owners as Stadco Inc., an aerospace and defense supplier in Los Angeles. That ownership had included Nazarian and his son-in-law, Neil Kadisha, who serves on the board of directors of Qualcomm Inc. and is a major shareholder in that digital wireless communications company.
Kadisha was running HPM, but he withdrew from day-to-day activities to let Nazarian handle the Ohio machinery maker.
Neither Nazarian nor Kadisha could be reached for comment.
If the management-led group succeeds in buying HPM, Flickinger said employees, suppliers and customers strongly will back the new owners.
"The reason they support us is we've, for many years, been heavily involved with the company and obviously will have the best interest of the company at heart when we move forward," Flickinger said.