The struggle to control automotive supplier Ventra Group Inc. is speeding up, with one suitor offering to buy a controlling stake in the Oakville, Ontario-based company.
Proprietary Industries Inc. of Calgary, Alberta, announced its offer to buy 17.4 million shares April 7 at C$1.65 (US$1.05) per share. That C$28.7 million (US$18.3 million) offer would give it 50.1 percent of the company stock.
Ventra shares were selling at C$1.18 (US$0.75) April 6. The company makes a variety of automotive components, including injection molded bumper fascias.
Proprietary is a holding company that specializes in buying struggling businesses from a variety of fields and using its turnaround expertise to improve the operation, said Vice President Ryan King.
It wants to do the same thing for Ventra, King said.
"They can survive this turnaround process," King said. "It's not a small company. The only element that's missing here is someone whose dollar is on the line and whose fortunes are tied part-and-parcel to the company."
Proprietary first started buying up shares of Ventra in December when the company's stock price fell on news that it could not complete its acquisition of some European operations, instead turning the businesses back over to their previous owner.
Ventra stock was selling at about C$0.40 (US$0.25) when Proprietary first launched its purchases, King said.
Ventra posted C$860.7 million (US$547.5 million) in sales during its last fiscal year. But it ended the year in the red, losing C$68 million (US$43.2 million).
Proprietary is offering 0.44 of one of its shares for a Ventra share.
Proprietary is not the only suitor, though. Metal bumper specialist Flex-N-Gate Corp. of Urbana, Ill., through its Canadian subsidiary 3051932 Nova Scotia Co., has purchased 17.7 percent of Ventra's shares and expressed interest in potentially buying all or part of the company.
Ventra officials said it was premature to comment on any proposals but said they would give "careful consideration to any bona fide offer or acquisition proposal" made for the company.
"Until further details are provided it is not possible for the [board of directors] to determine whether Proprietary's proposed offer would constitute a `permitted bid' under the corporation's shareholder rights plan," Chairman Spencer Lanthier said in a written statement.
Discussions are continuing with Ventra executives on any potential purchase, said Timothy F. Graham, president of 3051932 Nova Scotia, of Windsor, Ontario.
"We're still moving ahead, talking to management and seeing if there's any synergy for us," he said.
Proprietary's move does not change Flex-N-Gate's proposal, Graham said.
Despite its fiscal problems, Ventra still has many possibilities, King said. Proprietary wants to help it improve by seeking out private equity investments to help it grow, rather than increasing debt.
"We think it's a good company," he said. "We do see long-term potential."
Proprietary does not have any experience in the auto supply business, King admitted, but it has a history of providing financial support and seeking out private equity while allowing industry experts the freedom to run the business.
"We're not a day-to-day operator of companies," he said. "We mainly deploy the capital we raise and then stay out of the way of a competent management team."
Beyond the potential purchase plans, though, Ventra is dealing with another problem. Camrose Technologies LLC of Ada, Okla., a joint venture in which Ventra holds a 49 percent stake, filed for protection under Chapter 11 on March 21 in Oklahoma City.
The owners — Ventra and majority holder LaGrange LLC — plan to restructure Camrose while it is in Chapter 11 and shed an unprofitable door handle molding operation, said Camrose spokesman Shaun Wilson.
Camrose invested more than $3 million to bring in the handle business after Ventra and then majority owner William Pickard bought the company — called J.P. Emco Inc. at that time — out of Chapter 11 in 1997.
Pickard, whose other businesses include Regal Plastics Co. of Roseville, Mich., sold his majority stake to LaGrange within the past year.
The handle business never took off as well as the company's bumper fascia molding, Wilson said. When the company emerges from Chapter 11, Camrose plans to continue making bumper fascias but to drop handle molding, he said.
Terminating that business will cut about 150 jobs from the more than 600 working at Camrose a year ago.