The bank that is financing Hobson Mould Works Inc. plans to liquidate the company's assets, now that several more potential buyers have dropped out of the bidding for the toolmaker.
Milwaukee-based Firstar Bank wants to sell the company's equipment and building in Shell Rock, Iowa, after a three-month-long search for a Hobson buyer has come up empty, said Ken Mann, principal of Easton, Md.-based Equity Partners Inc.
The turnaround firm worked with several interested buyers — including two companies that made inquiries the week of April 16 — but could not reach a deal with any of them, Mann said.
Another potential purchaser, rotational toolmaker Lakeland Mold Co. of Brainerd, Minn., withdrew April 6 after signing a letter of intent to acquire Hobson. Lakeland cited a slumping economy as a primary reason for its change of heart.
"We looked for another white knight," Mann said. "But the timing was not right for others. Some of them believed they'd have to make a lot of internal changes in management, and they were already spread too thin to dedicate to a turnaround at Hobson."
Hobson Mould, a prominent maker of blow molds and blow molded parts, sent a financial prospectus to two more companies April 19, said Hobson President Gerald Hobson. One of those companies is a competing blow mold producer, he said.
But those companies had only 24 hours to agree to a purchase and make a down payment to satisfy Firstar, he said.
The prospect of a purchase now would take nearly a miracle, said several sources close to the negotiations. The price tag for Hobson was said to be close to $3 million, those sources said.
"It's not over until the fat lady sings," Hobson said. "But the humming is getting loud."
Meanwhile, Firstar has decided to liquidate Hobson, barring an 11th-hour savior, Mann said. The bank has not set a timetable for the liquidation. Possibilities would include accepting an all-cash offer to purchase assets or holding a bank-sponsored auction.
A group of Shell Rock-area businessmen and businesswomen, including former Hobson employees, also is considering buying the molding operations and forming a new company, said Carol Jahnke, economic development director of the Waverly Area Development Group in Waverly, Iowa. The economic group has helped put together state and local incentives for potential Hobson buyers.
While faint hope might remain, Mann said his work shopping the company is virtually finished. Hobson has not made a mold since late last year and has laid off most of its work force. That has contributed to a lack of interest, he said.
"A lot of ongoing customers were already gone, and that was a huge factor," Mann said. "We have no place else to look for a buyer."