CLOQUET, MINN. - Diamond Brands Inc. has filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
The Cloquet-based parent company of plastics processor Forster Inc. has a heavy debt burden influenced by a 1998 recapitalization and increased raw material costs, spokesman Carl Lundberg said in a May 24 telephone interview.
``We'll have no layoffs, no cutbacks,'' he said. ``As a company, we're thundering right along.''
Forster Inc., based in East Wilton, Maine, injection molds plastic cutlery. Lundberg said the company holds more than half of the grocery store market. According to information from the company's Web site, Forster injection molds 2.1 billion pieces of cutlery per year.
Lundberg would not disclose sales, but one source revealed that Forster had $14.4 million in sales for fiscal 1999. He did say, however, that ``our plastics business has been growing.''
Naresh Nakra, Diamond's chief executive officer, explained that the company has an $8.2 million financing package pending approval by the bankruptcy court in Wilmington, Del. The package is being provided by a group of current Diamond lenders, led by Wells Fargo Bank.
``Looking ahead, the financing package we have arranged will provide the liquidity necessary to fund our ongoing operations and enable the company to purchase and pay for goods and services,'' Nakra said in a news release.
Lundberg said the company can't anticipate when it will emerge from bankruptcy or when it will file a reorganization plan.
``Chapter 11 allows us to continue to move forward with our planned improvements in operations and merchandising and allows us to achieve our restructuring objectives in an orderly, timely manner,'' Nakra said.