An investment team led by William Flickinger, HPM Corp. president and chief operating officer, wants to partner with a New York equity firm or another undisclosed investor, while production remains shuttered at its Ohio plant.
The financially strapped machinery maker has been contacted by several possible buyers, including another unnamed equipment company and a private equity fund, both of whom have toured the facility, Flickinger said in a July 12 telephone interview.
But a move by a cobbled-together purchasing group, which was announced March 28 to HPM employees and is headed by Flickinger, has shifted to a new strategy. That investment team included Flickinger, some other senior executives and several outside suppliers working with the Mount Gilead, Ohio-based company. Flickinger owns about 10 percent of HPM.
Another effort by workers to purchase HPM under an employee stock-ownership plan appears in trouble, despite the push by HPM's union, the International Association of Machinists and Aerospace Workers, to strike an agreement. The group has commissioned a feasibility study on buying HPM from the Ohio Employee Ownership Center at Kent State University in Kent, Ohio.
``I don't really think an ESOP is a viable way for the company to go at this point,'' he said. ``Right now, the group doesn't have means to complete a sale of the company.''
Interest by several outside firms could be a last-ditch gasp to save the venerable supplier, founded in 1877 and employing more than 500 people before its recent troubles. Whispers abounded last week that HPM's owner, an investment team led by Los Angeles businessman Parviz Nazarian, had signed off on a plan to liquidate HPM if no buyer was found.
Flickinger said the more immediate goal was to sell the company and not resort to liquidation. He expressed interest in partnering with a purchasing group, with one or two other senior HPM executives, as investors. Several other bidders have not yet asked for his involvement, he said.
Officials from Fleet Capital Corp., HPM's largest creditor, have set up offices at HPM's headquarters to help with the ownership transition, Flickinger said.
HPM had told employees that it would close production July 2 for one week due to a general business slowdown and its economic condition. But Flickinger said Los Angeles-based Fleet Capital has forced HPM to run no more than limited production for a longer period while a solution is sought for HPM's debt problems.
HPM currently employs 16 in Mount Gilead. Most of those remaining workers are salaried employees or part of a skeleton maintenance crew. All but about 10 percent of the work force was dismissed in several rounds of layoffs before the July shutdown.
The company would like to hike those employee numbers in order to offer parts and provide service to machines in the field, Flickinger said.
``We know that it is very important to come to a conclusion on [the sale] quickly,'' Flickinger said. ``The bank is willing to fund us on a very limited basis in the meantime. But they're not willing to run what is considered normal operations. We've had a lot of interest, but we can't control when a purchase occurs.''
Planning for an ESOP will continue, even though Flickinger is skeptical of the possibility. The feasibility study should be completed soon, and union officials will present it to Flickinger, said Earl Gilkison, business agent for Local 1319 of the IAM.
About 50 workers were idled when production ended July 2.
``It's a bad situation that we'd like to help turn around,'' said Gilkison, based in Galion, Ohio. ``We didn't expect the closing to happen this soon, but we still have to hope for something positive.''
Even if HPM emerges from its current plight, it could be in a reduced state, said Kevin Carney, development director for Morrow County, where HPM is located. The company could sell one or several of its manufacturing areas - including injection molding equipment, extrusion machines, die-casting operations or remanufacturing functions - or shrink employment, he said.
Before the present uncertainty, HPM was the second-largest U.S.-owned producer of plastics machinery, with about $100 million in annual sales.
``The great unknown is how much time the leader is going to allow for a solution,'' Carney said. ``It's creating a lot of uneasiness. But we try to stay cautiously optimistic.''