United Shields Corp., a publicly held holding company that has pursued a strategy of buying plastics processors and toolmakers, now is in financial trouble and has hired advisers to explore the sale of its plastics interests, according to its latest financial statement.
Cleveland, Tenn.-based United Shields owns injection molding plants in Chester, Va.; Oxford, N.C.; and Pittsfield, Mass., as a result of its 1997 acquisition of R.P. Industries Inc. and its 1999 purchase of Pittsfield Mold & Tool Inc.
The company also owns a firm outside the plastics industry: HeaterMeals Co., a Cincinnati-based maker of electrochemical heaters and self-heating, shelf-stable meals.
The value of United Shields' publicly traded stock dropped to about a penny per share on July 31. The company is in default on payments of principal and interest of several loans, according to its most recent quarterly report, which the company filed Aug. 13 with the Securities and Exchange Commission. The report said the company has sustained significant losses since 1997 and was in violation of certain debt coverage convenant requirements.
Two of United Shields' subsidiaries' lenders, which are owed a total of $6.4 million, have accelerated their loan schedules and demanded payments. The lenders have signed forbearance agreements, which expire in September and October, to give the company time to find a buyer.
According to the report, ``These factors raise substantial doubt about the company's ability to continue as a going concern.''
United Shields reported a loss of $3.79 million for the six months ended June 29 on sales of $13.1 million. That compares to a loss of $737,506 for the same period last year on sales of $11.67 million.
According to the report, R.P. Industries has seen its sales drop 21.9 percent this year because of a decline in volume from existing customers and more competitive pricing for new customers. Sales at Pittsfield Mold & Tool are up 12 percent this year, but in June the company lost a customer that accounted for 57 percent of its sales so far this year. The customer, Safety First Inc., formerly of Chestnut Hill, Mass., moved all of its business to an unidentified molder closer to its new Midwest headquarters. PMT did pick up another, smaller customer.
United Shields filed suit on March 30 in the Hamilton County Common Pleas Court in Cincinnati against the former owners of Pittsfield Mold & Tool, according to the quarterly report. The case moved to U.S. District Court in Cincinnati on May 3, according to court documents.
Since then, United Shields has discontinued debt payments to the former owners, and the former owners have filed a countersuit. The former owners and United Shield officials were not available for comment.