AT Plastics Inc. has sold its flexible packaging business to Smurfit-Stone Container Corp., as the Canadian company continues to shed much of its noncore operations.
The move was one of several sales decisions by Brampton, Ontario-based AT Plastics' as part of its previously announced restructuring. On Dec. 24, AT Plastics also sold the intellectual property and assets of its cross-linked polyethylene compounds line for C$5.66 million (US$3.575 million).
An unidentified North American maker of pipe and tubing materials bought those assets, consisting of AT Plastics' Flexet performance compounds used for plumbing and radiant heating.
The dual sales, coming three days apart, will help the company shave its large debt load and focus attention on its remaining specialty polymers segment, said George Czubak, AT Plastics vice president and chief financial officer.
``The focus of the company had gradually shifted away from the packaging business,'' Czubak said of the sale to Smurfit-Stone. ``The packaging business was better taken care of by someone who sees that as a main focus.''
Chicago-based Smurfit-Stone, one of the world's largest producers of bag packaging products, fits that description. The company bought AT Plastics' 163,000-square-foot packaging plant in Brampton, paying C$38.5 million (US$24.3 million) for the facility. AT Plastics will keep its headquarters and a technical center in Brampton.
The sale, completed Dec. 21, hands Smurfit-Stone a new market niche in polyethylene shipping sacks and high-performance film liners, said spokeswoman Cary Johannes. The facility and its 217 employees will become part of Smurfit-Stone's flexible bag group in Schaumburg, Ill.
The PE sacks and liners made in Brampton will be used with Smurfit-Stone's folding-carton lines and for other consumer products, she said. The company had not made those types of flexible packaging.
``This is a different type of product for us that complements our offerings,'' Johannes said. ``It's more of an add-on acquisition for our existing products, such as cereal and pet-food boxes.''
The Brampton plant specializes in heavy-duty shipping sacks for building products, chemical and horticultural uses and in coextruded film liners for cereal makers and some industrial products. The plant produces about 32 million pounds of flexible packaging annually.
With the acquisition, Smurfit-Stone has five flexible packaging plants in North America, Johannes said. The company, with more than 300 plants worldwide, ranked 81st on Plastics News' list of film and sheet manufacturers, with an estimated $45 million in related North American sales in 2000.
The Brampton plant recorded about C$65 million (US$41 million) in sales during 2001, Czubak said.
AT Plastics will continue to produce specialty materials from a plant in Edmonton, Alberta. The company is a large manufacturer of laminated plastic made from ethylene vinyl acetate and other specialty polymers.
A spike in natural-gas prices and the economic slowdown forced the company to rethink its focus in early 2001, Czubak said. In May, the company sold its power-cable insulation business, part of its performance compounds segment, to Houston-based Equistar Chemicals LP.
At the time, its Flexet compounds line was shifted to AT Plastics' specialty polymers group in Edmonton, as the company looked for a buyer for its remaining compound products.
The proceeds from the sales of those businesses will be used to retire principal debt and restructure other loan obligations on more favorable terms. The company recorded sales of C$189 million (US$119.8 million) for the first nine months of 2001, but lost C$16.9 million (US$10.7 million) during that period.
The company had spent more than C$200 million (US$125 million) during the past two years to expand the Edmonton facility and make other improvements, Czubak said. While that added to the debt load, it also helped the company make the decision to focus solely on specialty polymers, Czubak said.