Pliant Corp. bought Decora Inc. on May 21, plucking the maker of Con-Tact decorative coatings from bankruptcy protection.
Decora's former chief executive officer unsuccessfully tried to block the $18 million deal, which he said was unfair to Decora shareholders.
Con-Tact, which sells at major retail and hardware chains, claims a 75 percent share of the adhesive portion of the decorative coatings market, said Decora Chairman and President Ronald Artzer. More than 85 percent of consumers recognize the Con-Tact name, according to spokeswoman Lori Conlin.
But the company faced financial distress after a management buyout from Rubbermaid Inc. in 1998.
At the time, Fort Edward, N.Y.-based Decora had annual sales of about $190 million. But the deal left the company with too much debt, so the firm attempted to restructure its finances.
That culminated in a pre-negotiated Chapter 11 filing in December 2000 and an attempt to convert debt to shareholder equity, Artzer said. The company began the process of negotiating with bondholders and sold off self-adhesive coverings subsidiary Konrad Hornschuch AG of Weissbach, Germany, in February 2001.
But the plan brought in less money than expected as market conditions slowed - Decora's sales have dropped to about $60 million annually, Artzer said. The company decided to find a buyer.
``We suffered a diminution of value, but the company survived and the employees survived,'' Artzer said in a May 23 telephone interview. ``Now we should flourish as a result of this sale.''
Pliant, based in Schaumburg, Ill., has big plans for Decora, now renamed Pliant Solutions Corp. The subsidiary, which employs 225, continues to operate from Ford Edward and has a sales office in North Ridgeville, Ohio. The company also makes coatings for windows separate from the Con-Tact line.
Pliant will use its distribution and marketing savvy to grow the Con-Tact business and integrate it with the company's other products, said spokeswoman Margaret MacBeth. Pliant recorded sales last year of $840 million.
The sale, though, went through some legal gymnastics before it closed.
Former Decora CEO and current board member Nathan Hevrony objected to Pliant's bid. He alleged that Decora did not seek bidders and rejected a competing bid from a private equity firm.
The company's relationship with Pliant was too cushy, Hevrony alleged, and included passing key film supply contracts to Pliant before the deal closed and offering Artzer a position as president of Pliant Solutions.
``There was vigorous opposition to the sale,'' said a lawyer representing Hevrony.
U.S. Bankruptcy Judge Joseph Farnan Jr. in Wilmington, Del., ruled May 18 that the deal could proceed, dismissing Hevrony's charges. That paved the way for the sale.
Artzer called Hevrony's suit a temporary fly in the ointment.
``Clearly, this was the best situation for the company,'' he said. ``It's a good fit of people and long-term strategic objectives. We have the right vehicle to go to market with a strong brand already in place.''