A tough economy and too much debt have brought a once high-flying injection molder - Moll Industries Inc. - into bankruptcy court.
The Davie, Fla.-based firm became a global molding house in the 1990s by borrowing money to fund rapid growth. But that debt caught up with Moll on Sept. 6, when the company's chief lender brought a lawsuit seeking to force Moll into involuntary Chapter 11 bankruptcy.
Highland Capital Management LP told the U.S. Bankruptcy Court in San Antonio that Moll is past due on loans totaling $48.4 million. Highland declined further comment. Moll said it is negotiating with Dallas-based Highland and hopes to reach an agreement that will let Moll file a revised voluntary Chapter 11 petition.
If the court approves, Moll Chief Financial Officer William Teeple said Highland probably will become Moll's majority shareholder. Moll's current majority owner is George Votis, who guided the company through its debt-financed expansions.
Teeple said Moll hopes to come out of bankruptcy and continue operating normally with Highland's support. But Moll noted in a Sept. 10 statement that it does not have any assurance that it will find financing.
Part of the agreement Moll is negotiating with Highland also calls for Moll to hire a chief restructuring officer, Teeple said. The restructuring officer would report to Votis and Moll President Charles Schiele, according to Teeple.
Other management changes are not expected, Teeple said.
Highland is Moll's largest creditor, but it is not clear how other yet-to-be-identified creditors or the bankruptcy judge would react to an agreement between Highland and Moll.
Highland's bankruptcy filing does not offer specifics about any potential restructuring. Moll said in a statement that the involuntary bankruptcy means that Highland no longer has to fund Moll's operations, but that lenders have agreed to fund Moll while talks with Highland continue.
Led by Votis, Moll grew rapidly through acquisitions in the 1990s, including Anchor Advanced Products Inc. in 1998, which created a worldwide firm with more than $415 million in annual sales.
But, as Moll put it tersely in Securities and Exchange Commission filings last year, ``The operating results of the company have been less than expected since the acquisitions.''
In the past two years Moll has closed several factories in the United States, France and the United Kingdom, and sold units.
Moll was forced to write off $3.5 million last year because of poor performance in its French division. It saw profit tumble in its brush, medical and communications businesses, as the company said business conditions worsened. Moll also became entangled in litigation last year with the buyer of its one-time German plants after those operations went bankrupt.
Because Moll bought back some debt in late 2001 it stopped having to file financial reports with the SEC. Teeple declined to offer specifics on financials since then, such as how much debt Moll still has, but said the company is starting to see benefits from its restructuring last year.
``If you go back to the '90s, the company was making a lot of acquisitions and using leverage to do that,'' Teeple said. ``In the late '90s, some acquisitions didn't produce enough earnings.''
When the economy soured, ``companies that did highly leverage themselves in the '90s found it difficult to cover that,'' he said.
Moll tied for 30th in Plastics News' 2002 North American injection molders ranking, with $200 million in sales, down from $261 million the previous year.