Key Plastics LLC has outbid competitor LDM Technologies Inc. to buy the assets of injection molder Soo Plastics Inc. out of Chapter 11 bankruptcy protection.
The U.S. Bankruptcy Court had not finalized the sale by Dec. 20, but was expected to approve the purchase for $8.75 million plus the value of the inventory, estimated at more than $1.3 million. Farmington Hills, Mich.-based Key already has sent executives to Sault Ste. Marie, Mich., to begin working with Soo employees.
LDM had entered the auction process as the designated buyer, with a purchase price of $8.5 million, plus the inventory value, but other firms had the option to outbid the Auburn Hills, Mich.-based auto supplier.
The purchase will give Key an opportunity to expand its under-the-hood product line and strengthen its ties to a key customer while also exemplifying its own re-emergence from Chapter 11 in 2001.
``This company has made that turnaround since the beginning, since we first came here,'' said Key Plastics President Daniel Ajamian, who joined the company after Carlyle Management Group bought it. ``[The Soo purchase] should signify that that is, in fact, the case. We were very comfortable with the price, with the way it's being financed.''
Top executives for Key are slated to spend the next two weeks working closely with Soo Plastics, to introduce themselves to employees and assess their strengths.
Soo Plastics filed for protection from creditors in September, listing about $16 million in assets and up to $18 million in debts. Key took notice of the company and decided to take a closer look, Ajamian said.
In Sault Ste. Marie it found a company with solid products and a good customer base, but in need of a more disciplined business approach, which Ajamian said Key can provide.
Soo molds battery trays, fan shrouds and other products not already part of the mix in Key's Underhood Products Group, allowing it more opportunities for growth.
Soo Plastics' biggest customer, General Motors Corp., also is Key's largest customer.
GM and other companies working closely with Key have seen its redevelopment during the past 20 months, Ajamian said. The new acquisition is a visible signal to the rest of the industry.
``I believe this should signify one more step in what we've been doing,'' he said.