Newcor Inc. has emerged from bankruptcy, but lost its independence in the process.
Majority owner EXX Inc. took over 98.9 percent of the automotive supplier Jan. 31 as part of a reorganization plan approved by the U.S. Bankruptcy Court in Wilmington, Del. Las Vegas-based EXX paid $5.9 million for the shares that made Newcor its subsidiary.
EXX already had a controlling stake in Newcor when it entered Chapter 11 protection in February 2002.
The multi-industry holding company first had launched a bid to buy Newcor in 2000, offering $4 per share when the firm's stock was selling at less than $3 per share.
EXX and its leader, David A. Segal, dropped the takeover attempt within months, but by then held a controlling interest in Newcor and had taken over the board of directors.
The reorganization plan allows for $28 million worth of new notes and $20 million in cash for Newcor's unsecured creditors.
Newcor will retain its headquarters in Royal Oak, Mich., and continue production of a variety of components, including molded plastic and rubber functional systems for the auto industry.
Its rubber and plastics division posted $25.9 million in sales for the first nine months of 2002, according to Newcor's quarterly filing with the Securities and Exchange Commission. It had operating income of $677,000 for the third quarter of 2002 and nearly $2.2 million for the first nine months of the year.
The company as a whole had sales of $44.5 million for the quarter, up from $41.6 million a year earlier. Newcor said it posted a net loss for the quarter of $5.8 million and operating income of $3.6 million. It has had a net loss of $45 million for the first three quarters of the year.
The firm said it has improved its margins by stripping waste and increasing efficiency, but also noted in its quarterly report that in January it would lose a contract worth about 20 percent of its total sales.
Despite that, Newcor executives said they still believe they can survive outside bankruptcy protection.
``The cash available from its operations will provide sufficient liquidity to allow it to continue as a going concern for the foreseeable future,'' Newcor said in its SEC filing.