While EuroPackaging plc is hot on the expansion trail, some U.S.-based rivals could thwart its attempt to buy film extruder Orange Plastics LLC.
Orange filed for Chapter 11 protection from creditors Oct. 6 in a move to resolve debt before selling the company. The court is set to sell the assets Oct. 28.
EuroPackaging of Birmingham, England, has bid $9.63 million for Orange's lone plant in Compton, Calif., although several issues still need to be resolved, said EuroPackaging joint Managing Director Afzal Majid, reached Oct. 16 by telephone in Malaysia.
While EuroPackaging would keep the plant open, others, including Sigma Plastics Group of Lyndhurst, N.J., would like to buy Orange's assets and perhaps close the facility. Alfred Teo, Sigma chairman and chief executive officer, said he is interested in buying Orange to defend Sigma's position in the West Coast market. Sigma owns a bag-making plant in nearby Rancho Dominguez, Calif. Teo attempted to buy Orange for $15 million six months ago, but was rebuffed by management, he said.
``Some customers have left and it is not worth $15 million,'' he said. ``We could have turned it around before. We are still interested in putting in a bid, but we don't know what to do with it yet.''
Several parties have expressed interest in Orange, though none are prequalified for the auction, said Ronald Leibow, a Los Angeles lawyer representing Orange.
EuroPackaging recently purchased a Salem, N.H., bag facility from struggling Plassein International Corp. and wants to expand in North America, Majid said. The firm also is considering opening a plant in the Midwest, he said. A new plant probably will have 11-26 extrusion lines, Majid said.
Orange recorded close to $50 million in sales last year. The U.S. Bankruptcy Court in Los Angeles approved bidding procedures Oct. 16 and gave unsecured creditors several months to challenge the bank lien on Orange, Leibow said. Orange owes more than $12 million to Lasalle Business Credit, a unit of Chicago-based Lasalle Bank Corp. ExxonMobil Chemical Co. is the largest unsecured creditor, with a disputed claim of $4.28 million. The resin company could delay the sale, Majid said.