U.S. Plastic Lumber Corp. may need to seek bankruptcy protection.
In an April 14 filing with the Securities and Exchange Commission, the Boca Raton, Fla., extruder said it is not in compliance with the terms of a loan from General Electric Capital Corp. and other lenders, pushing USPL to explore options including Chapter 11 protection.
USPL owes $8.9 million in principal on the loan, and has not made principal or interest payments on the debt since December, according to the filing.
``The company does not anticipate that it will have sufficient funds to finance its operations in the near future or thereafter,'' it said in the filing.
Mark Alsentzer, USPL's chief executive officer, said that the company is doing what it can to address its problems, and that it continues to operate.
``What caused problems with the debt structure doesn't really matter,'' he said April 16 by phone. ``I don't think it's something that can be discussed. The company continues to operate. We believe we have a good business. There are obviously problems with debt. But the company's products are good.''
In the filing, officials said they are currently discussing a waiver or forbearance with the lender.
USPL also announced in the filing that it was unable to file its 2003 annual report because its audit had not been completed. USPL expects to report a loss of about $19.8 million for fiscal year 2003.
USPL has cited financial troubles in filings for some time now. In a September filing, officials said they were exploring the sale of nonstrategic assets. Within the last year, the company sold its cornerboard packaging division and slipsheet business to Illinois Tool Works Inc.
Even in 2002, officials said bankruptcy was an option if they did not manage to close a sale of USPL's Clean Earth Inc. soil cleaning business, or restructure $39.9 million in senior debt. USPL sold Clean Earth Inc. to CEI Holding Corp. in 2002 for $45 million.
Industry sources said USPL tried to grow too fast. By the time it acquired cornerboard packaging maker Brigadoon Industries Inc. in 1999, it had made 16 acquisitions in less than three years. That activity included Eaglebrook Plastics and Eaglebrook Products Inc., and Trimax of Long Island Inc. and parent firm Polymerix Inc. In its 1999 annual report, company officials boasted, ``USPL is now firmly entrenched as the nation's largest producer of recycled plastic lumber and related products.''
Sources say its missteps included acquisitions of small or unprofitable companies that required a lot of energy to fix. Additionally, the acquisitions themselves lacked harmonization.
``The expectation just couldn't keep up with the vision,'' said one source, who spoke on condition of anonymity. ``The attention to detail got lost.''