The Spanish affiliate of packaging leader AEP Industries Inc. is unable to meet its debt payments and has filed for protection under Spanish law.
AEP Industries Packaging EspaÃ±a SA - known as AEP Spain - filed for suspension of payments after one of its lending banks demanded repayment. The unit lost almost $1 million on sales of about $11 million in the first half of 2004, according to a July 28 AEP news release.
The strength of the euro has had a ``severely negative impact'' on AEP Spain's business and prospects, officials with South Hackensack, N.J.-based AEP said in the release.
As a result, AEP is considering a sale or liquidation of the business, which could result in additional charges against earnings. AEP Spain, based in Alicante, has posted operating losses in each of AEP's past three fiscal years. The unit represents about 3.3 percent of AEP's total assets.
AEP - which was No. 14 in Plastics News' 2003 of North American film and sheet makers - lost $1.6 million on sales of almost $395 million in the first half of this fiscal year. The loss was less than the $7.6 million the firm lost in the same period last year, while the sales figure represents an increase of more than 9 percent vs. a year ago.
Officials attributed the sales improvement and reduced loss to ``global actions [AEP] has taken to strengthen and better position'' its business in the past two years. Since mid-2002, AEP has purchased a retail shrink film plant in Matthews, N.C.; launched unplasticized PVC film production in Griffin, Ga.; and sold its share in a New Zealand-based liquid packaging joint venture - Rapak Asia Pacific Ltd. - to partner DS Smith plc.