Plastech Engineered Products Inc. has signed a deal to buy assets of bankrupt auto supplier Andover Industries.
Andover, based in Troy, Mich., but with plants in Ohio and Pennsylvania, reported sales of $65 million in 2004, but Plastech said it is taking $45 million worth of business in the deal, expected to close April 4.
It was not clear what would happen to Andover's three plants. In a statement, Plastech said most of the work will be moved to its plants but that it is ``analyzing Andover's current business operations.''
Plastech will pay $5.22 million for Andover, according to the Erie, Pa., Times. Plastech reported $1 billion of sales in 2004. It was the only bidder.
Last February, Plastech bought LDM Technologies Inc. for an estimated $290 million.
The deal nearly doubled Plastech's size, but the company recently was put on credit watch with negative implications by Standard & Poor's.
Credit watch means that Plastech's BB- rating could be downgraded. The company has about $504 million in debt.
Most of S&P's concerns centered on rising plastic resin costs and lower production from Plastech's customers. The report also noted that Plastech had to ask its banks to waive some financial covenants.
But Plastech is profitable and Andover's added business will only help, the company said.
Martin King, director of ratings services for S&P, said the Andover deal is unlikely to degrade Plastech's finances.
``We're not going to become concerned about a small acquisition like that,'' he said. ``The only thing that would concern us is if it needs cash flow and spending to support it. But on the face of it, it doesn't seem significant.''