Bottle blow molder PVC Container Corp. has announced a first step to becoming a private company.
The Eatontown, N.J., firm said Sept. 16 that it wants to eliminate the costs of being a public company. It plans to shrink its number of stockholders in a reverse stock split so that it is eligible to stop filing reports with the Securities and Exchange Commission and so it can terminate its public registration.
``The company's common stock is not very liquid, and the company's stockholders do not receive any appreciable benefit from the company being a public reporting company,'' noted PVC Container President and Chief Executive Officer William Bergen in a news release.
One analyst said he feels the move is a logical one.
``Given the size of the company, the cost of being public is material,'' said Tim Burns with Cranial Capital Inc. of Solon, Ohio. Such costs could be between $500,000 and $1 million a year, he estimated.
PVC Container will offer one new share per 2,000 current shares. For shareholders holding fewer than 2,000 shares, the company will offer to buy them up at $2.39 per share, thus eliminating their owner as a shareholder. That price is nearly double the closing share price of Sept. 15 on the OTC Bulletin Board where the company's stock is traded. The company said shareholders holding about 70 percent of the stock have indicated they will back the plan. PVC Container nevertheless will put the plan to a shareholder vote in the next few months.
PVC Container has been thinly traded so going private ``will only complete the loop,'' Burns said in a telephone interview. Its market capitalization at about $14 million is a fraction of that for its main competitors.
In spring, PVC Container sold its PVC compounding business to PolyOne Corp. Prior to that, PVC Container recorded a net loss of $223,000 on sales of $15.3 million for its third quarter ended March 31. The sales figure was 33 percent lower than in the quarter ended Dec. 31.
Burns said the firm has faced tough markets for containers. Originally geared to PVC bottles, it branched into PET and other materials but could not overcome capacity overhang in the marketplace. It has been producing at the rate of about 3 billion bottles per year.
PVC Container has been public since its inception in 1968. Major shareholders are Kirtland Capital Partners of Willoughby Hills, Ohio, with a 65 percent stake and Lionheart Group Inc. of New York, with more than 10 percent.
