Injection molder Pine River Plastics Inc. has agreed to sell itself through a bankruptcy proceeding to a financial group that will continue the company's operations.
The St. Clair, Mich.-based company entered Chapter 11 protection Feb. 1 with the U.S. Bankruptcy Court in Detroit, citing difficulties launching new production in 2006 that left it struggling to survive.
The company has 500 employees divided between two molding facilities in St. Clair, one in Westminster, S.C., and a small warehouse in St. Clair. It has 50 presses with clamping forces of 90-1,500 tons.
Pine River listed 2006 sales of $65 million in court papers.
The proposed sale to Whitebox Advisors LLC of Minneapolis is expected within 90 days, said President Timothy Erdmann in a news release.
``We have built an amazing company. Unfortunately, growth and the current environment in the auto industry have brought us financial burdens that have made it difficult for Pine River to achieve its full potential,'' he said. ``Whitebox ... offers the additional resources, financial and otherwise, required to stabilize our operations and fuel our continued growth.''
In its court filing, the company noted it launched production on more than 100 new tools in 2006, the highest number in the company's history for a single year.
The work included parts requiring complex assembly and decorative elements that had a ``significant learning curve.''
But customers also sped launch dates on several of the programs by six to eight weeks, ``robbing the company of a normal volume ramp-up period to improve efficiencies,'' the filing noted.
Those new parts and increased speed led to higher-than-normal scrap costs, increased overtime and increased premium freight costs.
Pine River was unable to finance the purchase of two large-tonnage presses to relieve bottlenecks, which also led to increased overtime costs and forced it to outsource some parts to other molders to maintain needed production levels.
As a result, Pine River had no earnings before interest, taxes, deductions and amortization for 2006, and listed a loss of $1.7 million for its fourth quarter..
The company is fixing its problems and expects a better return on its investments in 2007, the affidavit noted.
Pine River attempted to sell the business outside of the Chapter 11 process earlier, but that deal fell through.
The new deal establishes Whitebox as the preferred bidder in a Chapter 11 auction of Pine River's assets.
The company has a letter of intent with a projected purchase price of $11.5 million, according to the filing. That number could go up if there are other interested bidders.
Whitebox has a ``seasoned industry management team'' that is ready to establish a ``reasonable and realistic path forward,'' the company noted in its news release.
``Whitebox is prepared to apply management know-how and capital to serve Pine River's customers and provide a partnership with its suppliers,'' said Todd Carlson, a senior member of the planned future management team.
