Glencore Finance AG - the Swiss raw materials giant that funded Milacron Inc.'s debt refinancing in 2004 - has gained control of the majority of the seats on Milacron's board of directors, after the election of five Glencore-nominated directors at a May 2 annual shareholders meeting.
Coupled with the two Glencore people already on the board, Glencore now has seven of the 12 seats on the Cincinnati-based plastics machinery maker.
Milacron shareholders also approved a 1-for-10 reverse stock split designed to push the share price above $1. The company faces a delisting by the New York Stock Exchange, which said Milacron stock needs to reach a closing price of at least $1 during any trading period of 30 consecutive days. Milacron stock is around 70 cents right now.
Glencore officials have not commented on their plans for Milacron, which has lost money for six straight years. But in a Feb. 1 filing with the Securities and Exchange Commission, Glencore said it might ``propose changes in the management, policies, operations, capital structure or business of Milacron.''
The Swiss firm has conducted ``negotiations with unaffiliated third parties'' about selling its stock, according to the filing, ``although no definitive agreements with respect to any such discussions and negotiations have been reached.'' Glencore also said it does not have ``any present plans or proposals'' to take the actions.
Glencore Finance is a unit of Glencore International AG, one of the world's largest producers of metals, minerals and raw materials, based in Baar, Switzerland.
Milacron lost $39.7 million for all of 2006. The last year it made money was 2000.
Ronald Brown, chairman, president and chief executive officer, said this is ``the most challenging environment the plastics machinery industry has ever faced in this country.'' He spoke in an April 30 conference call with analysts about Milacron's first-quarter results.
Milacron lost $10.8 million in the quarter on sales of $190 million. Sales declined 6 percent from first-quarter 2006 sales of $202 million. Officials blamed softness in a key segment - the U.S. market for injection presses - caused by the ongoing consolidation of automotive suppliers and lower demand for building materials from a low level of housing starts.
The poor injection press showing offset gains in extruders, blow molding machines and aftermarket parts and service, the company said.
Milacron Chief Financial Officer Ross Anderson said automotive plant closings in North America have ``created a glut of injection molding machines'' that has affected sales of new presses in markets outside automotive, such as packaging.
In the conference call, Brown said Milacron is doing better in Europe and especially in Asia. He reported sizable orders from China, India, Russia, Brazil and the Middle East. The company has built up a $40 million backlog of machines that are scheduled to ship in the second quarter.
Milacron is becoming much more global.
``By reshaping this company for long-term growth and sustainable profitability, I believe we have an exciting future,'' Brown told financial analysts.
Brown felt the impact of difficult markets in his wallet. According to an SEC filing, he took a 35 percent pay cut in 2006, as the board sharply cut back on restricted stock awards.