The New York Stock exchange is delisting PET maker Wellman Inc. as of Dec. 10.
The decision was made after Wellman's per-share stock price closed at under $1 for 30 consecutive trading days, officials with Fort Mill, S.C.-based Wellman said in a Dec. 4 news release. Wellman has decided not to appeal the decision and expects to be traded on over-the-counter markets, officials said.
Wellman has struggled with high feedstock costs, shrinking margins and heavy debt. The firm lost $66 million in the first nine months of 2007, after losing almost $69 million during the same period in 2006. Wellman's nine-month sales total for 2007 was about $890 million, a drop of 3 percent from the year-ago period.
``Our PET resin sales volumes in the fourth quarter of 2007 are expected to be lower than the fourth quarter of 2006 as a result of continuing competitive pressures in the PET resin market,'' officials said in a recent financial filing. ``We expect PET resin industry utilization rates to improve in 2008 compared to 2007 as demand growth continues to absorb 2007 industry capacity additions. This may result in higher sales volumes and margins in 2008 than in 2007.''
Wellman's PET-based unit actually turned a profit of almost $3 million in the third quarter, but its recycling unit lost almost $1 million and the firm was hammered with losses of $16 million in interest expense and of more than $13 million in depreciation and amortization.
The firm also is struggling with long-term debt of almost $600 million.
``We are highly leveraged and during three out of the last four quarters our cash interest expense has been greater than our EBITDA,'' officials said in the release. ``If industry conditions or our results of operations do not improve, we may not have sufficient liquidity.''
In late October, Wellman announced it had hired finance firm Lazard Freres & Co. LLC to help evaluate its options, including the possible sale of its recycling unit. Around the same time, Wellman filed a patent infringement lawsuit against PET market leader Eastman Chemical Co., regarding patents for titanium-catalyzed PET resins and preforms made from those resins. Wellman officials claim that Eastman's Integrex-brand technology is infringing on two Wellman patents for the named materials.
Earlier this year, Wellman sold its European PET resin and recycled fibers units, but officials said those sales resulted in a net loss of $24 million for the firm.
Based on estimated 2007 sales, Wellman ranks as North America's fourth-largest PET maker with a 12 percent market share. Wellman's per-share stock price was above $3 in July and was at $1.50 as recently as late October. The stock closed at 12 cents per share on Dec. 11.