For two years, Progressive Moulded Products Ltd. was in the midst of rapid growth.
The Canadian auto supplier based in Concord, Ontario, went from $373 million in sales in 2006 to $470 million in 2007 and was on track to hit $540 million in sales this year. It launched seven new products for North American automakers.
But all that growth came with a cost, and the company borrowed heavily to invest in new equipment and quickly bring on new business. Now it is seeking protection from creditors in both the U.S. and Canada.
Progressive filed June 20 for protection under Canada's Companies' Creditors Arrangement Act for its 10 Ontario plants and simultaneously sought Chapter 11 protection in U.S. Bankruptcy Court in Wilmington, Del. The U.S. filings are under the name Progressive Molded Products Inc.
Chief Financial Officer Guy Prentice stated in the filings that the ``unsustainably high debt load … has impaired [Progressive's] ability to obtain additional new business'' and limited its capacity to make capital investments.
Prentice also said he believes the company and its creditors can still reach a settlement to restructure Progressive's debt and maintain it as a viable operation.
Progressive was founded in 1967 as a mold maker, and began molding automotive parts in the early 1990s. It is owned by private equity firm Thomas H. Lee Partners LP of Boston and focuses on interior injection molded parts and assemblies.
It has 2,800 employees, 10 plants in Ontario and two in the U.S., in addition to a sales office in Auburn Hills, Mich. About 90 percent of its production is for Big Three automakers, all of which have seen production drop in recent years.
Progressive's future looked bright in 2006, when it won key new business, including two programs it took over from Collins & Aikman Corp. — which was in bankruptcy itself. But to begin that work quickly, the firm had to borrow money.
By the time it filed for protection, Progressive had $539.2 million in secured credit — with $276.9 million in outstanding debt — and more than $195.7 million in unsecured credit. Its list of unsecured creditors is topped by eight financial firms.
That much debt on its books made automakers nervous. They have been tracking suppliers' financial issues in fear of seeing key firms go bankrupt.
Key vendors, including resin suppliers, also have been tightening credit terms because of bankruptcy fears, he said, while resin prices have increased. In addition, Progressive was hit by the depreciation of the U.S. dollar compared with the Canadian dollar. The firm does 82 percent of its production in Canada and its key customers are in the U.S.
Automotive News, a sister publication to Plastics News, contributed to this report.