MeadWestvaco Calmar Inc. will buy the intellectual property and tooling assets of bankrupt trigger sprayer and lotion pump maker ContinentalAFA Dispensing Co. in a deal worth $7.5 million.
Judge Kathy Surratt-States of the U.S. Bankruptcy Court in St. Louis approved the transaction on Oct. 15 after an Oct. 10 auction date had passed. Grandview, Mo.-based Calmar was the sole bidder. It is the injection molding division of packaging giant MeadWestvaco Corp. in Glenn Allen, Va.
ContinentalAFA and its subsidiaries, AFA Products Inc. and Continental Sprayers International Inc., had filed for Chapter 11 protection from creditors on Aug. 7, after a series of abrupt plant closings at facilities in St. Peters, Mo.; Bridgeport, Conn.; Forest City, N.C.; and Cartago, Costa Rica, that affected about 740 employees.
``MeadWestvaco has acquired certain manufacturing assets of ContinentalAFA and 100 percent of its intellectual property portfolio. This acquisition helps support the company's packaging business by adding value to its current primary packaging solutions and capabilities,'' MeadWestvaco spokeswoman Alison von Puschendorf said in an Oct. 17 statement.
Executives from St. Peters-based ContinentalAFA were unavailable for additional comment, as were lawyers representing former ContinentalAFA workers in Missouri and Costa Rica who are suing the firm, seeking unpaid wages and benefits.
Other companies that have sued ContinentalAFA over allegedly unfulfilled contracts include liquid-dispensing manufacturer AFA Polytek BV of Helmond, Netherlands; Rexam Inc., the U.S. division of London-based conglomerate Rexam plc; and injection molder Intermex Manufactura SA de CV of Juarez, Mexico.
ContinentalAFA is owned by Harbinger Capital Partners, a New York-based hedge fund founded by financier Phil Falcone. Joseph Figlewicz of Focus Management Group USA Inc. in Tampa, Fla., is ContinentalAFA's chief restructuring officer.
New York-based investment banking firm Jefferies & Co. Inc., which shopped ContinentalAFA's assets, still needs buyers for its real estate, which is not covered by the Calmar deal.
ContinentalAFA reported a profit of $1 million in 2007 on sales of $94.8 million, compared with $10.7 million in profit on 2006 sales of $93.1 million. The company has projected a loss for 2008 of $5.3 million.
In its bankruptcy filing, ContinentalAFA blamed higher resin costs, competition from lower-priced imports, and the cost of integrating the former Owens-Illinois Inc. injection molding business, which ContinentalAFA bought in 2003. Sources said ContinentalAFA in June lost a contract with Clorox Co., its second-largest customer.
MeadWestvaco said Oct. 14 it will lower its business outlook for the third quarter ended Sept. 30 due to the impact of higher costs, lower volumes in the consumer and office products business and weakening demand in some packaging end markets, as well as hurricane-related production disruptions.
For the six months ended June 30, MeadWestvaco reported a profit of $52 million on $3.2 billion in sales, compared to $16 million in profit on $3 billion in sales for the same period in 2007.
Shares of MeadWestvaco dropped mid-week after Buckingham Research Group Analyst Mark Weintraub lowered his earnings-per-share estimate this year to 85 cents from $1.20 and to $1.20 from $1.50 for 2009 in a note to clients. MeadWestvaco stock is off about 46 percent since January.