PET maker Wellman Inc. emerged from bankruptcy Jan. 31 as leaner, slimmer and focused on PET resin and PET resin only, said Chief Operating Officer Steve Ates.
We think we have a platform to compete with anyone, he said.
All of the firm's annual capacity 910 million pounds now is consolidated at one site.
Wellman has secured a $35 million revolving line of credit from CIT Group Inc., and Sola Ltd. and BlackRock Financial Management Inc. have invested $35 million in exchange for 50 percent of the voting stock, Ates said.
Wellman's old first- and second-lien holders possess the remaining voting power, which they received in exchange for agreeing to write off its pre-bankruptcy petition debt owed to them.
We are in a very good position to move the company forward with strong financial backing, Ates said at the 2009 Packaging Conference, held Feb 2-4 in Las Vegas.
We are in an extremely strong financial position. We have a new board that is a breath of fresh air and understands the PET industry and that is going to be active getting us to the next level.
Wellman, based in Fort Mill, S.C., has consolidated manufacturing at its plant in Bay St. Louis, Miss. That move has allowed Wellman to significantly reduce its manufacturing costs, lower its working capital and streamline its organizational structure, according to the company.
Before Wellman filed for bankruptcy Feb. 22, its annual volume, which also included its since-sold polyester staple fiber and engineering resins business, was 1.93 billion pounds.
Ates said the company also has cut its workforce since it filed for bankruptcy, from 999 to 177 employees, and trimmed its management team from nine to three.
We have an experienced management group with the ability to make quick decisions, he said.
Based on estimated sales, Wellman ranks as North America's fourth-largest commodity PET maker, with a 12 percent market share. Its stock was delisted from the New York Stock Exchange in December 2007.
Ates applauded the bankruptcy process for the way it made Wellman reassess its business.
This is a very efficient process in making you look at what you are good at, what you are not good at, and how you run your business he said. It made us look at our strengths and weaknesses to determine how we can be a sustainable business.
We found that there was no need, no reason to be in the polyester fiber because that business left the United States nine years ago. We found that we did not have a sustainable cost structure to win in that business.
Because of its singular focus on PET resins, Wellman's costs will be lower and it will have lower working-capital needs, he said.
We can still deliver quality to the customer, but with less working capital invested. We have excellent low-cost expansion opportunities and are in position to meet long-term customer needs, he said.
Sola and BlackRock own 63.2 percent of the new Wellman, and nine previous creditors own 27.3 percent.
Packaging Conference 2009 was co-sponsored by SBA-CCI Inc., strategic consultants to the PET industry, and Plastic Technologies Inc. in Holland, Ohio.