At a June 26 hearing, U.S. Bankruptcy Judge J. Vincent Aug Jr. approved Milacron Inc.'s sale to two investor groups that bought the debt of the machinery maker despite opposition from unsecured creditors and the company's joint venture partner in India.
Now Milacron officials are looking forward to emerging from the Chapter 11 bankruptcy that began March 10 in a Cincinnati courtroom.
Milacron expects to complete the sale in July to a group of investors led by Avenue Capital Group and DDJ Capital Management LLC. Those firms, which hold about 93 percent of Milacron's senior secured notes, were the preferred, or stalking horse, bidders. The stalking horse bid was $175 million for the Batavia, Ohio-based maker of injection molding machines, blow molding machines, extruders, mold components, structural foam machines and industrial fluids.
Milacron received no other qualified bids, according to court documents.
There was considerable interest in the company, but in the end, the existing investor group's offer was the highest, said Dave Lawrence, Milacron president and CEO, in a news release issued June 29 to announce the court approval. These are investors who understand our company, our customers and the markets that have long relied on Milacron's products and services. Their continued confidence in our brands, people and products is enabling us to complete the bankruptcy process quickly and emerge as a much healthier company.
New York-based Avenue Capital focuses on distressed debt and undervalued securities, including companies in bankruptcy, reorganization or liquidation. DDJ Capital of Waltham, Mass., invests in high-yield securities and special situations.
In his 25-page ruling, filed June 30, Aug rejected objections from the committee of unsecured creditors and the Mahendra N. Patel family in India, which partnered with Milacron to create Ferromatik Milacron India Ltd. in 1995. They charged that the bid procedures effectively blocked bids for individual parts of the company, such as Uniloy blow molding machines or D-M-E mold parts.
Unsecured creditors said bid procedures worked to chill bidding and depress the purchase price for Milacron's assets, which they claimed are worth far more than the stalking horse bid.
There is good reason to believe that the assets retain significant value which can and will be realized relatively soon as the global economy improves and the historic cycles of the debtor's business cycle turn positive again, the unsecured creditors wrote in an objection filed five days before the sale hearing.
A group of 14 retired executives joined with unsecured creditors to object to the sale agreement. They included some big names from Milacron's past, including Ronald Brown, Daniel Meyer, Harold Faig, Raymond Ross and Barr Klaus.
Patel, who filed his objection in May, also claimed that the sales procedure was unfair to parties seeking to buy parts of the company.
Patel said it also violated his family's right of first refusal to any sale.
Aug rejected arguments that the bid process was unfair: There was no evidence of insider influence or improper conduct.
But the judge left open the possibility that an Indian court could rule on Patel's complaints, saying nothing in his order affects the family's rights under Indian law.
Patel's lawyer in Cleveland, Sean Malloy, said the Indian businessman already has filed a case in the Indian legal system.
Lawrence expressed optimism about Milacron's future.
Milacron is poised to do well, particularly as world markets improve, he said.