Indian equipment manufacturer Kabra Extrusiontechnik Ltd. has purchased a 15 percent ownership stake in Gloucester Engineering Co., a U.S.-based maker of film equipment, both companies announced March 8.
The firms already have a relationship: Gloucester and Kabra formed a joint venture in early 2009, located in Daman, India. Kabra is part of Kolsite Group of Cos., which is publicly traded on India's Bombay Stock Exchange and National Stock Exchange.
Kabra's board of directors approved the proposal to spend more than $4 million to acquire the minority stake, according to a statement issued by the Mumbai-based firm. A Kabra representative will sit on Gloucester's board.
Kabra will acquire a stake in Gloucester Engineering's equity and debt and will provide additional capital resources, officials of the company in Gloucester, Mass., said in a news release.
Gloucester CEO Mark Steele said Kabra has been an excellent partner in the joint venture, which is called Kabra Gloucester Engineering Ltd. The joint venture recently got an order for a five-layer blown film line from Propyl Pack India and is developing new products for international markets.
S.V. Kabra, Kabra's chairman and managing director, called the investment a historic moment.
[Kabra] has taken a leap forward, being the first plastic machinery company from India to invest in an overseas plastic ma- chinery company, he said in a statement.
[Gloucester] is a highly technology-focused company and has consistently ranked among the world's top five high-end extrusion machinery manufacturers for the packaging industry.
S.V. Kabra said the minority investment will help his company gain exposure to customers in North America, Europe and other Western markets.
Gloucester emerged from Chapter 11 bankruptcy Jan. 3, under majority ownership of Blue Wolf Capital Partners LLC, a New York private equity fund. Before the buy-in by Kabra, Blue Wolf had owned 95 percent of Gloucester Engineering. The other 5 percent is owned by a group of unsecured creditors designated as critical vendors.
The joint venture in India was set up before Blue Wolf owned Gloucester, and before the company filed for bankruptcy reorganization.
Steele and Michael Ranson, a partner in Blue Wolf, called Kabra's investment a vote of confidence in Gloucester.
The fact that a sophisticated international company in the plastics extrusion industry would choose to invest in Gloucester Engineering underscores the fact that the company's turnaround is complete, it has a stable capital base and its future is bright, Ranson said.