MINNEAPOLIS (Feb. 29, 5:50 p.m. ET) — All three molding plants of the financially troubled Rotonics Manufacturing Inc. will get new owners, under deals announced Feb. 29 with Snyder Industries Inc. and American Custom Rotomolding, a sister company of Canadian processor Acrylon Plastics Inc.
Snyder has signed a letter of intent to buy rotational molding plants in Commerce City, Colo., and Bensenville, Ill. Snyder also will acquire the marketing and design operations in Indianapolis.
American Custom Rotomolding will acquire the Rotonics plant in Maple Plain, Minn.
Snyder and ACR issued Feb. 29 news releases with similar wording, saying they plan to keep all the facilities open with current employees. Both announcements termed the deals asset purchase agreements.
Terms were not disclosed.
Both deals are expected to close on March 9.
Rotonics makes a range of rotationally molded products, such as pallets, material handling bins, laundry carts, marine floatation devices and medical waste containers.
Rotonics' struggles came to light on Jan. 18, when the company posted legal documents on its website seeking a sale or liquidation to pay creditors. A report by trustee James Cullen showed Rotonics had $21.3 million in assets and $53.1 million in liabilities — most from $41 million in secured loans — as of Dec. 31. The balance sheet does not list creditors.
The documents list Randall Patterson as Rotonics' sole stockholder.
Cullen declined to identify the main creditor, but said the lender provided short-term financing and continued to make payroll. The factories remained open.
Cullen is a turnaround advisor at Alliance Management in Minneapolis, which works with troubled companies.
In the trust agreement, Cullen had said that his goal was to sell the factories as ongoing operations. Now both new owners are pledging to keep the plants running and make a smooth transition for employees and customers. Snyder and American Custom Rotomolding both will take over inventory, accounts receivables, work in progress and customer delivery requirements once the deals close.
Acrylon optimistic about US manufacturing
American Custom Rotomolding is newly formed entity. Its sister company, Winnipeg, Manitoba-based Acrylon Plastics, operates three rotational molding plants and two extrusion plants. Acrylon also does thermoforming in one of the rotomolding plants.
Stephan Segal, vice president of American Custom Rotomolding, said the economic upswing made this a good time to buy and continue to run the Maple Plain plant.
“We're optimistic about U.S. manufacturing,” Segal said in a telephone interview. “There will be no interruption to the customer base and no interruption to the people who work there.”
Cullen said 94 people work at the Maple Plain plant.
American Custom Rotomolding President and CEO Craig McIntosh said his firm's customer base will rely on the more than 20 years of expertise of the team in Maple Plains.
“Over the next few weeks, American Custom Rotomolding looks forward to meeting with all of the Maple Plain employees and customers to ensure a smooth transition and an interrupted continued supply of exceptional products and services,” McIntosh said in a news release.
Snyder needed capacity
Michael Spurrier, Snyder's vice president of sales and marketing, said Snyder has been adding machines to its existing plants, but still needed more capacity. The Rotonics plants also allow Snyder to enter some new markets.
The three Rotonics facilities employ about 150, Spurrier said.
Snyder President and CEO Thomas O'Connell said the plants are a good strategic fit with Snyder's existing product lines.
“In addition, Rotonics also provides entry into new markets, which will substantially expand our company's growth opportunities in the broader material handling industries,” he said in the news release. “As Snyder moves forward it is our objective to provide a smooth transition for Rotonics' employees and an uninterrupted supply of products and services to our customers.”
In 2010, Rotonics sold its tank molding division in 2010 to Snyder and Norwesco Inc., which are both owned by private equity firm Olympus Partners.