HOUSTON (March 21, 2:50 p.m. ET) — GSE Holding Inc. has paid $7.5 million for geomembrane manufacturing equipment operated by competitor Poly-America LP.
GSE, a Houston-based maker of polyethylene geomembranes and liners, will move one of the production lines from a Poly-America site in Grand Prairie, Texas, to its plant in Egypt by mid-year, CEO Mark Arnold said in a March 20 phone interview. The other line will be moved to GSE's Houston plant, where it will be used in a maintenance cycle before being transferred to the firm's facility in Thailand in early 2013.
The purchase will remove competitive capacity from the North American market, Arnold said, while allowing GSE to meet mining-related demand for its products throughout Africa. The firm also recently received approval to ship products made in Egypt into the European market.
GSE had competed with Grand Prairie-based Poly-America primarily in the landfill sector. Poly-America had operated its geomembranes business as Poly-Flex Inc.
Arnold said that GSE funded the machinery purchase with proceeds from its Feb. 10 initial public offering. Some of those proceeds also were used to pay down the firm's debt. That debt reduction was one of the reasons cited by the Standard & Poor's debt rating agency when it improved GSE's corporate credit rating from B-minus to B status on March 15.
“The company's financial risk profile has improved,” S&P officials said in the report. “In the near term, we expect that GSE will perform similarly to recent trends, assuming end-market demand continues to gradually improve with economic activity and raw material price movements remain manageable.”
GSE employs almost 600 and had sales of about $460 million in 2011 — an increase of about 35 percent vs. 2010. The firm was founded as Gundle Corp. in 1981 and grew through acquisitions before being bought by Chicago private equity firm CHS Capital LLC in 2004. It recently began identifying itself as GSE Environmental.
GSE's per-share stock price opened at $10.30 on Feb. 10 and was at $13 in late trading March 21, for an increase of almost 30 percent.