MELBOURNE, AUSTRALIA — Australia-based bioplastics and film company Cardia Bioplastics Ltd. will close its Brazil manufacturing plant and invest instead in its Asia-Pacific operations.
The São Paulo plant opened in September with A$750,000 (US$586,000) in new equipment. But the Melbourne-based company reviewed its manufacturing operations ahead of a merger with Stellar Films Group Pty. Ltd., and decided to divert resources to plants in Australia, China and Malaysia, according to Frank Glatz, the company's managing director.
“It is important to act quickly to concentrate on strategically higher-value growth opportunities, such as those in the Asia-Pacific region,” Glatz said. “Cardia has therefore taken the strategic decision to discontinue funding its Brazilian film and bag-making operations.
“The Brazilian operation continues to require significant investment into equipment and working capital to deliver on existing sales opportunities for finished products such as retail carrier bags,” he said in a news release. Glatz was unavailable to explain what will happen to the Brazil plant.
Cardia is a publicly traded company based in Melbourne. The company has a pending merger with Stellar Films, a privately held company also based in Melbourne. Cardia shareholders are scheduled to vote on the merger on March 17.
Glatz said a successful merger will help the company meet growing demand from Asia Pacific customers.
Glatz still expects demand in Brazil to grow, after new laws that prohibit distribution or sale of plastic bags to consumers in favor of reusable bioplastic bags.
“Cardia will remain committed to Brazil by maintaining its market presence and continuing to focus on the supply and distribution of its proprietary compostable and Biohybrid resins,” he said.
Biohybrid is a mix of renewable thermoplastics, mainly corn starch, and traditional resins. Cardia produces eight resins with differing qualities for varied applications. The film is produced on Stellar Films Group's proprietary cast film process.
After the merger, the new, as-yet-unnamed company plans to issue a prospectus to raise A$3 million (US$2.4 million) to fund future growth and provide working capital.
Cardia Chairman Richard Tegoni, in a January statement to the Australian Stock Exchange, said the merger will create a company with annual sales of more than A$27 million (US$22 million) and expanded production capacity for Cardia's Biohybrid brand and compostable film products.
Stellar Films operates plants in Melbourne and Port Klang, Malaysia, and has customers in more than 27 countries. It owns 50.8 percent of Akronn Industries Sdn. Bhd., which manufactures silicone-coated paper and film products in Nilai, Malaysia.
Cardia was established in Melbourne in 2002 and has a resin and film plants in Nanjing, China.