Plastic housewares producer Katy Industries Inc. of St. Louis has emerged from bankruptcy with the new name of American Plastics LLC.
Katy filed for Chapter 11 bankruptcy protection in May and had been seeking offers to top an agreed-on stalking horse bid by Highview Capital LLC and Victory Part Capital Advisers LLC. No better offer materialized, so the two private equities became Katy's owners, effective July 17, when the U.S. Bankruptcy Court in Wilmington, Del., approved their original bid. Highview and Victory Park jointly made their stalking horse bid through a new entity called Jansan Acquisition LLC.
In September, Victory Park bought a majority interest in Katy for $6.5 million but a significant number of shares were outstanding. Terms of the finalized deal between Katy and Victory Park and Highview were not announced. Victory Park and Highview have been providing debtor-in-possession financing to keep Katy operating.
"For 50 years, Katy has established a strong reputation and popular brands by reliably providing quality products and services to its customers," stated Highview cofounder Ryan McCarthy in a news release.
"Now, with a well-capitalized balance sheet and new funding, American Plastics is in a strong position to continue that legacy, execute on its strategic plan and enter a new era of growth."
Katy had four major business units that together made a variety of injection molded plastic storage products, cleaning items, housewares, injection molded components, structural foam molded products and food-service equipment and supplies. It had manufacturing facilities in Jefferson City, Mo.; Fort Wayne, Ind.; and Tiffin, Ohio. Its distribution facilities were in Fontana, Calif., and Toronto. It employed 300 as of Dec. 31.
Officials at American Plastics, Victory Park and Highview did not respond to requests for information on American Plastics' strategies for the future.
Katy's operating report as of May 26 showed total assets of $88.5 million, of which more than half was for machinery and equipment. Its total liabilities were $98.4 million. Of that figure, $21.8 million was for accounts payable and $60.2 million represented its debt such as loans.
On June 23, the U.S. trustee held a meeting of creditors but that was adjourned to Aug. 24. There is a Sept. 28 deadline for creditors to file proofs of claim.
Most of Katy's board of directors resigned in August 2016 when Victory Park bought its majority stake. The director who did not resign was Robert Guerra, who had replaced Katy's former CEO David Feldman, who was put on administrative leave. Feldman subsequently sued Katy for firing him without cause. A hearing for that lawsuit is slated for September, according to a Bizjournals.com report.
Charles Asfour, a partner in Victory Park, became Katy's chairman last fall. Guerra, formerly Katy's CEO, is now CEO for American Plastics. Guerra has more than 30 years of experience in industrial manufacturing management, most recently as president of Precision Engineering Americas, a fluid control engineering specialist serving a range of industries.
American Plastics will continue to operate the former Katy brands: Continental Commercial Products, Contico, Wilen, Fundamentals and Fort Wayne Plastics. For the financial quarter ended Sept. 30, Katy recorded sales of $24 million, down 22 percent from a year earlier. Its loss for the quarter at $5.4 million was more than triple the prior year's loss.
"Our partnership with Highview enabled Katy to complete a quick and efficient sale process within just three months while also preserving the company's value and establishing a new platform for future success," noted Victory Park partner Asfour in a news release.
"We appreciate our customers' loyalty throughout the restructuring process and are committed to continuing to provide essential products through the same brands they have come to rely on," added Guerra in the news release.