Unable to find a buyer for its ailing Australian subsidiary, cast film manufacturer Stellar Films Group Pty. Ltd., bioplastics developer Secos Group Ltd. has called in liquidators to wind up the business.
The move follows Secos's decision to stop manufacturing film in Australia in November, following an independent strategic review of its operations. The review recommended selling Stellar Films, but no buyer was forthcoming.
Stellar manufactures plastic linings for products like diapers, feminine hygiene pads, incontinence pads and surgical gowns.
Melbourne-based, publicly listed Secos was formed though the April 2015 merger of Cardia Bioplastics Ltd. with privately held SFG.
Secos Chairman Richard Tegoni told Plastics News the review advised Secos to sell or wind up SFG because increased operating costs in Australia meant it would continue to lose money.
"We tried to sell the business, however Secos was required to provide about A$100,000 (US$71,800) a month in financial support to keep [it] open, and therefore the board determined it was in the best interest of shareholders to put the business into liquidation," he said.
He said closing SFG achieved A$1 million (US$717,800) in cost savings and additional cost reductions of more than A$800,000 (US$575,000) a year were achieved through streamlining Australian operations and consolidating manufacturing in Malaysia and China.
Secos's Malaysian cast film manufacturing subsidiary, Stellar Films (Malaysia) Sdn Bhd, which has a manufacturing plant at Port Klang, Malaysia's largest port, 24 miles southwest of Kuala Lumpur, will "offer Australian film customers ongoing support to ensure continuity of supply."
Tegoni told Plastics News Stellar Films Malaysia is now Secos's only cast film business. "It is currently running profitably and has spare capacity to support further growth."
Secos also operates a separate Malaysian plant, 12 miles from Port Klang, that manufactures its Cardia Bioplastic resins.
Secos also has resin, film and bag production facilities in Nanjing, China.
In December, Secos elevated its newly appointed chief operations officer Ian Stacey to CEO, replacing Steve Walters, who will continue as a director.