Synthetic rubber producer Ameripol Synpol Corp. has filed for Chapter 11 bankruptcy protection but already has a suitor-International Specialty Products Inc.-ready to make an offer to take over the firm's assets.
Wayne, N.J.-based ISP, a maker of specialty chemicals and minerals, said Dec. 16-just hours after Ameripol Synpol filed for bankruptcy-that it intends to present its proposed purchase agreement for the assets related to styrene-butadiene rubber to the U.S. Bankruptcy Court for the District of Delaware.
Terms of the proposed deal were not disclosed, but Sunil Kumar, ISP president and CEO, said his company is prepared to invest ``tens of millions of dollars'' in the Port Neches, Texas-based operation to improve efficiency there.
The sale will be subject to bankruptcy court approval, meaning other potential buyers also will be allowed to bid, according to Ameripol Synpol.
In its Dec. 16 filing with the bankruptcy court, Ameripol Synpol cited its inability to meet cash demands from lenders and to secure other sources of financing. It listed assets of $112 million and liabilities of $98 million.
Ameripol Synpol blamed its situation on an increase in foreign competition and declines in price for synthetic rubber during 2000 and 2001. The company makes only emulsion SBR at a plant in Port Neches, which has a listed annual capacity of 336,000 metric tons.
For the first 10 months of 2002, Ameripol Synpol reported an operating loss of about $10 million on sales of $110 million; for fiscal 2001, the firm had a $21 million operating loss on sales of $187 million.
Earlier this year, Ameripol Synpol streamlined its operations, consolidating production in April from its Odessa, Texas, plant to the larger Port Neches facility and closing its Akron sales office in June. At that time, it also secured a $35 million finance agreement to help fund the consolidation and upgrades.
The company also spun off its carbon black business into a joint venture with Degussa Corp. The venture, Degussa Engineered Carbons L.P., is operating six U.S. plants, three from each company, producing furnace, thermal and specialty blacks.
ISP is an $850 million company with 2,700 employees at more than 70 locations serving business sectors including pharmaceutical, food, personal care, coatings and industrial. Top executive Kumar formerly was with GAF Corp. and Bridgestone/Firestone.
Kumar said ISP management is confident ISP can effect a turnaround of Ameripol Synpol based on its knowledge of chemical processing control and the potential for regaining lost customers.
``We're going into this deal with the enthusiastic support of current and possible customers,'' said Kumar, who has visited several former Ameripol Synpol customers to solicit business for the company under ISP management.
``We certainly know that emulsion-SBR is not a growth business,'' Kumar said, ``but by reducing costs and expanding the customer base, we feel the business has long-term potential. We know it won't be a short-term turnaround. We would be in for the long term.''
Kumar said it's obvious the business ``is starved for capital'' after being under-financed for some time.
ISP's bid comes amid the company's filing to go private. While publicly traded, ISP was closely held by only a few shareholders, and therefore it made more sense to take the company private, Kumar said.
Ameripol Synpol also said it has secured a debtor-in-possession line of credit to meet day-to-day operations.
The firm's largest creditors are: Huntsman Corp./Huntsman Petrochemicals, $9 million; Equistar Chemicals L.P., $6.86 million; Merrill Lynch & Co. Inc., $1.41 million; GE Plastics, $1.26 million; BP P.L.C/BP Amoco, $1.19 million; and Degussa Engineered Carbons, $1.1 million
Ameripol Synpol's relations with its workers in Port Neches are somewhat undefined at the moment.
The company has been negotiating throughout the second half of 2002 with members of Local 4-228 of the Paper, Allied-Industrial Chemical, and Energy Workers International Union, but it said an offer it put forward Oct. 10 was withdrawn after the union failed to act on it.
A subsequent, revised offer was put forward Nov. 5, but then the union approved the earlier version, which Ameripol Synpol said was no longer valid.
Local 4-228 representative Richard Hardy said the union currently is not working under a contract, which means employees have no grievance procedures or protection.
``That is why we hope we can come to an agreement within a month or two,'' he said. ``We are very concerned about recent things that are going on.''
It's unclear what effect the Chapter 11 filing will have on this aspect of the business but Hardy did say employees at the facility were reassured their pay would not be affected during the company's reorganization.