By Mike Verespej
GAINESVILLE, GA. (Jan. 28, 1:10 p.m. ET) — Industrial polypropylene recycler Sundance Products Group LLC has shut down operations at its three plants, is selling off its inventory of raw materials and finished pellets, and is looking for an investor or a buyer for the business.
Sundance, which has three plants in Georgia, was the eighth-largest plastics recycler in the Plastics News 2008 recycler rankings, with an estimated $57 million in sales in 2007 and a capacity of more than 200 million pounds. Private equity investment fund Soin Capitol LLC in Dayton, Ohio, owns a 70 percent stake in Sundance, purchased in May 2006.
In a letter to creditors Jan. 21, Sundance said that “absent a new infusion of capital or a going concern sale of substantial value, the business will have no future revenue.”
“Our continuing losses now require that we stop all operations,” said the letter. “Sundance is now working diligently to market its inventory and other assets, and to evaluate options that could allow it to resume operations in the future if it can find sources of additional capital or a buyer interested in running the business.”
Production operations were initially shuttered Dec. 12, one week after the company’s first round of layoffs, said Jim Frentheway, director of human resources. About 40 employees were recalled to work Jan. 5 at the Candler Road plant in Gainesville, Ga., that preps raw material for further processing, but that operation was shuttered again at the close of operations on Jan. 9, he said.
“We have shut down production operations due to a lack of sales,” Frentheway said in a Jan. 28 telephone interview. The drop-off in recycled resin purchases by buyers in China during the past four months led to a glut of materials and low prices for recycled plastics.
All but about 25 of the company’s 330 workers have been laid off, Frentheway said. He said the remaining employees are in logistics, maintenance, human resources, accounting, sales and purchasing and almost all of them in Gainesville, where the company has two locations. A handful of the 25 people remain at the company’s site in Buford.
Frentheway said that there is no plan in place “at this point” to sell any of the company’s equipment or machinery, even though the production operations have been closed down. He said Sundance was selling off its inventory, the majority of which is raw material, with the remainder pellets. The typical amount of raw material the company would have in a given month is between 3 million and 5 million pounds, and that the inventory currently on hand was probably “close to that,” he said.
In its letter, Sundance informed creditors that “the forced liquidation value of its assets is likely much less than the amount owed on account of our secured debt.” Unless conditions changes, the letter said that the company will have “no unencumbered funds from which to make any payments to suppliers or other unsecured creditors.”
The letter said Sundance would continue to try to “maximize the value of its assets to meet our obligations.”