Yesterdays bankruptcy filing in Cincinnati, where Milacron is based, should not affect its European, Asian or any other non-North American operations. While the international operations arent part of the Chapter 11 filing, they would be included in a sale of Milacrons assets, according to spokesman Al Beaupre.

Avenue Capital Group and DDJ Capital Management LLC, which together own about 78 percent of Milacrons stock, have committed to an $80 million debtor-in-possession agreement under which they will provide the $40 million in new funds to Milacron. Milacron has also received a $55 million debtor-in-possession revolving credit facility from General Electrical Capital Corp. Debtor in possession refers to a company that continues to operate while in Chapter 11 bankruptcy.

New York-based Avenue Capital Group describes itself as a pioneer in the distressed debt market, having invested in the public and private debt and equity securities of distressed companies across a variety of industries for more than 20 years. Waltham, Mass.-headquartered DDJ Capital Management is a registered investment advisor specializing in high yield securities and special situation investing.

These investors already own a large percentage of our public debt, Milacrons Beaupre told Lube Report. They are willing to put in some more money, and that provides a financing for the short term. And then as we restructure financially, they will use that money plus other money to offer to buy all the assets. But as it goes through a court ordered system that Chapter 11 prescribes, other bidders will be allowed or encouraged to come in and make competing bids. If all goes according to plan, someone will end up buying all the assets of the company and it will emerge in a much stronger position, with a better balance sheet.

Bob McKee, Milacrons president of global industrial fluids, acknowledged the global economic situation has hit the metalworking fluids industrys main customers hard this year, especially the automotive and general industries.

Even aerospace is slowing down a little, McKee told Lube Report. The Big Three [General Motors, Ford and Chrysler] automotive production is down 40 to 50 percent for the first quarter, compared to a year earlier. You cant take that production out and not affect the metalworking fluid industry. Our business has been slower the first couple of months this year than it was last year.

He noted the metalworking fluids group had ended up with record sales in recent years. For 2007, its most recently reported full year, Milacrons Industrial Fluids segments sales reached $124 million, up 6 percent from $117 million in 2006. Net income in 2007 improved by 53.7 percent to $16.6 million, up from $10.8 million in 2006.

Growth in recent years had included a new plant in Shanghai, China, along with a new office in Brazil and entering the Eastern European market. The fluids division of Milacron has been a very strong business for a long time, McKee said.

Unfortunately, the rest of the company didnt fare as well, as Milacron on the whole reported a net loss in the fourth quarter of 2007 of $73.4 million, and a net loss for the full year 2007 of $88.8 million.

McKee expects little customer impact from the Chapter 11 filing. According to Milacrons Customer FAQ about the reorganization, open orders will be filled as usual, pricing is not affected and buying agreements will remain in place without change. Post-filing, vendors will receive priority payment for goods and services, with the court determining eventual payment to vendors for goods or services received before the filing date.

We had a very complete communications plan weve gotten to all of our customers, distributors around the world, he stated. Weve seen tremendous support from all of our customers, and weve assured them of a continuous supply of product.

McKee noted that Milacrons international operations have a slightly different capital structure and are operating as normal. I have to say the fluid group is a very global, very close-knit group, he said. We share ideas, we share global customers, we share R&D, and it works very well together. I cant believe that anyone would want to break up what I sense is a very cohesive group.