A bankruptcy court in Cincinnati approved the sale of Milacrons assets to a group of existing investors for an estimated $175 million on Friday, with completion of the sale expected in July. The company has been in Chapter 11 bankruptcy since March.
On May 3, Milacron signed a definitive agreement to sell substantially all of its assets to an investors group consisting of Avenue Capital Group, DDJ Capital Management LLC and certain other entities that together hold about 93 percent of Milacrons secured notes. The agreement was originally announced March 10, the same day Milacron filed for Chapter 11 bankruptcy protection in Cincinnati. A more definitive, binding agreement was announced May 5.
There was considerable interest in the company, but in the end, the existing investor groups offer was the highest, said Dave Lawrence, Milacron chief executive officer. Their continued confidence in our brands, people and products is enabling us to complete the bankruptcy process quickly and emerge as a much healthier company.
Milacron is poised to do well, particularly as world markets improve, Lawrence continued. The new ownership will enhance our ability to further advance our technologies, to develop new partnerships and to expand our services to customers across the globe.
Cincinnati-based Milacrons Industrial Fluids segment supplies metalworking and industrial fluids. The companys larger business supplies plastics-processing technologies.
Milacron spokesman Al Beaupre noted that while the original $175 million estimate from March has not been updated, it will likely be in the same ballpark as the final cost. There are a lot of things that get negotiated down to the last minute, or that dont get decided until the purchase day, Beaupre told Lube Report.
Avenue Capital Group and DDJ Capital Management LLC, which together owned about 78 percent of Milacrons stock, committed to an $80 million debtor-in-possession agreement under which they will provide $40 million in new funds to Milacron. Milacron 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.
According to bankruptcy court documents, under the restructuring support agreement, the liabilities for Milacrons employees under the pension plan will not be assumed and continued by the purchaser of Milacrons assets. The Pension Benefit Guaranty Corp. said it will take over the pension plan assets and use insurance funds to pay guaranteed benefits earned under the Milacron retirement plan. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, the agency stated, and other workers will receive their pensions when they are eligible to retire.
The plan will remain ongoing under company sponsorship until the agency becomes trustee of the pension plan. PBGC spokesman Gary Pastorius told Lube Report yesterday that the court approval of the sale to the investors group on Monday doesnt impact the pension situation, which remains in court proceedings, with no specific timetable.
Milacrons Beaupre also said the pension plan situation with the PBGC had not changed. Their people are negotiating with our people, and the new buyers people, he explained. They are working things out.