Web Date: February 27, 2008
Wellman Declares Bankruptcy
Polyester fiber and resin maker Wellman Inc., long troubled by high raw material costs and a crushing debt burden, has filed for bankruptcy.
According to CEO Thomas M. Duff, the company has tried reducing debt, selling noncore businesses, laying off workers, and cutting costs, but these efforts were "not sufficient to offset the deterioration in business conditions and the cost of our substantial debt obligations."
According to its bankruptcy petition, filed in New York City on Feb. 22, Wellman has $600 million in debt but only about $500 million in assets. The company has reported losses from continuing operations every year since 2003. Its 2006 sales were $1.3 billion.
The petition is only the latest setback for Wellman. In December, the New York Stock Exchange delisted the company's shares because they traded for less than $1.00 for 30 days straight. Last October, Wellman engaged investment bank Lazard Frères to explore "strategic alternatives" such as a sale of the company.
Edgar Acosta, a polyester consultant with Houston-based DeWitt & Co., says the bankruptcy petition is a sign that Wellman hasn't received takeover offers in excess of its debt obligation. Considering Wellman's 1.5 billion lb in annual polyethylene terephthalate capacity and its technology, market channels, and raw material contracts, Acosta estimates that the company is worth $250 million at most. But a bigger PET plant could be built in the U.S. with that much money. "If you had $250 million, you could likely build a bigger plant than what they are selling, but you would not get the customer relationships," he says.
- Chemical & Engineering News
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