Hilex Poly Co LLC, the world's largest plastic bags company, has filed for Chapter 11 bankruptcy protection as part of an agreement with its lenders to restructure its debt - a move that will allow it to continue daily operations.
Hilex Poly has reached an agreement with its lenders to restructure its senior secured debt. The deal would help Hilex significantly reduce its annual interest burden and overall debt. In addition, the plan will significantly improve the company's cash flow, the company said in a release.
NNThe voluntary, pre-packaged Chapter 11 reorganisation will allow the company to finalise the restructuring of debt while continuing to operate.
Hilex, based in Hartsville, made the filing in the bankruptcy court for Delaware in Wilmington, Delaware.
"Hilex undertook a comprehensive strategic review to evaluate all options for restructuring our balance sheet and, after careful consideration, determined that a pre-packaged filing was in the best interest of all our stakeholders," said David Pastrich, president and chief executive officer of Hilex.
"We believe the restructuring will enable us to invest more capital in the business and position Hilex as a more attractive long-term partner for our customers and vendors. We will continue to focus on our industry-leading environmentally friendly solutions, including HED degradable bags, Bag-2-Bag in store closed loop recycling systems, and enviro-count rack technology," he said
The company, a subsidiary of the HPC group of companies in Los Angeles, has 11 manufacturing sites, including one in Milesburg.
''This is basically just a pre-planned restructuring of our debt,'' said Joyce Foster, vice president of human resources. ''There is no plan to do anything different tomorrow than we're doing today,'' she added.
Hilex said all lenders are participating and it expects the financial restructuring to take between 45 and 60 days. It is not expected to affect day-to-day-operations, including customer obligations, supplier commitments and employee pay and benefits, Hilex said in a statement.
Hilex has also arranged for debtor-in-possession financing from GE Capital and Morgan Stanley Senior Funding Inc, with an initial commitment of $140 million as well as a commitment for robust exit financing.
Hilex Poly Co LLC is an industry leader focusing on high density polyethylene (HDPE) film products and related services. It purchased the Milesburg facility from Sonoco Products Inc., which sold its high-density film operations, in 2003. In 1980, Sonoco entered the plastic bag business with one product offering, a 12 x 7 x 24, 18 micron, white film, t-shirt style bag printed in one or two colors.
The original plant had a production capability of 235,000 bags. HDPE resin was initially imported from Germany. A second plant was added in Santa Maria, CA in 1983. Over the years more manufacturing plants were added and product lines became more varied and specialised to meet the needs of particular market segments. That facility now manufactures approximately 5 billion plastic bags each year for retailers and grocery stores.
Whole foods chains have started offering plastic bags and instead ask customers to use its recycled paper bags or to bring reusable bags from home. Despite this, plastic bags remain quite popular for shoppers.