Dynamic acquisition
lamination division of Ormet Corporation comes after the
publication of some rather unspectacular third quarter results. Net
sales for the three and nine months ended September 30, 2003 were
$66.2 and $196.1 million compared to net sales of $64.1 and $190.0
million for the same periods in 2002. The takeover of Iuka, which
is still subject to certain closing conditions, will be an all-cash
deal and is expected to close in the fourth quarter of 2003.
The Iuka Lamination Division currently consists of one converting operation located in Iuka, Mississippi. The operation produces laminated foil products for the insulation, food packaging and label stock markets. Packaging Dynamics expects the acquisition to add approximately $15 million in annual revenues. The transaction purchase price is approximately $5 million.
"Our acquisition of the Ormet foil laminating business broadens our laminating capabilities and demonstrates management's commitment to our Specialty Laminations markets and customers," said Packaging Dynamics chairman Frank Tannura. "The acquisition creates opportunities to extend our product development capabilities and lower our overall cost position in laminations. We expect the investment to be earnings neutral in 2003 and modestly accretive in 2004."
The company well certainly be hoping that the acquisition can bolster the group's economic performance. Net loss for the three and nine months ended 30 September 2003 was $15.9 and $13.3 million, respectively, compared with net income for the three and nine months ended 28 September 2002 of $0.9 and $1.5 million, respectively.
In addition, current period net income has been affected by a $22.1 million asset impairment and a $2.8 million severance charge related to the recent shutdown of the company's Detroit paper mill. The company says that there will be additional costs associated with the shutdown of the paper mill, which will be recognised in the fourth quarter and 2004. Also, the company completed a senior debt refinancing in the quarter which resulted in a $0.7 million charge to write off unamortised financing costs.
Packaging Dynamics, headquartered in Chicago, Illinois, is a flexible packaging company that laminates and converts paper, film and foil into various value-added flexible packaging products for the food service, food processing, bakery, supermarket, deli and concession markets as well as a limited number of industrial markets.
