Embattled machinery manufacturer Milacron (Cincinnati, Ohio / USA; www.milacron.com) has voluntarily filed for protection from creditors in the US and Canada under US Chapter 11 insolvency law. European activities, which include machinery manufacturer Ferromatik Milacron (Malterdingen / Germany; www.ferromatik.com) and peripherals producer D-M-E (Mechelen / Belgium; www.dmeco.com), are unaffected. The company has been in financial difficulty for several years and was de-listed from the US stock exchange in May 2008 – see Plasteurope.com of 29.05.2008.

Under a plan similar to that devised for automotive supplier Key Plastics (Farmington Hills, Michigan / USA; www.keyplastics.com) which exited Chapter 11 last month – see Plasteurope.com of 23.02.2009 – Milacron has agreed with its main creditors, Avenue Capital Group and DDJ Capital Management to acquire “substantially all” assets – together the two private equity groups hold 78% of the US company’s senior notes worth nearly USD 223m. In return, Avenue and DDJ would enter into and pay down a USD 80m debtor-in-possession (DIP) term loan facility providing USD 40m in fresh funding for Milacron. An existing revolving credit would be replaced with a new USD 55m revolver from GE Capital. When the process is completed, the assets would be sold to the bidder submitting “the highest and best offer.”

Dave Lawrence, president of Milacron since December 2008, said the process “will allow the business to withstand current economic conditions as part of a new enterprise with a healthy balance sheet.” Signs pointing to insolvency were clearly visible in 2008. In December, the global group reported debt of USD 286m. Management forecast sales of USD 804 to 817m, including 674-684m in plastics machinery (the Chapter 11 filing points to unaudited sales of USD 788m). In the third quarter cash flow was a negative USD 34m, and a full-year net loss of USD 16-25m was expected.