Key Plastics (Farmington Hills, Michigan / USA; www.keyplastics.com) is currently converting around USD 115m of senior secured notes into equity. The transaction, scheduled for completion by the end of January 2009, also transfers control from Ewing Management to the main creditor Wayzata Investment, which holds 50% of the notes. As part of the arrangement, the US automotive supplier with activities in Europe will receive liquidity of around USD 20m, will be relieved of most of its debt and will have an equity ratio of 40-50%, said Helmut Hinkel, managing director of the Key Plastic North Division in Europe, which has production facilities in Germany and the Czech Republic.

Ewing Management, founded by B. Edward Ewing, has managed Key Plastics since its acquisition by Carlyle Management in 2001 (see Plasteurope.com of 30.09.2004). The plastics company and Key Safety Systems are now owned by a holding company, Key Automotive Group, established in 2002. Altogether, the companies employ 14,000 people in 15 countries and have annual sales of around USD 1.8 bn

Unlike the French-Slovakian unit, which has filed for protection from its creditors (see Plasteurope.com of 01.12.2008) and is directly linked to the US parent company, the three other European divisions of Key Plastics – operating in Germany/Czech Republic, Italy and Portugal (to which two facilities in Shanghai are attached) – are managed largely independently. Hinkel said he assumes that the debt-to-equity swap will provide a stable financial basis for the US and European operations. Moreover, the new principal shareholder Wayzata, does not seem disinclined to invest in Europe.

The difficulties at the French operations are attributed in part to problems with the Renault “Laguna”, which has achieved only about a third of the initially expected sales volume. The problems also affect Key’s affiliated facility in Dolny Kubin / Slovak Republic, which is close to the assembly plant for the Kia “Ceed”. The French unit is also suffering from a number of recent product launches which have not been very successful. The French company was forced into administration by the need to adjust capacity, mainly because there is little alternative when planning restructuring in France, according to Hinkel.

Key Plastics’ North Division, which operated as Kendrion RSL until it was acquired by Key Plastics in 2006, recently received an order from Volkswagen, its top customer in the US. It will be supplying pressurised fluid reservoirs for the new “Jetta”. The German unit’s strength lies in IMD parts for instrument panels. For example, it is supplying artificial wood trims for the Opel “Insignia”. It also has expertise in centre consoles (mainly VW) and engine components (mainly Daimler). In the new VW “Golf”, Key Plastics will be replacing the PVC slush skin produced for instrument panels with a TPE skin manufactured with proprietary technology based on a dual-component (rigid/flexible) injection moulding process. It has apparently invested a significant amount in dual-component machines and clean room production cells for this order, although Hinkel did not provide figures.

Like most other suppliers, Key Plastics North is impacted by the production cutbacks in the automotive industry. Hinkel said the division has noticed a drop in revenues from Opel and Daimler since September, and a less pronounced downturn from VW. It expects to hold full-year sales at close to last year's level of around EUR 200m. In 2007 Key Plastics had 5,600 employees worldwide and reported global sales of over USD 700m.