Key highlights: 15% net sales growth, *Strong production in the quarter, *Record-high earnings for 2021' *Another strong cash flow delivery. Quarterly data: Net sales grew by 15% to SEK 6 688 million (5 803). Currency effects had a marginal impact on net sales, *Adjusted EBITDA* increased to SEK 1 075 million (568), corresponding to an adjusted EBITDA margin of 16% (10%), *Operating profit was SEK 418 million (163), including items impacting comparability of SEK -177 million (73),* Net profit was SEK 320 million (242)
Appleton Coated today said that it has filed a voluntary state Chapter 128 petition for receivership to allow the company’s operations to continue under the supervision of a court-appointed receiver named by the Outagamie County Circuit Court.
Company officials said the petition and appointment of a receiver will allow the company to continue operations under the direction of the receiver, who will lead a process aimed at selling the company’s assets to a buyer who will continue operations.
“Despite the best efforts of our employees and ownership group and the introduction of new products, this step is the best option at this point,” said Doug Osterberg, Appleton Coated’s president and chief executive officer. “While the company has made significant progress in diversifying its product offerings and entering new markets, the overall business climate is very challenging, and operating under a state court-appointed receiver is the best route to transition the business to sustained profitability.”
Osterberg added that profitability in the North American graphics paper sector has deteriorated in recent years due to digitization of communications and currency exchange rates that favor imports. These factors produced a decline in domestic demand, excess capacity and aggressive price competition in the company’s traditional coated and uncoated paper businesses, he said. He also noted that these market conditions combined with recent increases in raw material costs, especially market pulp, yielded lower sales volumes and declining profit margins.
Osterberg said the filing will also relieve the company’s burdensome debt and help attract an appropriate buyer. Operating results, he said, are expected to improve in the near term as the company fills unused capacity by moving into both the high-value graphics and commodity segments of containerboard packaging. He noted that the company will continue to take advantage of the many new and innovative products it has developed and in which it is a market leader, such as environmentally responsible products and products for high-speed digital inkjet printing, one of the few growth segments in printing.
He said the company’s bank has agreed to fund operations during the receivership and that the business will continue to operate during the transition. He added the company will be able to pay salary and wages and fund benefits for current employees.
While operations will continue, a WARN (Worker Adjustment & Retraining Notice) Act notice and a notice under the Wisconsin Business Closing Law must be provided, according to federal and state law. The notices are required in this case because the structure of the Chapter 128 proceeding technically results in the administrative termination of all employees at the end of the process, even though the receiver will try to sell the operation as a going concern. A buyer of the business will be requested to immediately rehire substantially all employees under its new ownership and operation of the business.
“The strategic location of Appleton Coated, coupled with the experience, knowledge and work ethic of its employees and the size and capabilities of its paper making machines and equipment, make it a logical candidate to transition to high value segments of the packaging market. We, therefore, expect, but cannot guarantee that a suitable buyer will be identified who will value the company’s strong workforce and be willing to invest in the future,” stated Osterberg.
Osterberg said he expects the Outagamie County Circuit Court to appoint Milwaukee attorney Michael Polsky of Beck, Chaet, Bamberger and Polsky, S.C. as Appleton Coated’s Receiver. Polsky has considerable experience in the field and has successfully worked with a number of Wisconsin companies in similar situations. Under state law, the receiver will continue to operate the business and manage the company’s assets, liabilities, finances and employees for the benefit of all creditors under the supervision of the Court.
“This has not been an easy decision for the ownership group that bought Appleton Coated three years ago, but market changes and world-wide economic conditions have forced our hand, and as difficult as this decision is, it’s the best move at this point,” Osterberg said.
Source: Appleton Coated Press Release