Thursday, June 10, 2004

Milacron embraces new financing plan

Shareholders approve bailout measure

By James McNair
The Cincinnati Enquirer

Milacron Inc. trumpeted the occasion of its 119th annual meeting Wednesday, and shareholders approved a financing plan that ensures it won't be the last.

Facing loan defaults and the possibility of Milacron's bankruptcy, shareholders consented to a bailout package that leaves majority ownership of the company - momentarily at least - in the hands of two foreign investment funds. One of the funds, Mizuho International, is an offshoot of the world's biggest bank, Japan's Mizuho Bank.

Milacron needed shareholders to approve the issuance of $100 million in preferred stock to Mizuho and Glencore Finance of Switzerland. That approval, in turn, gave a green light to the company's issuance of $225 million in 111/2 percent bonds due in 2011, the proceeds from which will be used to pay off $140 million in bonds due next April. Milacron also has a new $75 million line of credit from JP Morgan Chase at its disposal.

"This is tremendous for the company," Milacron chairman and chief executive Ron Brown said after the votes were counted at the meeting, held at the Cincinnati Museum Center. "I can say with confidence now that your company has a bright and exciting future."

Milacron, which employs a little more than 1,000 people in Walnut Hills, Batavia and Oakley, makes plastics-manufacturing machinery and industrial fluids. Its machines are used to make Gillette razors, Dunkin Donuts cups, plastic lumber and DVDs. Its fluids are used in the machining of assemblies for Honda automobiles and the Boeing Delta missile.

"We have the technologies, the products and the talent and now we have the financial ability to succeed," Brown said.

Milacron lost $450 million in the last three years, and its $739.7 million in sales last year was a 24 percent decline from 2000. But Brown said the company invested $56 million in research and development during the three-year downturn and is now expanding into new markets.

"I firmly believe we're at the beginning of a recovery in capital spending," he said. "We have seen significant increases in plastics manufacturing spending in this country. I don't see a company that is better positioned than Milacron to take advantage of that recovery."

Glencore and Mizuho control 57.9 percent of Milacron's shareholder vote. That will change, however, if shareholders exercise newly issued rights to buy 15 million common shares at $2 apiece. With only one seat on the company's board of directors, the outside investors appear content to have a passive role.

Had shareholders not approved the measures Wednesday, Milacron would not only have faced the threat of defaulting on its 2005 bonds, but it would have had to pay at least 20 percent interest on Glencore and Mizuho's $100 million investment. Steven Isaacs, Glencore's chairman and now a Milacron director, is hopeful that the purchase of the preferred shares, which pay a 6 percent dividend, was a sound one.

"Now that the deal is finalized and all the refinancing steps are put in place, it will come down to execution of the business plan," Isaacs said.

The stock market has given Milacron a thumbs-up. Since the $100 million investment was announced March 12, Milacron shares have soared 84 percent, closing Wednesday at $4.41, up 3 cents on the day.


Airport tries to lure low-costs
Chart: Few survivors in low-cost carriers
Clear Channel to pay record $1.75M fine
May buys Marshall Field's
Big lesson from IBM: Heed customer's needs
Peale: Dewey's owner tempers growth
Belle of Cincinnati has dates with West Virginia cruisers
Delta jet tests alert system for turbulence
Milacron embraces new financing plan
Day care workers join NYC protests
Get savvy, save more to retire
Business Digest
Business People