NEW YORK — Wellman Inc. scored both fourth-quarter profits and new financing on Thursday.
This story first appeared in the February 14, 2003 issue of WWD. Subscribe Today.
The Shrewsbury, N.J.-based polyester fiber and packaging resin maker said that, in a move to reduce debt, it entered into an agreement to sell up to $125.4 million of perpetual convertible preferred stock to private equity firm Warburg Pincus. As such, Warburg is investing $20 million in Wellman in the form of a convertible subordinated note that will be converted into preferred stock upon shareholder approval and warrants to purchase 1.25 million shares of Wellman common stock at an exercise price of $11.25 a share.
In a statement, the firm said proceeds from the transaction will be used primarily to pay down existing company debt of $233.6 million. In addition, Warburg vice president Oliver Goldstein was named to Wellman’s board of directors, bringing the number of directors to nine.
The deal is contingent upon shareholder approval, expected during the second quarter commencing in April, and Wellman’s ability to obtain a new $175 million credit facility to replace its existing $275 million facility, which matures in September. The firm’s lead banks, J.P. Morgan Chase Bank and Fleet National Bank, will arrange and have committed to participate in the new facility.
Also on Thursday, Wellman reported stronger sales allowed the company to swing back to the black for the fourth quarter. For the three months ended Dec. 31, the firm recorded profits of $3.4 million, or 11 cents a diluted share. That compares with last year’s loss of $600,000, or 2 cents. Excluding unusual items in both years’ quarters, net earnings from continuing operations were $3.1 million, or 10 cents, versus a loss of $4.4 million, or 14 cents, a year ago. Excluding unusual items in both years, earnings from continuing operations grew 63.4 percent to $26.2 million, or 82 cents, versus income of $16 million, or 50 cents, in 2001.
Sales for the period rose 11.8 percent to $250.2 million from $223.8 million a year ago.
For the year, the company lost $194.4 million, or $6.07, versus profits of $8.4 million, or 26 cents, a year ago. Full-year results included a $197.1 million aftertax charge for goodwill impairment. Sales for the year ticked up 0.7 percent to $1.01 billion from $1 billion last year.