The sale of Flat River Glass factory to Austria“s Stlzle-Oberglas has been finalised despite a eleventh-hour challenge from a rival bidder on 6 October 2005.
On 3 October 2005, Stlzle had signed an …
The sale of Flat River Glass factory to Austria“s Stlzle-Oberglas has been finalised despite a eleventh-hour challenge from a rival bidder on 6 October 2005. On 3 October 2005, Stlzle had signed an asset-purchase agreement with bankrupt Glass Group Inc. of Millville, New Jersey, to buy Missouri-based Flat River Glass and two glass-coating plants in New Jersey for USD 12 million in cash and the assumption of USD 2.1 million worth of liabilities. The deal needed approval from Judge Peter Walsh of the Bankruptcy Court in Wilmington, Delaware. However, in a dramatic move on 6 October 2005 Gujarat Glass announced its intent to offer USD 16 million in cash and assume a similar amount of liabilities for the Glass Group assets. To give the Indian company time to prepare a bid, Gujarat Glass asked Judge Walsh to delay any decision on the sale until 11 October 2005 so it could finish examining the plants“ assets over the weekend. However the requested delay of five days was too much for Glass Group and its creditors to consider. They asked Walsh to approve the Stlzle deal immediately, because the Indian glassmaker gave no guarantee it would submit a bid. They also noted that key lender CapitalSource Finance LLC would not extend a maturing loan of more than USD 38 million if the Stlzle deal was delayed, which would have have forced Glass Group to shut down operations. A delay also would have allowed Stlzle to withdraw from the deal without a penalty, which the Austrian glassmaker said on 6 October 2005 it would do. The hearing was accessible on a conference call. The United Steelworkers of America and the Glass, Molders and Pottery Workers unions, which represent workers at the Glass Group plants, objected to any delay, saying it would put jobs at risk. About 530 people work at Flat River Glass. A lawyer for the Glass, Molders and Pottery Workers union also expressed concern that Gujarat“s overriding interest in buying the businesses was to obtain the customer lists and then move the work to India. Gujarat has two glass plants in northwestern India and one in Sri Lanka. Given the opposition, Walsh approved the sale to Stlzle after a 90 minute hearing. Within minutes of the judge signing the order, Gujarat“s lawyer, Brendan Shannon, surprised the court with a new offer: Gujarat would forgo due diligence and immediately sign an asset-purchase agreement for the USD 16 million cash price, he said, thereby committing the company to buy the facilities on similar terms as Stlzle. The move led Glass Group and the unsecured creditors to support Gujarat“s offer despite the risk that the Indian company might be unable to complete the deal quickly. However, Stlzle, CapitalSource and the unions remained opposed to the Gujarat offer. “We urge the court to approve the Stlzle transaction and finally give certainty to these workers,” said Steelworkers lawyer David Jury. After all had spoken, Walsh ended the hearing, leaving unchanged his approval of the deal with Stlzle.