Nonwovens Industry
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PGI



Published January 1, 2002
Related Searches: apertured film Automotive battery separator spunmelt
PGI
PGI
Related Sales Reports
Location: North Charleston, SC

Sales: $734 Million

Description: Key Personnel
Jerry Zucker, chairman, president and CEO; James Schaeffer, executive vice president and president and COO of Nonwovens Division; Jim Boyd, executive vice president, treasurer and CFO; Thomas Phillips, senior vice president; Rick Ferencz, group vice president-engineering and Asia; Rick Pearce, vice president-industrial and new business development; David Yalenti, vice president-wiping products; Fernando Espinosa, vice president-Latin America; Rolf Altdorf, vice president-Europe, Middle East and Africa; William Spencer, vice president-Europe; Mike Hale, vice president, operations; Nyle Bishop, vice president, medical; Robert Dale, vice president, Apex

Plants
Landisville, NJ; Rogers, AR; Vineland, NJ; Benson, NC; Gainesville, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Neunkirchen, Germany; Cuijk, The Netherlands; Tilburg, The Netherlands; San Luis Potosi, Mexico; Buenos Aires, Argentina; Bailleul, France; Nanhai, China; Cali, Colombia; Istanbul, Turkey; Molnlycke, Sweden

ISO Status
Landisville, NJ; Rogers, AR; Vineland, NJ; Benson, NC; Gainesville, GA; North Little Rock, AR; Mooresville, NC; Waynesboro, VA; Nanhai, China, Buenos Aires, Argentina; San Luis Potosi, Mexico, Molnlycke, Sweden, Istanbul, Turkey and Cuijk, The Netherlands facilities are ISO 9002 certified

Processes
Spunbonded, melt blown, SMS, composites, air through bonded, adhesive bonded, resin bonded, thermal bonded, spunlaced, airlaid, wetlaid, apertured film, film laminates, sonic laminated, thermal laminated, APEX, other proprietary fabric forming, surfacing and binding systems

Brand Names
Apex, Agribon, Amira, Bonclin, Bonlinn, Bonsec, Dry-Fit, Duralace, Dura-Tex, Empact, Ensorb, Freeswell, Isolite, Keybak, Kiara, Masslin, Matline, Miratec, Multi-Strike, Poly-Breathe, Poly-Safe, Reticulon, Refortel, Softlin, Soft-Touch, TopSwell, Thermoform, Thermospost Ultra Dryloft, Ultra-Ply, Vignec, Waste-Set, Xiora

Major Markets
Agriculture, apparel, automotive, battery separator, cable wrap, filtration, home furnishings, hygiene, industrial, industrial and marine sorbents, medical, packaging, thermal barriers, wipes for cleanroom, food service and specialty end uses

The past 12 months have been challenging ones for N. Charleston, SC-based PGI Nonwovens, marked by a large-scale reorganization program and debt problems. In May, these troubles culminated with the company filing for “pre-negotiated” reorganization under Chapter 11 of the U.S. Bankruptcy code. The filing came after a proposed restructuring plan failed to win approval from the minority of PGI’s senior note holders. In its filings in the U.S. Bankruptcy Court in Columbia, SC, PGI indicated that it would reorganize on an expedited basis and expects to emerge from Chapter 11 by the end of the year. At the time of the Chapter 11 financing, PGI also received commitments for up to $125 million in debtor-in-possession financing from a group of lenders led by JP Morgan Chase to fund post-petition obligations. The filing included PGI’s 20 domestic subsidiaries; its international operations and joint ventures were excluded from the filing.
 
According to PGI executives, the company’s financial problems stemmed from a number of macrofactors including an aggressive capital investment program in 1999, high raw material costs, unfavorable exchange rates and an overcapacity situation in the spunmelt category, which has led to pricing erosions. “These factors were affecting everybody in the industry, but they came at a time when we were highly leveraged,” explained Robert Johnston, PGI’s vice president of strategic planning. “We had too much debt to be able to effectively handle all of the factors that developed simultaneously. Upon the near-term emergence from Chapter 11, PGI will be substantially better capitalized and a much stronger company.”
 
Before filing for Chapter 11, the company had received support for the major elements of the reorganization from its existing bank group and the holder of more than two-thirds of its outstanding bonds to implement the reorganization, which would have eliminated more than $550 million in debt through a reorganization of company finances. Additionally, the company had a commitment for up to $75 million in the form of new money investment for CSFB Global Opportunities Partners, a New York, NY-based investment fund. This plan, however, failed to win approval by a minority of PGI senior note holders, giving the company no other choice than to file for bankruptcy protection.
 
PGI’s debt problems began at the end of 2001 when its lenders exercised their rights to block bond payments after the company defaulted on a senior credit facility. Then, on March 25, some of the company’s aforementioned note holders tried to force PGI into involuntary Chapter 11 status after it was blocked from making two interest payments on $600 million in debt securities. The involuntary Chapter 11 petition was subsequently dismissed so the company and its creditors could negotiate a possible restructuring, but the company and the minority note holders could not come to terms. The court authorized PGI to continue certain actions, including entry into the DIP financial agreements, continuous wages and benefits to employees without interruption and payment of certain pre-filing obligations, despite its Chapter 11 status.
 
While company executives described the Chapter 11 filing as an “unfortunate situation for its business” for some of its partners and shareholders, it has not affected business as usual for PGI. “We have been able to meet all of our orders,” said James Schaeffer, executive vice president and CCO of PGI’s Nonwovens Division. “There has been absolutely no interruption to our business.”
 
Additionally, executives expect PGI to emerge from Chapter 11 as a stronger entity with a reduced debt load and a secure financial structure. “This is a not a company that has a bad product or a bad plan,” Mr. Johnston said. “It is a good company in a good industry that just had too much debt to carry during an industry slowdown.”
 
In addition to the financial restructuring plan, PGI has been focusing on other cost reduction practices to improve its bottom line. In November, PGI launched a restructuring plan designed to save the company $55-60 million annually and reduce its global workforce by 14%. The restructuring was viewed by the company as an important step in positioning PGI to return to growth and profitability in coming quarters. Now that the restructuring plan is complete, PGI has no plans for future employee layoffs. Instead the company will rely on best practices to control costs.
 
In terms of growth, PGI has continued its focus on Latin America as an important growth area. In April, the company announced the addition of a new spunbond line at its Bonlam facility in San Luis Potosi, Mexico. The new line will target the Latin American medical, industrial and hygiene markets when it comes onstream in 2003. In addition to Bonlam, PGI has plants in Buenos Aires, Argentina and Cali, Colombia. “We are a leader in Latin America with plants strategically located all around the region,” Mr. Schaeffer re­marked. “Not only do we focus on different areas of the region, we offer all different technologies and we will continue to expand there in the future.”
 
In Asia, the company’s Nanhai, China plant continues to meet expectations. The facility, which contains two spunbond lines, produces material for hygiene, medical and agricultural applications in a variety of Asian markets. PGI purchased the Nanhai site in 1999 and added the second spunbond line in 2000, poising the company for an Asian recovery.
  
In the U.S., the major news from PGI was the downsizing of its Landisville, NJ plant last summer. The plan reduced the operations at the plant by relocating some of its thermal bonding production to PGI’s Rogers, AK site. Additionally, 70 of the plant’s 135 positions were eliminated. While reducing operations in Landisville made good business sense to the company, PGI has no plans to close the facility or any of its 25 other production sites around the world.
 
Of continued interest for PGI is its Miratec business and its Apex technology. While PGI completed the bulk of its investment in this portion of the business in 1999, the company continues to predict the technology will form the backbone of its future growth. Mr. Schaeffer said. “It’s a truly advanced technology and we can do things with it that no one else can.”
 
One prime area where Miratec, an engineered material formed through an Apex process, shows definite potential is the apparel industry. Most recently, Levi Strauss has been selling dungarees under its Engineered Jeans label. Additional areas where Miratec seems to have opportunity include upholstery and furniture, filtration and automotive.
 
While Apex and Miratec have been important parts of PGI’s research and development efforts during the past three or four years, other segments have not been ignored. For instance, the company’s hygiene business remains an important entity within PGI, and the company is constantly working on new products to differentiate itself from the competition. In fact, one of the ways in which PGI distinguishes itself on the playing field is through its strong commitment to research and development. Despite its financial troubles, the company has maintained its commitment to investing in innovations, keeping its research and development budget around $20 million per year.
 
“We will continue to use technology to enhance our business,” Mr. Schaeffer said. “We are receiving an increasing number of patents based on initiatives begun during the past few years. Our research and development capabilities is one of the benefits a large company such as PGI has over regional players. It’s one of the key factors that separates us from the competition.”
 
In other news, the company’s partnership with automotive supplier Johnson Controls, Milwaukee, WI, continues to expand PGI’s U.S. automotives business. Under the terms of the agreement, PGI assists Johnson in producing fabrics for vehicle ceiling and door panel applications that also act as sound insulation. Johnson and PGI are reportedly expanding into additional product areas with the agreement. Additionally, PGI has formed a supply agreement to produce a proprietary Miratec/Apex fabric for the DuPont Advanced Fibers Systems Business. DuPont Advanced Fiber Systems group is offering thermal protective apparel using DuPont’s Nomex fiber and PGI’s Apex fabric forming technology to provide unique features and benefits in protective apparel.
 
For the future, PGI will take several steps to achieve growth. For now, the company’s number one priority is emerging from Chapter 11. Once that hurdle is passed, the company will continue to focus on innovation, take advantage of opportunities in emerging markets and develop new products through a strong research and development effort. “That’s the way we are structured,” Mr. Schaeffer said. “The nonwovens industry can expect to see good things from PGI in the future.”