Coveris selling two business units

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Packaging manufacturer Coveris Holdings SA has realigned its operations into four business units, both to improve how it meets changing market demands and to explore selling two of the divisions.

The four units are: Americas; Rigid; Europe, Middle East and Africa (EMEA); and United Kingdom Food and Consumer.

The two units that are for sale are Americas and Rigids, according to Chairman and interim CEO Dimitri Panayotopoulos.

The sale process has begun on the Americas unit, and buyers "have been engaged" on the Rigids unit, Panayotopoulos said on the company's third quarter conference call on 17 Nov. 

"We have seen strong interest in both businesses and expect that both will be sold during the first quarter," Panayotopoulos said. "The sale of these business units will allow us to reduce our leverage, bolster the company's liquidity and enhance our financial positions."

Panayotopoulos added that the reorganisation will foster business with global customers who want to be served by local partners.

The Americas business has annual sales of about $1bn (€850m) and a roster of long-term customers, while the rigids business is ready for the next step in its evolution, according to Coveris officials.

Owned by the private equity firm Sun Capital Partners, Coveris had sales of more than $2.5bn (€2.1bn) in 2016 and says it is the sixth-largest packaging company in the world. Net sales were up $8m (€6.7m) to $628m (€533m) in the third quarter, with flexible packaging accounting for about $460m (€390m) and rigid packaging $168m (€143m).

However, overall sales were essentially flat compared on a currency basis to the prior year.

The sales process underway for the two business units is not expected to have any negative effect on operations or customer commitments, Coveris officials said, pointing to adequate liquidity to operate and grow.

"We continue to focus on growing profitable volume in a slow growth environment," Panayotopoulos said.

For example, a facility in South Carolina closed earlier this year and "profitable volume" was moved to another plant.

Coveris officials said they typically spend about $750,000 (€637,000) per plant on maintenance and they are looking at selling more than half of the facilities with the two business units, which should cut costs next year.

Coveris began as Exopack Holdings SA when it was formed in May 2013 through the combination of five previously separate companies: Exopack Holding Corp., Kobusch Group, Britton Group, Paragon Print & Packaging Corp. and Paccor.

The Americas business unit consists of the former Exopack Holdings plus several companies acquired in the last four years, including one in Latin America.

Coveris expects to name a new CEO in the fourth quarter. Then, in 2018, a "fairly significant" financial restructuring is planned after the sale process concludes, officials said.


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