The innovative Hoquiam-based wood composite company PanelTech International is being sold at court-controlled auction later this month and bidders already have begun lining up the necessary financial paperwork to offer a bid, according to guidelines in the federal bankruptcy proceedings.
So far, the price begins at just more than $2 million and some of the interest is local, including a group of former PanelTech executives.
“Three bidders have publicly expressed interest in bidding,” said Christine M. Tobin-Presser of the Seattle law firm Bush Strout & Kornfeld LLP, who represents the group of unsecured creditors. “We hope there will be even more as increased competition generally increases the ultimate purchase price.”
The auction will be Jan. 24, followed by a hearing to approve the successful bidder the next day.
Assuming a successful bid is approved by the court, Tobin-Presser said, the funds will ultimately be disbursed to creditors holding allowed claims according to established priorities.
“In their role as creditors, the unsecured creditors will have an interest in the bid that provides the most cash to the bankruptcy estate for disbursement,” she said.
The company filed for Chapter 11 bankruptcy last March after it had taken a $1 million commercial line of credit from Anchor Bank back in November 2010 with an outstanding principal balance of $965,000 due in full. The company was able to make the monthly payments of $5,200 per month, but said in its bankruptcy filings that it simply couldn’t pay the loan off.
PanelTech manufactures solid surface phenolic resin paper composite products under the Paperstone, Rainstone and Stonekast brands for kitchen and bath surfaces, architectural use and other applications. It also uses resins to create products such as vehicle armor and facility blast protection.
On Jan. 2, according to the most recent court filings, a group known as Paneltech Industries Inc. was listed in an asset purchase agreement that said the “seller contemplates the sale of substantially all of the assets related to the seller’s business.” The buyer has offered to pay a cash price of $2.08 million, according to the bidding procedures.
Records show the company is made up of current PanelTech staff and would include reorganization and refinancing. The officers are listed as PanelTech CEO and President Roy Nott of Aberdeen, Scott Olmstead, the company’s chief financial officer, and Ronald Iff, production manager at the Stevens Way facility. They formed the corporation last June.
That so-called “stalking horse” offer to buy the company set up a process overseen by U.S. Bankruptcy Judge Brian D. Lynch in which other potential buyers are allowed to be solicited and higher offers can be made at the impending auction, which then must be approved in a following hearing.
Other companies or corporations that have so far announced plans to bid are Little Green LLC, which records show was formed Dec. 21 by Randolph Rust and Gale Dahlstrom of Grayland, and Expanko Inc., a flooring products manufacturer with headquarters in Pennsylvania, court documents show.
All qualified bidders must disclose their identity under the court process before the auction and all bidders will be given competing proposals for the company on Jan. 23. Higher bids must be made in increments of not less than $25,000 than a preceding bid. Bidding also requires an initial $25,000 deposit.
The successful bidder then must pay the balance of the purchase price in full in cash at closing.
Amit D. Ranade, attorney for PanelTech International in the bankruptcy case, said he could not comment on the pending auction or possible outcome and referred to the auction sale notice and court documents.
The Chapter 11 application states that Paneltech owes more than $1.4 million to the top 20 highest unsecured creditors, including a $350,530 disputed products liability claim from Starbucks, insurance premiums, trade debt, equipment leases and stock repurchase notes.
As of March, the company employed 39 people, the filing said at the time.
The latest documents list the value of the company’s equipment at $765,600, with inventory of $598,698, accounts receivable at $530,917 and “intangibles” at $184,785.
Tobin-Presser noted that some individual creditors might have other interests in the auction, such as vendors of the company or employees who might want to stay with the company or continue a business relationship. “The Unsecured Creditors Committee represents the unsecured creditors as a whole and its interest is in achieving the highest return on allowed unsecured claims,” she said.