Solo Cup to close Wheeling factory
Solo Cup Co., a Highland Park-based maker of disposable foodservice items, announced plans Tuesday to reduce its debt by $325 million, in part by closing manufacturing facilities in Wheeling and Leominster, Mass.
Both factories employ about 200 workers each, company spokeswoman Angie Chaplin said. Solo Cup will transfer about 70 to 80 jobs from each plant to nearby facilities.
Workers from Wheeling, as well as some equipment, will move to a facility located at 7575 S. Kostner Ave. on Chicago's South Side. The Wheeling factory is expected to shut down by Feb. 28.
The remaining employees, who are mostly hourly workers, will receive severance packages based on their length of time with the company and their positions, Chaplin said. The two manufacturing facilities slated to close produce disposable cutlery and plastic straws, Chaplin said.
The factory closings are part of the company's effort to increase efficiency by streamlining or eliminating some products, Chaplin said. Solo Cup has had some product overlap since it acquired SF Holdings Group Inc., another disposable foodservice company, in 2004, she said.
In addition to the factory closings, Solo Cup finalized the sales this week of two of its businesses, and net proceeds from these sales also will go toward reducing debt.
On Monday, Solo Cup closed a $170 million deal with Kohlberg Co. LLC to buy Solo Cup's Hoffmaster Co. Inc. brand. Solo Cup obtained Hoffmaster in 2004 as part of its SF Holdings acquisition.
And on Wednesday, Solo Cup finalized the sale of its uncoated white paper plate business to AJM Packaging Corp. Solo Cup, a privately held company that reports to the SEC because of public debt, did not disclose the price of this sale.
"I can tell you the amount is not material in terms of SEC reporting requirements, which is also the reason the sale was not previously announced when the agreement was initially reached with the buyer," Chaplin said.
The factory closings and the sales of both businesses are part of a larger "performance improvement program" the company instituted at the beginning of the year, Chaplin said.
Solo Cup swung to a profit of $3.2 million in the second quarter of 2007, after losing $38.7 million in the first quarter, on top of $373 million in losses in 2006. Solo Cup has not yet released third quarter earnings.
The company paid off a $130 million second lien loan in June following the sale and leasebacks of six of its manufacturing facilities, including those in Chicago and Urbana. Solo Cup's long-term debt totaled just over $1 billion at the end of the second quarter.