16 Jul2014
Written by CFB Blogger. Posted in Blog
Trellis Earth Products, Inc., a manufacturer of such disposable bioplastic food service items as cutlery, food containers and shopping bags, will reportedly be paying $2.6 million for most of the assets of
Cereplast, including production equipment, patents, inventory and trademarks, as well as paying some of the costs intrinsic in Cereplast’s Chapter 7 bankruptcy. Cereplast, which had been headquartered in El Segundo, California, had moved its company to Seymour, Indiana about a year ago.
Trellis Earth is a 7-year old company, headquartered in Portland, Oregon. The company has over 500 customers in the food service industry including
Kroger, Trader Joe’s, and
Wegmans.
From an article by Gerry Dick for
Inside Indiana Business, Mike Senzaki, Trellis Earth CEO, stated, “’We have long wanted to mark our products as ‘Made in the U.S.A.’. The acquisition of this factory will enable to us to quickly become the pre-eminent American supplier of bioplastic food service disposables. Of our 100+ products, we hope to make at least 50 percent of them in the U.S. within six months and the balance within a year.’”
Trellis Earth is a privately held company with almost $20 million of sales since 2007. The news story reports that “the company is targeting $8.5 million in revenue for 2015 based on strong forecast demand from customers seeking its U.S.-made, corn starch based, proprietary bioplastic finished goods. The 105,000 square foot facility acquired from Cereplast has existing annual bioplastic manufacturing capacity to produce materials worth over $50 million.”
The back-story on Cereplast’s Chapter 7 bankruptcy:
Cereplast had planned to make their Indiana manufacturing facility the largest bioplastics manufacturing facility in the world. However, in February, it had filed Chapter 11 bankruptcy in order to stop an impending foreclosure on their headquarters by
Horizon Technology Finance Corp., a secured lender. In March, the case was converted to that of a Chapter 7 bankruptcy in the New Albany, Indiana, bankruptcy court.
Cereplast’s Indiana plant would have created some 200 jobs, perhaps now fulfilled by the Trellis Earth purchase.
The Indiana Economic Development Corp. reportedly offered Cereplast up to $665,000 in performance-based tax credits as well as up to $60,000 in training grants. The city of Seymour granted additional incentives.
However, the article continues, although Cereplast predicted that its environmentally-friendly components would become the industry standard in plastic production, it had a difficult time finding and retaining customers. The plant never achieved its goals, reaching peak employment of only about 50 in 2011. The next year saw the company losing $30.2 million on sales of less than $1 million; it then began missing debt payments. Although sales doubled to approximately $2 million through the first three quarters of 2013, losses grew to $34 million. Employment fell to just 20 workers by the end of 2013.
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