Anchor Glass wants to void deal to make Snapple bottles

A Tampa company's financial woes may mean trouble for the makers of Snapple, Yoo-Hoo and Nantucket Nectars.On Wednesday, Anchor Glass Container Corp. sought bankruptcy court permission to cancel its five-year contract with British conglomerate Cadbury Schweppes PLC.

Under the contract, Anchor is supposed to provide 16-ounce glass bottles for Snapple and other Cadbury beverages, as well as containers for certain Motts Inc. products, through 2008.

Anchor claims the contract has caused the company "substantial losses" and will continue to because the terms do not let it recoup the rising costs of natural gas, electricity and other raw materials used to make glass bottles.

"This contract is so bad for Anchor . . . we're better off not having it," said Rob Soriano, whose law firm, Carlton Fields, represents Anchor in the bankruptcy case.

Soriano said Anchor had little choice but to try to void the contract because attempts to renegotiate the contract have been unsuccessful. He said Anchor's best leverage is that Cadbury has few alternatives from which to choose. Only a handful of other companies make glass bottles and jars in the United States. A Cadbury spokeswoman declined to comment.

If Anchor cancels the contract, bankruptcy law permits Cadbury to seek damages. However, such damages are assigned a low priority in the long line for repayment and may not be repaid in full.

Anchor is trying to renegotiate contracts with other customers, including No. 1 client Anheuser-Busch, which accounted for nearly half of its revenues last year.

The threat to cut off Cadbury's bottle supply could hit Salem, N.J., hard. Anchor's plant there, one of eight nationwide, is reportedly the Cadbury contract's primary supplier and the city's largest employer, with about 350 workers.

According to Today's Sunbeam, a local newspaper, the Salem City Council approved tax breaks and other incentives Tuesday to help Anchor keep the factory humming.

Anchor filed for Chapter 11 bankruptcy protection on Aug. 8, its third such filing in the past decade. The company is seeking to shave its existing debts, renegotiate contracts with customers and suppliers and get $125-million in financing in order to return to financial health.

A number of potential hurdles stand in Anchor's way. Last week, for example, the company narrowly avoided being cut off by a supplier that provides 65 percent of its soda ash, a critical ingredient in the making of glass containers. Anchor owes the company several million dollars and is as much as a year behind on some of the payments.

600450 Anchor Glass wants to void deal to make Snapple bottles

See more news about:

Others also read

Emirates Glass, a Dubai Investment subsidiary, has won a major contract to supply 140,000 square meters of its premium glass to the prestigious development on the Palm Jumeirah, reaffirming its already established reputation as the single most prominent company in the entire regional glass industry.The deal was announced during the company's participation in the prestigious Big 5 show, the largest annual venue for the entire Middle-East glass contracting industry.
Isra Vision Systems AG supplier of machine vision systems, has successfully improved its market position in display glass inspection with a major order totalling 1.8 Mio Euro.
Packagers such as the UK's Rexam and private equity firms are set to vie for pump-sprayer business Calmar, which France's Saint-Gobain (SGOB.
Jain Scientific Glass Works, manufacturers of glassware for laboratories, is importing glass as raw material from China, which was much cheaper than the local product and abundantly available.
The National Lime & Stone Co. will discontinue production of calcined lime early next month at its Carey plant, the company CEO announced Thursday.
The following stocks are moving in Japanese markets today. Prices are as of 12:55 p.m. at the Tokyo Stock Exchange. Stock symbols are in parentheses after company names.

Add new comment