Glassmaker gets more time to avoid liquidation

Glass Group Inc., owner of the Flat River Glass factory in Park Hills, Mo., got a reprieve from repaying a $38 million loan due Wednesday.

The glassmaker's key lender, CapitalSource Finance LLC, agreed to extend the loan's maturity to Sept. 9, giving the bankrupt company more time to find a buyer for its assets.

An earlier threat by CapitalSource to force a closure and liquidation of the glassmaker is now on the back burner, though the issue might re-emerge if the Millville, N.J.-based company can't find an acceptable buyer by the end of next week.

Glass Group is trying to sell the Flat River Glass factory and other assets after creditors became frustrated with management's inability to turn around the money-losing operations. The glassmaker filed for Chapter 11 bankruptcy on Feb. 28.

The Flat River Glass factory employs about 530, making it the largest employer in Park Hills. The city of about 8,419 is in St. Francois County, 65 miles south of St. Louis.

Judge Peter Walsh of the Bankruptcy Court in Wilmington, Del., approved an amended loan agreement Wednesday afternoon that extended the loan's maturity by nine days.

On Wednesday morning, Glass Group said it received a 19-day extension, but that date was later reduced when the company and the lender hammered out the final terms of the deal.

During the Wednesday afternoon hearing, Glass Group's attorney, Derek Abbott, said the company was still working to find a buyer, but he offered no details.

"I don't want to tank the process by making public" the negotiations, he told Judge Walsh.

However, he agreed with the judge that there was some prospect for a sale.

Hopeful about reaching a deal, Glass Group has requested a Sept. 9 hearing to get the court's approval to sell the assets.

Four investors already bid for some or all of the properties in a Monday auction, but CapitalSource was unhappy with the bids since none were large enough to pay off the $38 million loan. The bidders and their bids haven't been disclosed.

CapitalSource lent the money to Glass Group after the glassmaker entered bankruptcy, making it the "debtor-in-possession" lender. Under bankruptcy law, the so-called "DIP lender" has a lot of clout because it has priority on repayment and holds liens against the assets.

To protect its interests, CapitalSource filed a motion Tuesday asking the bankruptcy court to shut down Glass Group's operations and liquidate the cash-starved company. The lender said it made more sense to shut everything down rather than let the business continue to pile up losses.

Though CapitalSource hasn't formally withdrawn this motion, the reprieve takes this issue off the table.

The matter could resurface if Glass Group fails to find a buyer by Sept. 9, the day the loan matures. The lender's attorney couldn't be reached for comment.

At that point, CapitalSource could seek to foreclose on the company's properties. Any request by the lender to shut down operations would require Judge Walsh's approval.

Glass Group is the largest maker of small, specialty molded glass containers in the United States.

Despite holding this niche, the company blamed rising energy and raw material prices for pushing it into bankruptcy. Besides the Park Hills plant, other assets include a glass-making plant and two decorating facilities in New Jersey and a stake in a glass-making joint venture based in Beijing.

600450 Glassmaker gets more time to avoid liquidation
Date: 2 September 2005

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