Glenshaw Glass buyer faces hurdles

William Kelman, the Pittsburgh businessman who purchased a small art glass company in Westmoreland County this year, yesterday said he has agreed to buy the assets of Glenshaw Glass Co., a shuttered bottle maker in Shaler.

Kelman said he signed an asset purchase agreement on Monday night with the intent of eventually resuming production at Glenshaw Glass, which was closed last year after being forced into a court-ordered receivership that was later converted to a bankruptcy proceeding.Earlier this year, Kelman rescued the L.E.Smith Glass Co. of Mt. Pleasant, a financially troubled hand-made glass shop that produces crystal punch bowls and other decorative items for retailers.

Glenshaw was a much larger mass producer of bottles and glass containers, employing about 300 before it was heavily damaged by last September's flooding.

The plant closed in November after a court-appointed trustee, Margaret Good, failed to quickly find a buyer following the ouster of former owner John Ghaznavi, who defaulted on a loan to PNC Financial Services Group.

Good, president of the Meridian Group, remained the chief responsible officer under bankruptcy.

The sales agreement for the bottle production plant comes just a month before the scheduled Sept. 14 start of an auction to sell equipment and other plant assets, including bottle-forming lines and stock room inventory.

Although the agreement is a positive sign that the plant may eventually reopen, the sale to Kelman must be approved by U.S. Bankruptcy Court Judge M. Bruce McCullough before it can take effect.

The court may entertain higher offers, if they are any, at a yet-to-be scheduled hearing on the sale. At least one other bidder may be interested, union representatives said.

Kelman has other hurdles as well, including conducting due diligence, negotiating a new labor agreement with Glenshaw's production unions and reaching out to beer makers and other former customers.

"What we hope to do is restructure the operations to make it profitable," Kelman said. "There are a number of valuable clients and business lines that we want to focus on, and weed out lower margin business."

The plant's largest union, the Glass Molders Pottery Plastics and Allied Workers International Union, is open to negotiations, said Fred Greenberg, an attorney representing the union, and Lou Brudnock, a local union president at the plant. "We're hopeful it will work out," Greenberg said.

Kelman stressed that the two glass companies would be operated separately. But he said they will cooperate in business areas where it might make sense to do so.

"They are totally different product lines," he said. "But we hope to find ways to work together, combining the strengths of L.E. Smith and the strengths of Glenshaw Glass."

Kelman declined to divulge the purchase price.

David Rudov, an attorney representing Glenshaw's unsecured creditors, however, said he believed the agreement calls for a price of $3.8 million with deductions to be made for inventory sales and accounts receivable collected before closing.

Rudov said the unsecured creditors approved the deal for two reasons. They believe it will generate more cash than auctions of property and equipment, plus it carries the prospect of re-employment for some former Glenshaw workers.

Kelman, 37, a native of Scotland, has lived in Pittsburgh on and off since 1980. A graduate of Point Park University with an MBA degree from Duquesne University, Kelman said he trained at Mellon Financial as a credit loan officer before becoming involved in real estate finance and manufacturing operations.

"My banking background has become very useful in terms of helping to structure transactions in such a way that we can get them to work," he said. "We have very good connections in the investment community beyond Pittsburgh."

Kelman said he had been involved in purchase discussions for only 10 days prior to the agreement. He said it is too early to say how long it might take to complete the purchase and put together a management team to operate the facility. He also said it was too soon to know how many employees could be rehired.

"I don't have an estimate, but the sooner the better," Kelman said. "We've got a lot of things to do to get to closing."

600450 Glenshaw Glass buyer faces hurdles
Date: 18 August 2005

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