Would-be buyer wants Freedom Plastics kept open
Georgia Gulf, based in Atlanta, thought it won last week's auction of Freedom's assets. But a Rock County judge agreed Monday with Freedom's court-appointed receiver to hold another auction next week.
"Had we won yesterday, we would have been there today engaging the employees," said Ashley Mendoza of Georgia Gulf, which makes a variety of building and home improvement products.
"That was our plan."
Freedom employees in Janesville and Fort Pierce, Fla., will have to wait through another auction of the company's assets to learn whether a new owner will secure their jobs.
Georgia Gulf and Silver-Line Plastics of Asheville, N.C. were the high bidders at last week's auction for Freedom's assets in the two states. Silver-Line wants the Florida operation, while Georgia Gulf is interested in buying the Janesville plant to complement its Royal pipe business in Canada.
Rock County Judge Kenneth Forbeck approved a request Monday from court-appointed receiver Michael Polsky to hold another auction next week.
Freedom makes PVC pipes and fittings and supplies the wastewater, plumbing, irrigation and industrial markets. It's been hit hard by a depressed construction economy and mounting costs for raw materials.
With liabilities greater than assets, Freedom entered a receivership sale in early February in hopes it could stay in business. It has more than 100 employees in Wisconsin and Florida who have been told they'll be out of a job in April unless a buyer steps forward and decides otherwise.
Polsky said Bank of America, Freedom's primary secured creditor, would not agree to last week's high bid from Silver-Line Plastics and Georgia Gulf.
Last week's high bid was for an amount "substantially less" than the $20 million Freedom owes the bank, and Polsky said the bank has the right to decline it. Extensive negotiations between Polsky, the bank and the high bidder failed to produce an agreement.
Marc Skapof, the attorney for Silver-Line and Georgia Gulf, objected to the new auction, saying his clients won the last one. Skapof expressed concern that the bank came in after last week's bidding was complete and started negotiating and cutting side deals with other bidders.
If the bank doesn't like the results of the receivership auction, it should have opted for a different proceeding, such as a foreclosure against Freedom, Skapof said.
"The bank has to live by the rules of the proceedings they're in," he said.
Forbeck said that what did or did not happen after last week's auction could be the subject of a separate evidentiary hearing.
Earlier this year, Bank of America agreed to finance Freedom's operations until a buyer was found. That financing ended Friday, although the company still was in production Monday.
Polsky said a company consultant was preparing an operating budget for the next couple of weeks, and the bank will decide whether the company keeps running or shuts down.
Silver-Line Plastics and Georgia Gulf joined forces to submit last week's high bid.
Georgia Gulf's products are used in a range of applications including pulp and paper production, packaging, chemical intermediates, pharmaceuticals and medical applications.
Founded in 1985, Georgia Gulf had 2007 revenues of $3.16 billion and more than 5,000 employees.
"Our intention is to operate Janesville as a pipe and fitting plant and maybe even expand it," Mendoza said. "We have a process that we'd need to go through to rehire the employees, but the existing employees are the logical place to start."