Cosmolab, the cosmetics factory in Lewisburg, will be sold to one of its competitors, a German business, a Cosmolab spokesman said Wednesday while explaining the business' exit strategy from a bankruptcy petition filed that day.
"The company has a purchase agreement to sell the company," according to Michael Musso, chief restructuring officer for Specialty Packaging Holdings (SPH) Inc., Cosmolab's parent company. "It's already in place," Musso said in a cellphone interview as he traveled to Delaware.
Cosmolab's petitioned to the U.S. Bankruptcy Court in Wilmington, Del., is for protection from creditors as it financially reorganizes itself. That restructuring is to lead to Cosmolab's sale to All4 Cosmetics Inc., a subsidiary of Schwan-STABILO Cosmetics, of Nuremburg, Germany.
The nature of the bankruptcy petition is designed for businesses that have a buyer at the end of the process.
"All4 is prepared to continue business operations in Lewisburg, continuing Cosmolab's long history as a leader in the manufacture of color cosmetics and cosmetic pencils," SPH said Wednesday.
"This is not a liquidation," said Musso, an employee of the Morris Anderson firm in New York that's served financially distressed companies since 1980. "The company [SPH] has made a tremendous amount of capital investments in recent years. Some did well, some did not, and when the global crisis hit, the company faced liquidity issues and the board of directors felt this was the best solution for the company and also to ensure that the jobs were maintained and the company kept going.
"In the past month we have relocated a division from Oxnard, Calif. that makes mechanical cosmetic pencils," Musso said. "That division has been moved - the equipment arrived last week."
It will result in job openings at the plant here, Musso said, estimating the number at "15-20" production jobs.
However, his estimate of the number of employees at the plant now was 250 and a Lewisburg city listing of businesses here shows of the number of employees working at the Cosmolab plant is 350, a number established in September.
"The good news is that we've worked very hard to keep the jobs in Lewisburg and the buyer anticipated maintaining the Lewisburg operation," Musso said.
Lewisburg Industrial Development Director Terry Wallace said his periodic checks on businesses here led him to believe that "Things are getting better, but they're not out of the woods yet."
He also noted that Cosmolab became the production facility for a new product, a line of hypo-allergenic, organic make-up, that led to a state grant to pay for specialized training of the employees.
Specialty Packaging Holdings' announcement said the color cosmetics manufacturer's leadership "will continue to conduct business as usual during the Chapter 11 proceedings while they undertake to sell their assets."
The companies "have sought emergency relief to ensure the continued payment of employee wages and benefits and the ability to honor existing customer programs," according to the one-page, four-paragraph press release.
"We would expect the reorganization could take 60-75 days but it could take up to 90 days," said Musso, whose employer was retained by SPH in April.
Cosmolab's long history as a pencil manufacturer was one of the reasons Schwan wants to buy the Lewisburg operation, Musso said.
"Cosmolab is the only manufacturer of wooden cosmetic pencils in the US today," he said. "Schwan has long valued Cosmolab as a competitor."
"SPH announced that it has arranged a debtor-in-possession financing facility with Bank of America which will be presented to the court for approval," the company said.