Bankrupt National Envelope sold to competitor, including Fayette County plant
Bankrupt National Envelope agreed on Wednesday to sell its operating assets, including a plant in Fayette County, to competitor Cenveo Inc., the world's largest envelope maker, for $25 million.
Both companies have been affected by the rise of email and online bill paying, reducing demand for paper envelopes.
National Envelope, based in Frisco, Texas, said it reached a definitive agreement with Stamford, Conn.-based Cenveo to sell most of National's assets for $20 million in cash and $5 million in stock. A closing is subject to bankruptcy court approval, closing conditions and is expected to occur by the end of September.
The company's parent, NE Opco Inc., sought Chapter 11 bankruptcy protection on June 10 for the second time in three years. National Envelope employs 400 workers in Upper Tyrone Township, its largest of eight envelope manufacturing plants.
“We're very happy with the outcome of the Chapter 11 proceedings.” Jim Pinto, CEO, stated. “All parties involved worked diligently to see that the company was sold through the bankruptcy process and received the best possible outcome. This sale ensures the best result for all interested stakeholders, including debt holders, owners, creditors, customers and employees.”
Spokesmen for both companies could not be reached for further comment. Spokesmen for United Steelworkers Local 198, which represents workers at the local plant, could not be reached.
Pinto previously blamed a decrease in sales to competition and “a continuing decline in the volume of U.S. mail.” In filings in U.S. Bankruptcy Court in Wilmington, Del., he said “the company's customer base continues to encourage their customers to move towards an electronic flow of information.” Pinto has been CEO since January.
The company continued to operate under bankruptcy protection, but warned employees in June that falling sales and mounting financial problems could result in a sale or closing of all its sites.
The company has other plants in Appleton, Wis.; Industry, Calif.; Ennis, Texas; Frisco, Texas; Exton; Shelbyville, Ky.; Smyrna, Ga.; Westfield, Mass.; Lenexa, Kan.; and Kent, Wash.
Cenveo said it expects that the acquisition of National Envelope will increase sales by about $300 million and operating profit by about $30 million when the combination of the two companies is complete.
National Envelope reduced employment to about 1,600 workers from about 2,200 in the past year, and listed assets and liabilities of as much as $500 million each in its bankruptcy filings. It was “actively seeking a buyer who (will be) committed to the business,” a spokeswoman said.
National Envelope's Chapter 11 bankruptcy in 2010 resulted in an auction of its assets for $208 million to private-equity firm Gores Group LLC of Los Angeles after three years of losses caused by the recession and rising use of the Internet. Among the bidders in that sale was publicly owned Cenveo.
Since then, revenue declined by 20 percent to $427 million in 2012 from the year before, with a loss of $60.1 million compared with $44.1 million in 2011, its filing showed. The company has reported losses every year since 2007.