Solo Cup Co. reported lower earnings last Wednesday causing its debt to drop Thursday. The term loan recovered to the 100 3/8 context during mid-afternoon trading, but was still about 1/8-1/4 of a point lower than before the news. Its 8 1/2 '14 bonds were trading between 81.75-88.05, according to TRACE; they had been trading tighter on Wednesday, between 81-83.
For the 13 weeks ending Oct. 1, gross profit for Solo Cup decreased $25.7 million compared to the same time period last year, according to a filing with the Securities and Exchange Commission. For the thirty-nine weeks ending Oct. 1, the company reported a net loss of $339.3 million, versus a net loss of $13.5 million, as restated, compared to last year, according to a release.
In the release, Robert Korzenski, ceo, said the results were impacted by a challenging industry environment, increased raw material costs and isolated inventory management issues. He said the company looks to address these issues by improving manufacturing and supply chain efficiencies and to decrease some administration expenses, among other suggestions. It expects to generate net sales of between $600 million and $650 million for the fourth quarter of 2006.
The company has asked for a number of amendments throughout the year and following the Sept. 19 news that it would restate its financial statements for the 2005, the 2004 and the 2003 fiscal years, its debt also dropped. Its 8 1/2% '14 bonds dropped to 82 3/4 from 86 and its bank debt fell to 99 1/2-99 3/4 (CIN, 9/25). Bank of America leads the loan facility.
Solo Cup is a $2.4 billion company that focuses on the manufacture of disposable foodservice products, including cups and plates. A call to a Solo Cup official was not returned by press time.