A federal judge approved a $9.6 million purchase bid for Pinnpack, allowing the California recycled PET thermoform manufacturer to remain operational.
A recently formed company called Pinnpack Capital Holdings (PCH) submitted the bid to acquire Oxnard, Calif.-based Pinnpack, which is owned by bankrupt PET reclaimer CarbonLite. PCH is managed by a Pinnpack leader.
Pinnpack takes RPET produced by its parent company and processes the plastic into food packaging. Pinnpack used 7.3 million pounds of RPET in 2018, 8.9 million pounds in 2019 and 8.8 million pounds in 2020, according to state documents. The company expects to use 10.1 million pounds this year and 12.1 million pound next year.
After filing for Chapter 11 bankruptcy in March, CarbonLite had its RPET production plants in Riverside, Calif.; Dallas; and Reading, Pa. sold to The Sterling Group, Indorama Ventures and DAK Americas, respectively. Pinnpack went on the auction block on June 16, and a judge approved PCH’s $9.6 million bid – the only bid received – on June 22.
In a declaration submitted to the U.S. Bankruptcy Court for the District of Delaware, CarbonLite’s chief restructuring officer, Brian Weiss, told the judge that the sale to PCH was the only way to prevent the closure of Pinnpack, which lacked the cash to continue operating.
“Absent immediate consummation of a Sale Transaction, PinnPack would be forced to terminate its 190 employees and liquidate its assets,” Weiss wrote.
Plans to invest in Pinnpack
PCH plans to invest millions in the company, court records show. The managing owner of PCH is Ira Maroofian, who has been president of Pinnpack Packaging LLC since June 2016 and is a member of the board of directors for CarbonLite Holdings LLC.
In a declaration submitted to court, Maroofian noted that multiple investments have been lined up to support Pinnpack.
He said Iraj Barkohanai and family trusts controlled by Barkohanai will make an initial investment of $12 million in Pinnpack. In his filing, Weiss said Barkohanai owns 90% of PCH.
“PCH’s investors are ready, willing and able to invest additional amounts into PCH if necessary,” Maroofian wrote.
Additionally, the California Department of Resources Recycling and Recovery (CalRecycle) has an agreement, subject to final state approval, to loan Pinnpack up to $3.25 million, Maroofian’s documents show. CalRecycle has already provided Pinnpack $3 million in low-interest loans through the Recycling Market Development Zone program to expand in recent years, and CalRecycle claims it is still owed over $2.6 million on those loans. The tentative deal to lend more money includes a settlement between the parties over the outstanding debt.
Maroofian’s submittal included a financial projection showing Pinnpack getting on more solid financial footing. The projection showed Pinnpack bringing in about $3.66 million in revenue and spending $3.59 million in expenditures each month, resulting in about $65,000 in positive cash flow each month.
