Shrewsbury, NJ, September 26, 2006—Wellman announced plans to restructure its U.S. fiber operations which are intended to improve its operating results, reduce working capital and lower overall debt.
The company will consolidate all of its U.S. fiber production to its Palmetto plant, located in Darlington, South Carolina and close the fiber capacity located at its Johnsonville, South Carolina facility. Wellman said it expects to sell its Material Recycling Division (MRD) which converts post-consumer PET bottles to flake and certain equipment used to produce Wellstrand (a specialty coarse denier fiber), both located at its Johnsonville facility.
All of these actions are expected to result in a pre-tax charge of $30-$35 million in the third quarter 2006 which is substantially comprised of non-cash items.
Joseph C. Tucker, Vice President of the Fiber and Recycled Products Group stated, "We will continue to meet our Johnsonville customers' requirements for high quality fiberfill from our Palmetto plant which has the capacity to produce 500 million pounds of polyester staple fiber annually."
Thomas M. Duff, Chairman and Chief Executive Officer, stated, "Consolidating our U.S. fiber production is expected to increase operating income and reduce working capital. We will be able to operate one fiber facility at close to full capacity rather than operating two under-utilized facilities. This will allow us to lower our overall costs and remain more competitive in our domestic fiber operations. This decision is not a reflection on the dedication or abilities of our Johnsonville employees."
The Company also announced that it is exploring strategic alternatives for its European fiber and PET resin businesses. Thomas M. Duff stated, "We are reviewing the performance of these businesses and exploring strategic alternatives with the goal of improving our overall corporate value."
