In the wake of downward spiraling sales and reduced liquidity, Chemtura Corp. filed for Chapter 11 bankruptcy protection on March 18.
The parent company of chemical manufacturer BioLab has arranged for $400 million of financing so it can pay future suppliers and move forward with day-to-day business.
Chemtura, however, is not currently looking to sell BioLab, and the restructuring effort should have a minimal impact on the company, noted Charlie Schobel, BioLab’s vice president and general manager, pool and spa products.
“At this time, we don’t see any concern in being able to provide product to our customers,” he said. “We’re a strong company that has a parent company with some cash liquidity problems.”
BioLab actually generated $50 million in operating income last year, Schobel added.
Chemtura’s heaviest losses were sustained in the specialty chemicals market, where weakening demand for industrial plastics caused sales to plummet.
Still, Lawrenceville, Ga.-based BioLab has seen its own fair share of change in the past few years, culminating in the restructure of its managerial team at the beginning of 2009.
Despite the bankruptcy filing, dealers remain confident in BioLab.
“I’m not expecting even as much as a hiccup,” said Chris Callanan, owner of North Shore Pool & Spa in Wakefield, Mass. “My company has been with them since the ’70s, and we’ve been through thick and thin.”
Nevertheless, dealers and service technicians industrywide are paying more for their chemicals these days. Three separate price hikes from various manufacturers since summer 2008 have increased the cost of these products 20 percent across the board.
The increases may be long overdue. Chemical companies were forced to absorb the brunt of higher raw material costs from the middle of 2007 and throughout 2008, though prices on some raw materials have since dropped.
“A number of the major manufacturers were under contract for the season, so therefore they couldn’t raise prices, and I know they lost millions and millions of dollars in the process,” said Manuel J. Perez de la Mesa, president/CEO of PoolCorp in Covington, La.
“The bottom line,” he added, “is that chemical prices have been artificially depressed for years and the costs are beginning to recover to what they should be.”