Milacron negotiating asset-based loan in Europe, seeking additional ways to grow liquidity in 2008

By Jennifer Lanning Drey

Portland, Ore., Feb. 25 - Milacron Inc. is in the process of negotiating an asset-based loan in Europe and will continue to look for opportunities to improve its liquidity in 2008, Ronald D. Brown, the company's chief executive officer, said Monday during Milacron's fourth-quarter earnings conference call.

"I think at this point we've got enough confidence to say we're in the process of negotiating that facility, but we really aren't able to discuss any of the details at this point," Brown said when asked for further details on the asset-based loan during the question-and-answer session of the call.

At Dec. 31, Milacron had $41 million in cash and cash equivalents, demonstrating a $3 million increase from the start of the fourth quarter. The company ended the quarter with $34 million in borrowing availability under its North American revolving credit agreement, down from $42 million at the beginning of the quarter due to strong collection activity that reduced receivables at the end of the period, Ross A. Anderson, chief financial officer of Milacron, said during the call.

"During the quarter, we continued to focus diligently on cash flow and liquidity," Anderson said.

Net cash provided by operations during the fourth quarter was $9.6 million, compared to cash used by operations of $800,000 in the comparable period of 2006.

For the full year, operating cash flow improved to $35.5 million from $28.8 million in 2006, he said.

Write-downs cause higher loss

For the fourth quarter, Milacron reported a net loss of $73.4 million, caused primarily by a non-cash write-down of deferred tax assets of $63.0 million associated with the change of ownership of the majority of the company's preferred stock during the quarter. The loss also included $7.4 million in restructuring charges and $1.9 million in one-time costs related to the company's curtailment of its U.S. pension plan.

The fourth-quarter figure compares with a net loss of $8.6 million in the same period of 2006.

"The charges taken in the fourth quarter in restructuring and pension curtailment signal our commitment to continue to transform the company's cost structure for the long-term," Anderson said.

In 2008, the company also expects to benefit from cost measures implemented in 2007.

"While 2007 was a challenging year, we did succeed in making good progress, but much more progress needs to be made," Brown said.

In the current year, the company will focus on markets outside of North American, which have a faster rate of growth, he said. The company expects to be able to more fully participate in those markets as a result of adding sales people in 2007, expanding its manufacturing capacity in China, and continued cost reductions.

"For 2008, the North American economy, as well as the high oil and plastic resin prices, remain our largest challenges. We can't control either of these, but there are a lot of things we can control and those are the things we're focusing on," Brown said.

Milacron is a Cincinnati-based supplier of plastics-processing technologies and industrial fluids.

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