When a Belgian firm tried to sell a Baltimore manufacturer to a company that planned to take jobs elsewhere, the local employees saved their livelihoods by buying their employer.
Ten years later, another foreign company has stepped up to buy the company and save the jobs once more.
Hedwin Corp., a plastic container maker, struggled in recent year with rising costs, the recession and a major fire that hamstrung the plant in Medfield last year. The company filed for Chapter 11 bankruptcy protection from creditors earlier this month to facilitate a sale and is set to be auctioned off May 9.
Fujimori Kogyo Co., a Japanese company long involved with Hedwin, agreed to offer $16.5 million for the Baltimore company and wants to retain all 300 employees, according to documents filed with the U.S. Bankruptcy Court in Baltimore.
"They're going to keep it in Baltimore," said Alan Grochal, who represents Hedwin and heads the bankruptcy and creditors' rights department at the Baltimore law firm Tydings & Rosenberg. "They're committed to establishing this United States outpost here."
Fujimori declined to comment, but its history with Hedwin goes far back. In 1962, Fujimori negotiated a license to handle Japanese production of Hedwin's Cubitainer, a collapsible plastic container in a box that's used for liquids as varied as sake and ultrasound gel. The company still produces collapsible plastic containers today, but under its own Fujitainer brand.
Hedwin told the court it was in a "liquidity crisis" and saw a sale as necessary.
"Absent a sale, the Debtor would have to immediately terminate its employees and begin the wholesale liquidation of its assets," said Charles S. Deutchman, Hedwin's turnaround management consultant, in an affidavit.
Deutchman told the court that Hedwin's gross profit, a figure that typically doesn't include all costs, shrank significantly last year — to $3.4 million from $4.5 million in 2012.
A June fire at Hedwin's Roland Heights Avenue manufacturing facility temporarily shut down some assembly lines and permanently stopped others. The company said it also was coping with higher resin prices, quality-control problems and increased production expenses as equipment upgrades were delayed.
Before last year, Hedwin already faced sharply rising costs for health care, electricity and raw materials. It closed its Indiana plant in 2007, bringing jobs to Baltimore, to prevent lenders from taking over the company.
The company brought in Deutchman last fall and hired investment banking firm Mesirow Financial in December to help with a sale.
Mesirow contacted 78 potential buyers. Ten came to visit. Four made offers: Fujimori and three private-equity firms, including Blackstreet Capital of Chevy Chase.
"For the good of Baltimore employees, we were really rooting for the strategic bidders who would keep the company in Baltimore, presumably; keep the employees," he said. "Obviously we didn't want someone who was going to buy it to take it apart piecemeal or move it to another location."
Fujimori made the best offer and signed an agreement April 1. Hedwin filed for Chapter 11 protection the next day.
The alternative to bankruptcy was to seek sale approval from the owners — about 600 employees and former employees with shares in the company. But Grochal said Hedwin leaders feared approval would not come in time.
"We didn't have enough money to continue to operate confidently for too long," he said.
The auction, if competing bids come in, will be held May 9. The sale approval hearing would be May 12. Fujimori officials, preparing for the possibility of closing in short order, spent several days at Hedwin last week.
A loan that executives took out to buy Hedwin in 2004 through an employee stock ownership plan, known as an ESOP, still hangs over the company. But Hedwin did not list that debt as a factor in its financial distress.
Michael Keeling, president of the ESOP Association, a trade group for companies with such plans, said research suggests employee ownership is a positive for most companies. A Rutgers University study, which looked at private companies with ESOPs launched in the late 1980s and early 1990s, found that the firms had a better survival rate than similar companies without employee ownership.
Hedwin's employee purchase in 2004 was aided by the state, which guaranteed part of the loan. That portion of the loan was paid off in 2009, the state Department of Business and Economic Development said, so the guarantee is not at issue in the bankruptcy.
But the shares in the employee stock ownership plan are. In bankruptcy proceedings, creditors come before shareholders — and typically there's no difference whether the shareholders are outside investors or employees.
The key to whether the shares will be worth anything, Grochal said, is how much it will cost to terminate the company's underfunded pension plan as the federal Pension Benefit Guaranty Corp. takes over as part of the bankruptcy.
"We don't know for sure if there will be some money left," he said. "My guess is there probably won't, or if it is, it'll be a nominal amount."
Guy Shipley, who worked at Hedwin for 22 years before leaving in 2012, said the fate of the shares is a shame. But he noted that his and most employees' shares were granted, rather than bought.
He's less focused on the shares than on the deal with Fujimori, which strikes him as the best possible outcome, given the circumstances.
"It's great news for the employees there," said Shipley, a Cockeysville resident. "I'm very psyched that if Fujimori buys them, they'll keep them in Baltimore and make them a stronger company."
Keeling, with the ESOP group, was at Hedwin the day the employee purchase was announced. Both then-Gov. Robert L. Ehrlich Jr. and his lieutenant governor, Michael S. Steele, were there too, so good was the come-from-behind story.
Keeling knew Hedwin had run into trouble more recently. He's glad leaders there struck a deal to keep the jobs in town — again.
"In a lot of bankruptcies, they're gone, whether you're in an ESOP or not," he said.