The ownership of Sweetheart Holdings Inc. -- the former Maryland Cup Corp. -- has changed once again.
A group of investors headed by American Industrial Partners has agreed to buy the country's largest producer of paper and plastic cups, plates, cutlery, straws and ice cream cones from the Morgan Stanley Group Inc., a New York-based investment banking company.
The sale is expected to be completed in two to three months. The price was not disclosed.
The Sweetheart operation includes a manufacturing plant in Owings Mills on Reisterstown Road that has a work force of 2,500 and produces paper cups, plates, straws and ice cream cones. The company has a national work force of 8,000 at 14 locations.
The sale, disclosed in Morgan Stanley's earnings report released Thursday, was the latest in a 10-year succession of ownership and financial changes to hit the company, which has operated in the Baltimore area since 1920.
For now, the switch in ownership should not change the local operation, according to Sweetheart spokeswoman Sandie Preiss. "We do not expect any operational changes," she said.
About a dozen workers leaving the plant yesterday said they did not know the company had been sold again. However, Ms. Preiss said a one-page notice of the sale was posted on company bulletin boards Thursday morning.
Formed in 1989, American Industrial Partners is headed by the former chief executives of five major corporations. The company, which has offices in New York and San Francisco, makes equity investments in industrial and manufacturing operations.
The investment group includes: Theodore Rogers, formerly of NL Industries Inc., a chemical company; Richard Bingham, a former managing director and head of the merger and acquisition division at Lehman Brothers, a New York investment firm; Thomas Barrett, who headed Goodyear Tire and Rubber Co.; Burnell Roberts, the former chief of Mead Corp., a large paper company; and Donald W. Davis, former head of the Stanley Works, a tool manufacturer.
The group already owns five other companies, ranging from **TC concrete company in Florida to a paper box maker in California. One of the companies is Easco Aluminum Corp., which had been part of the Baltimore-based Eastern Stainless Steel Co. The steel operation has since been merged into Armco Inc.
The five companies have total sales of about $750 million, accord
ing to Robert Klein, a spokesman for the investment group.
Maryland Cup was an independent company from its founding in Boston in 1911 until 1983, when it was sold to Wisconsin-based Fort Howard Co., a maker of toilet tissue and other paper products.
In 1986, Fort Howard combined its Lily-Tulip division with Maryland Cup, adopting Maryland Cup's trade name -- Sweetheart -- for the new division. Two years later, Morgan Stanley and other investors acquired Fort Howard in a $3.9 billion leveraged buyout.
The next year, Morgan Stanley split off Sweetheart from Fort Howard into a separate company whose stock was held by the Morgan Stanley Leveraged Equity Fund II.
As these changes occurred, the balance sheet of Maryland Cup and its successor operations was devastated. Its net worth dropped to a negative $95 million in 1991 from a positive $256 million in 1983, according to filings with the Securities and Exchange Commission.
A class-action lawsuit has also been brought against the company in U.S. District Court in Baltimore by about 300 retirees and their spouses because of reductions in their medical plans that happened after Maryland Cup was sold in 1983. That case is still pending.
Morgan Stanley said it took a $29 million charge to earnings in its first-quarter results stemming from the sale. It also eliminated a $225 million bridge loan the company had made to Sweetheart as part of the earlier split from Fort Howard.