By Joel Dresang
Nov 16, 2005 (Milwaukee Journal Sentinel - Knight Ridder/Tribune Business News via COMTEX) -- Majority shareholder James D. Azzar succeeded Tuesday in buying much of Badger Paper Mills Inc. to appease the Peshtigo papermaker's creditors.
Azzar, whose previous bid was spurned by company management last month, got a takeover approved Tuesday in Marinette County Circuit Court, where Badger Paper was under a receivership proceeding, similar to bankruptcy. Badger Paper's lenders had forced the company into selling off assets to settle debts after the company had defaulted on credit agreements.
Azzar, of East Grand Rapids, Mich., for years had a running battle with Badger Paper management. He owns businesses in Michigan and Indiana that have bought from and competed with Badger Paper. One of the companies, Bomarko Inc., in Plymouth, Ind., makes specialty coating and flexible packaging for the food and medical industries.
Details of Azzar's approved bid weren't available late Tuesday after the court hearing, but Paul Bouthilet, chief financial officer of Badger Paper, said he spoke with Bomarko executives Tuesday and expected to meet with them today.
"Right now I have no idea what his intentions are," Bouthilet said of Azzar, "other than common sense would suggest that if you spend money on something, you're going to use it."
Another bidder, turnaround investment company Meriturn Partners, had made a run for Badger Paper's assets, at one point offering about $8.4 million.
"If Meriturn hadn't been involved in this, there would have been a whole lot less received for the assets," said Daryl L. Diesing, who represented Meriturn for the Milwaukee office of Whyte Hirschboeck Dudek.
A chief employer in the Peshtigo area since 1929, Badger Paper struggled to specialize in niche products such as waxed paper for candy wrappers, fast-food sandwiches and disposable souffle cups.
Faced with rising costs for energy, fiber and health benefits, the company -- which once employed more than 450 workers -- used buyouts to cut its payroll by about 50 jobs, or 20 percent, last year.
This summer, Badger Paper shut down one of its two paper-making machines in Peshtigo, ending work for another 100 employees. The company said the machine accounted for about two-thirds of the company's paper, but about 40 percent of its output was unprofitable low-priced commodity-grade copy paper.
Badger Paper reported $72 million in sales last year but suffered a net loss of $7.6 million, its third failure to show profit in five years.
In September, management announced a tentative agreement to sell Azzar the 75 percent of the company he didn't own for $1.25 a share in cash, or about $1.9 million.
Last month, the company said it called off negotiations with Azzar and said it would end its registration with the U.S. Securities and Exchange Commission and arrange to delist its thinly traded stock.
Badger Paper's share price, listed over the counter, was 16 cents Tuesday.
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