Indianapolis-based chemical company Vertellus Specialties Inc., which filed for Chapter 11 bankruptcy protection May 31, now says it plans to close a portion of its South Tibbs Avenue plant within the next two months, affecting 40 to 50 employees.
In a letter to the Indiana Department of Workforce Development, Vertellus said it will “terminate certain operations” at the facility “beginning Oct. 17, 2016, or earlier, if business conditions necessitate it.”
Currently, 243 employees work at the plant, located at 1500 S. Tibbs Ave. The Indianapolis plant is the largest single operation for Vertellus, which also has operations elsewhere in the U.S. as well as Europe and Asia.
Vertellus, one of the world's largest makers of Deet insect repellent, produces specialty chemicals for a variety of uses, including agriculture, nutritional, pharmaceutical, medical and personal care. Its owner is Wind Point Partners, a Chicago-based private equity firm.
In a statement e-mailed to IBJ, Vertellus blamed global factors for the cuts.
“Global production overcapacity in recent years has resulted in declining demand and lower prices in agricultural markets. These market conditions have contributed to underperformance in Vertellus’ agriculture and nutrition segments and necessitated actions to offset these challenges, including workforce reductions. Employees impacted by the reductions may apply for different jobs within the company and are being provided with at least 60 days’ notice, along with assistance to aid in their transition,” the statement said.
Vertellus’ Indianapolis site manufactures a variety of chemicals including pyridine and picoline, various specialty pyridine and picolines derivatives, vitamin B3, cyanopyridines, chloropyridines and more.
Pyridine is a compound used in herbicides, insecticides, vitamin B3 and even Head & Shoulders shampoo. Picoline is a compound often used in agricultural chemicals.
In filings associated with its bankruptcy case, Vertellus has cited a slowing demand for its pyridine and picoline products.
At the same time, the company said, it’s dealing with “significant increases in global capacity and production, primarily from Chinese manufacturers of VAN’s primary products.”
Vertellus is still working its way through the bankruptcy process.
The company has reached an agreement with lenders for them to purchase the company for $453.8 million. The offer is in the form of a credit bid, in which the lender offers to cancel debt.
That group of lenders is identified in court filings as Valencia Bidco LLC, a Delaware-based corporation formed several days before Vertellus filed for bankruptcy.
As part of the sales process, other interested parties have until Aug. 29 to submit bids on Vertellus. If no other bids are received, Valencia Bidco will purchase Vertellus.
Vertellus told IBJ it expects the sale process to be complete next month.