Financial projections provided to federal regulators as part of a possible acquisition of Maytag Corp. assumed closing three factories, including the company's flagship plant in Newton, IA, U.S.
A preliminary proxy filed with the U.S. Securities and Exchange Commission indicated the company could expect to save U.S. $140 million by closing laundry equipment manufacturing plants in Newton and Florence, SC, and a Hoover vacuum cleaner plant in North Canton, OH, in 2005.
The company, which normally does not release long-term projections, provided the details as part of the information it handed over to New York private investment firm Ripplewood Holdings, which has joined with other investors to form Triton Acquisition Holding Co. to buy Maytag.
The Triton offer has valued Maytag at $14 a share and includes $1.13 billion cash.
The proxy was designed to give Maytag stock owners an insight into details of the proposed purchase.
Although the documents said no decisions have been made to close plants, three possible scenarios for the company's performance in 2005 assumed closing of the three plants.
"The decision to pursue the assumed shutdown as not yet been made, and the detailed execution plans and financial projections have not been developed, but Maytag management views the $140 million as a reasonable estimate of the cost savings association with the proposed shutdowns," the document said.
Additional documents filed as part of the proxy statement indicated that Maytag must continue to look at reducing its manufacturing capacity.
"This will require a manufacturing restructuring that addresses noncompetitive supply chain costs..." the document said. "Maytag continues to study and review its manufacturing footprint strategy, and at this time has made no final decisions on the future of these specific production facilities."
The need for plant shutdowns assumed the company's "inability to maintain or grow the market share of the existing platforms or obtain concessions from the labor force," the document said.
Maytag spokesman John Daggett declined to comment on the document.
Company CEO Ralph Hake has said in recent statements to industry analysts that the company must cut production costs in its factories and outsource work when it results in cost savings. Mr. Hake has said the Newton plant is the company's highest cost factory and that discussions about the plant's future would be held with the United Auto Workers, which represents 1,340 production workers at the plant. (AP)
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