The longtime CEO of area food-processing company KanPak is nearing the end of a short bankruptcy he declared to keep control of his company.
Dennis Cohlmia, who runs the nearly 50-year-old Arkansas City-based maker of aseptic packaging and products such as coffee drinks, creamers, fruit drinks, milk shakes and desserts, declared personal bankruptcy on July 1 because of his holdings in KanPak. The company sells its products worldwide to some of the largest chains.
His minority investor, Cleveland-based private equity firm Cyprium Investors and several related entities, wanted out of its stake in the company, but the terms of that departure were in dispute, say attorneys representing Cohlmia. In 2008, the forerunner of Cyprium said it loaned KanPak $15million for new equipment and facilities at a time when banks were pulling back from lending. Such loans are typically for five years.
The Cohlmia family and the Cyprium entities had earlier agreed that if Cyprium hadn’t been paid for its loans and its share of the company by May 31, it would gain sole control of KanPak. At the time, Cohlmia was negotiating for a loan from, or to sell an equity stake to, food distributor Golden State Foods or private equity firm Stonehenge Partners, but hadn’t reached a full agreement.
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In order to forestall a Cyprium takeover and bring Cyprium back to the table to negotiate, Cohlmia declared bankruptcy, said Tom Gilman, an attorney with Redmon & Nazar LLC.
“It made them blink, so that we could get some ability to negotiate,” Gilman said.
An agreement was reached July 15 between Cyprium and the Cohlmias on the exact terms of Cyprium’s departure, although the financial terms were not disclosed.
The waiting period for objections to the proposed agreement expires Thursday and then it becomes official, said company lawyer Bill Sorensen. The bankruptcy would then be closed.
It remains unclear if Cohlmia has a new investor in place, yet. However, the company is prosperous with strong sales and profits, both attorneys said.
“It’s a prime opportunity to get a new lender and/or investor,” Gilman said.