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Chesapeake Corp., a specialty packaging company with operations mostly overseas, said in a regulatory filing yesterday that it may be required to file for bankruptcy protection as it tries to restructure its finances.
Company spokesman Joe Vagi declined to comment beyond what Chesapeake disclosed in its third-quarter earnings report yesterday.
The company has a corporate staff of about 25 people in Richmond, but most of its 5,400 employees work at operations in Europe, China and Africa.
Chesapeake has reported annual financial losses for three years as its business units have struggled with rising costs, price competition and lost customers. For the third quarter of this year, the company lost $8.3 million, or 42 cents per share, compared with a profit of $4.8 million, or 22 cents per share, in the same period of 2007. Revenue declined 7 percent to $248 million.
The company said its liabilities exceeded its assets by about $500,000 at the end of the third quarter. Unable to meet obligations under a $250 million credit line, the company said last week it had obtained an agreement from lenders giving it until Dec. 10 to develop restructuring plans.
Chesapeake shares, which have been delisted from the New York Stock Exchange, fell 2 cents yesterday to 4 cents on the over-the-counter bulletin board.
Once a major producer of paper products in Virginia, Chesapeake operated the West Point paper mill for decades but sold the plant in 1997 as part of a strategic shift to exit the commodity paper products business. In 1999 and 2000, Chesapeake acquired several European-based businesses that make specialty packaging for pharmaceuticals, beverages and other consumer products.
In the United States, the company makes leaflets and labels at plants in Hicksville, N.Y., and Lexington and Raleigh, N.C.. that altogether employ more than 200 people.
In its earnings report, Chesapeake said it expects certain of its U.S. subsidiaries would be a part of a bankruptcy filing, but its foreign-based units would not be a part of any similar proceedings.
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.
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