PPG Industries Inc. is turning to a seasoned company veteran to help sell or restructure its troubled automotive glass division.
The company said yesterday that Frank Archinaco, who retired in 2002 as an executive vice president and who spent much of his career in the glass operations, has returned to PPG as president and chief executive officer of the auto glass and services businesses effective immediately.
"Frank's deep experience in the automotive glass business will serve us well as we continue to explore strategic alternatives for this business," PPG Chairman Charles Bunch said in a statement.
Automotive glass is one of the units PPG has been trying to shed as it refocuses its business away from glass and chemicals and into coatings and specialty products such as Transitions eyewear.
The auto glass division was scheduled to be sold by the end of 2007 for $500 million to a California investment group. But last week, the prospective buyer, Platinum Equity, said it wanted out of the deal because it said PPG misrepresented the unit's finances. Platinum filed a lawsuit in the Supreme Court of the State of New York -- the trial court level -- asking the court to rescind its purchase because, it said, PPG provided false sales projections and failed to tell Platinum that two major customers planned to significantly reduce their purchase volumes in 2008.
According to Platinum's complaint, PPG initially said the glass unit would post $1.1 billion in sales and $140 million in earnings before interest, taxes, depreciation and amortization in 2008. After the sales agreement was reached, Platinum said, PPG disclosed revised projections that lowered 2008 sales by 15 percent and reduced EBITDA for 2008 by 40 percent.
Further, the lawsuit said PPG failed to disclose that two major auto glass customers, Belron U.S.'s Safelite group and Harmon Autoglass, planned to reduce their combined purchase volumes by more than $33 million this year.
Also, the lawsuit charged that PPG understated pension liabilities by $8 million to $10 million, misrepresented a loss of new contracts expected to result in $84.2 million of lost revenue and hid plant maintenance costs of $6 million to $8 million.
PPG said it would try to enforce its rights under the sales agreement with Platinum but that if the deal were to fall through, it would explore other options, including a sale, restructuring "and other strategic alternatives."
The auto glass division has about 4,400 employees in the United States and Canada and includes plants in Creighton, which was PPG's first manufacturing facility; Tipton, Blair County; and Meadville, Crawford County.
Mr. Archinaco, 64, spent 37 years at PPG before his retirement from one of the top positions in the company. He started in 1965 as a management trainee in Newark, N.J., and held a series of management jobs in various places including general manager of European glass operations from 1984 to 1986. He was named vice president for automotive original equipment glass products in 1986, vice president of automotive and aircraft glass in 1991 and senior vice president, glass, in 1995.
He was elected executive vice president in 1997, a job in which he oversaw all of PPG's glass and chemicals units. Mr. Bunch served alongside Mr. Archinaco as a corporate executive vice president and was named president of PPG the same time Mr. Archinaco retired.
Separately, a credit agency this week downgraded PPG's credit and debt ratings because of the company's increased debt load following its acquisition of Dutch paints maker SigmaKalon Group for $3 billion.
Standard & Poor's Ratings Services said its actions "reflect the deterioration in PPG's cash flow protection measures." It lowered PPG's corporate credit and senior unsecured debt ratings from "A" to "A-" and the commercial paper rating from "A-1" to "A-2."
While S&P's outlook on PPG remains "negative," the agency said it removed PPG's ratings from CreditWatch with negative implications where they were placed in July when PPG announced the SigmaKalon deal, the largest acquisition in the company's history.
"While SigmaKalon is a good strategic fit, there is very little flexibility for any negative surprises with regard to the strengthening of credit measures, including the key ration of funds from operations to total debt," wrote S&P analyst Wesley Chinn.
S&P said its ratings took into account PPG's "strong, competitive positions in large coatings markets and the geographic diversity of the consolidated sales base -- more than 50 percent of sales are outside North America."
Shares in PPG closed yesterday at $67.83, down 77 cents.
The Associated Press contributed to this report. Joyce Gannon can be reached at email@example.com or 412-263-1580.