Constar returns to bankruptcy court

Constar International Inc., a Philadelphia maker of plastic containers, is back in bankruptcy court, just 18 months after a previous Chapter 11 plan shaved $186.2 million off its debt load.

The filing Tuesday in Wilmington will reduce the company's debt to $150 million, if it receives court approval, the company said. Current shareholders will be wiped out, as happened in the last bankruptcy.

Constar got into a liquidity squeeze over the last 18 months as its biggest customer, Pepsi-Cola, started making more of its own plastic bottles, according to the declaration of J. Mark Borseth, Constar's chief financial officer.

Three quarters of the senior secured noteholders owed $220 million have agreed to exchange that debt for $70 million of new debt, $30 million worth of convertible preferred stock, and the majority of the company's common equity, Constar said.

Since its spin-off from Crown Holdings Inc. in 2002, Constar has been dogged by losses. The company reported $323.97 million in net losses from 2003 through 2007.

Constar has 850 employees, according to a court document, down from 1,570 two years ago, when it filed for bankruptcy protection with $638 million in debt.

In its latest bankruptcy petition, Constar listed assets of $418 million and debts totaling $414 million.

A $55 million loan from a small group of noteholders will allow the company to continue operating during the restructuring, which the company expects to complete by late spring.