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Urethane Technologies Swaps 80% Stake for Cash

TIMES STAFF WRITER

Struggling plastics maker Urethane Technologies Inc. said Tuesday it has swapped an 80% stake in the company for a $1.65-million cash infusion.

The company, which has never turned a profit, said the cash from New York investment group Endeavour Capital Corp. should help it weather “a significant squeeze in operating margins” caused by increasing competition and rising raw-material prices.

In the last 10 months, the maker of polyurethane systems used in the construction, recreation equipment and automotive industries has laid off nearly half its work force and moved its headquarters from Santa Ana to smaller facilities in Orange in a bid to slash operating costs.

The deal with Endeavour, a venture capital firm that specializes in financing small to mid-size companies in return for an equity investment, calls for Urethane Technologies to issue new preferred shares that give Endeavour voting control of the company and can be converted to common stock representing an 80% share of the company.

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Company officials were not available for comment, but chairman James D. OreficeC said in a prepared statement Tuesday that Urethane Technology’s problems “can only be resolved with the support of our lenders, creditors and the assistance of Endeavour Capital,” he said.

Since March, Urethane Technologies has laid off 44 employees, cutting its work force to 50 people. The layoffs and other cost-cutting measures have enabled the company to reduce operating costs by 40%, according to the statement.

Endeavour Capital would not comment on the transaction.

Urethane Technologies stock rose 3.125 cents a share in heavy trading Tuesday to close at 12.5 cents a share on the Nasdaq market.

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