ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, September 14, 1996 TAG: 9609160030
SECTION: BUSINESS PAGE: A-4 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
Old Virginia Brick Co. Inc., a 105-year-old maker, has found cash for upgrading its outmoded local brick factory nearly halfway around the world - in a Turkish construction materials company.
The Salem company has sold a half-interest in its operations to Isiklar A.S. of Istanbul for an undisclosed sum of cash, Old Virginia Brick executives said Friday.
The transaction will not affect the company's 170 employees or operations. Old Virginia Brick will continue making molded bricks in Salem and extruded bricks with holes in the Lynchburg suburb of Madison Heights, the executives said. The company specializes in making bricks for historical preservation projects and for new construction in historical areas.
Old Virginia Brick was looking for capital when it learned through brick-industry contacts of some Turkish businessmen with the money and motivation to invest in the U.S. brick industry. They were from Isiklar, a market leader in industrial brick, lime, cement, paper bags and engineering services also engaged in construction of roads and other infrastructure.
Their company recently purchased two U.S. brick companies - Darlington Brick, near Pittsburgh, Pa., and Powell and Minnock Brick, near Albany, N.Y.
The two sides began negotiating about four months ago. The deal, which was signed Sept. 6, also gave Isiklar four of eight seats on Old Virginia Brick's board of directors.
The money will pay to improve a grinding plant and kilns on West Main Street and buy one or two forklift-equipped tractor-trailer delivery trucks. This will cost $900,000 to $1.1 million, said Fletcher Smoak, the company's president. He declined to reveal Isiklar's actual investment.
Old Virginia Brick is wrestling with rising orders and production problems, and these difficulties were part of the reason the company sought outside investors, Smoak said. This past winter, it produced only 40 percent of its budgeted volume of molded bricks, leaving it short on inventory for the spring construction season, which cost it sales. The reason: Natural gas prices were too high and the supply was too limited for the company to operate at desired capacity.
Just how much the company suffered is not clear, because Old Virginia Brick does not disclose its finances.
"We're trying to bring Old Virginia Brick along," Smoak said. "This will help the process and make us a lot stronger company."
By having ties with the Pennsylvania and New York brick plants, Old Virginia Brick might save on future purchases of natural gas and insurance by negotiating volume discounts, Smoak added.
LENGTH: Medium: 53 linesby CNB