In line with Metabolix' ongoing shift in focus from compounding resins to the commercialization of performance additive solutions based on polyhydroxyalkanoate (PHA) biopolymers, the company has decided to exit from its business operations in Germany. On September 30, 2014, the board of directors approved a plan under which the company will discontinue the operations of its wholly-owned German subsidiary, Metabolix GmbH, and pursue a sale of all or part of the operations of this subsidiary company. The purpose of the plan is to simplify the company's business structure and focus the company's resources on the success of its core biopolymers business based on PHA performance additives.
The German subsidiary Metabolix GmbH is mainly active in the marketing and sale of compounded resins used in compostable film and bag applications. Under the plan put forward by the board of directors, the company intends to sell, transfer and/or otherwise dispose of substantially all the assets of Metabolix GmbH, and Metabolix GmbH will cease operations by the end of 2014.
For financial reporting purposes, beginning in the third quarter of 2014, the company intends to classify the assets and liabilities of Metabolix GmbH as assets and liabilities held for sale and classify the related operating activities of Metabolix GmbH as discontinued operations. The results of Metabolix GmbH operations, as well as exit costs and other expenses, net of proceeds, related to the termination of the business, will be reflected as loss from discontinued operations.
The company says that it expect to incur a charge of approximately $900,000 in the third quarter of 2014 as a loss on disposal of discontinued operations, approximately $750,000 of which is expected to be non-cash related. The final loss on disposal of discontinued operations may differ from this estimate depending on the actual or expected proceeds from the sale of Metabolix GmbH assets and the actual disposition costs incurred. The company does not anticipate incurring any charges for employee termination costs in connection with the plan. Discontinuing the operations of Metabolix GmbH is expected to result in net annual cash savings of approximately $2.0 million per year, with initial savings beginning during the fourth quarter of 2014.
