THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, July 1, 1995 TAG: 9507010582
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: Short : 47 lines
The Board of Directors of Harmony Products Inc. decided Friday to put $2.65 million of their own money toward keeping the struggling Chesapeake-based organic fertilizer manufacturer in business.
The company announced late Friday that it would undergo a major restructuring to remain afloat. Harmony has permanently shut down its primary production line - eliminating about 10 jobs - leaving the company with 15 employees, President Gregory B. Gill said.
That shutdown will force the company to immediately pay off $1.4 million in industrial development bonds. Members of the board agreed to buy additional shares of company stock worth $1.4 million to pay off the bonds.
Board members reached into their pockets a second time to buy another $1.25 million in common stock so the company could reduce other debts guaranteed by the board.
The restructuring was forced upon Harmony, Gill said, because the company's projections for the organic fertilizer market were too optimistic. After Earth Day in 1989, he said, experts were predicting a boom in demand for organic-based fertilizers.
``Companies like Harmony geared up to take advantage of the organic and organic-based fertilizer market,'' Gill said. ``The movement has been less dramatic than expected to a great degree.''
The board still believes that boom will happen, he said.
``It was expected to be a tidal wave, and it has not,'' Gill said. ``The tidal wave still may happen - it's our opinion that it will.''
Harmony uses technology that allows it to convert organic waste to organic-based fertilizers that release nutrients slowly. The company markets these fertilizers as boosting nutrients more than synthetic fertilizers and being better for the environment.
Harmony estimates the production line shutdown will result in a pre-tax charge of $2 million when it posts its second-quarter results. It decided to shut down that production line because its inefficiencies were driving up production costs, which meant the company could not price its products competitively. by CNB