Diolen forced to ask suppliers to suspend payments

Advances in Textiles Technology, August, 2008

Diolen Industrial Fibers BV has revealed it has asked suppliers to accept a suspension of payments. The request had already been made on behalf of its operations in Arnhem and in Emmen, The Netherlands. On Monday 29 June, the request was extended to include the German production facility in Obernburg.

In the past few weeks, the company says it has tried to arrange a refinancing with a number of parties that are involved with Diolen. The basis for this refinancing was a business plan that demonstrated future prospects for the company. Unfortunately it proved to be impossible to arrange the required money.

Diolen, a leading European manufacturer of polyester yarn, says it has been under severe pressure because of strongly rising costs for energy and raw materials (see also Pricing, this issue). Additional demands come from increasing competition from the Far East, which has been further fuelled by the weak dollar, making imports to Europe relatively cheap.

The company believes that by implementing its new business plan it could significantly improve its results through lower costs, better operational performance and further positioning itself as a value-added player in the growing market for polyester yarns. However, the necessary financing can not be found.

The banks have provided estate financing, which will ensure the continued production and delivery to customers. In the coming weeks, further possibilities for the company will be evaluated, with the purpose of continuing the activities as a whole or potentially on a more limited scale.

In addition to polyester yarn, Diolen has developed and now makes Diolen[R] high-tenacity polyester and Diofort[R] polyphenylene sulphide (PPS) yarns, as well as chips of polyester and other polymers. Its yarns are used for the production and reinforcement of industrial products that have to be safe and reliable, such as tyres, safety belts, sails, billboards, roof constructions, hoses and ropes for deep sea mooring.

Customers from around the world are served from two production locations in Emmen, The Netherlands, and Obernburg, Germany. Diolen also has its own research activities in Emmen and sales offices in The Netherlands, Germany and in Scottsboro, Alabama, USA. Its headquarters and European sales base is inArnhem. Diolen Industrial Fibers employs more than 900 people.

Just a few days before this announcement, Diolen had written to its customers to inform them it was raising prices on all its products from 1 August 2008, blaming steep and ongoing cost increases in its principal raw materials, energy, auxiliaries, packaging materials and transportation. Diolen also said that it would start to implement indexed pricing, linked to the costs of raw materials and crude oil.

For further information, contact: Diolen Industrial Fibers BV, PO Box 9600, 6800TC Arnhem, The Netherlands. Tel: 26-366-3816. Fax: 26-366-5832. E-mail: info@diolen.com; http://www.diolen.com