A longtime distribution company that also produces dozens of flavors of brand shave ice syrup is going out of business.

CICO Enterprise Ltd. is in the process of selling its inventory — valued at more than $1 million — of paper and plastic goods, food service items and janitorial supplies, said Tony Natale, CICO interim president. Natale said the Halawa-based CICO also is looking for a buyer for its Harders brand, which includes syrups and extracts, as well as shave ice equipment.

Harders flavors were produced at CICO's Waipahu location until last Friday and had been supplied to businesses such as Matsumoto Shave Ice in Hale'iwa. Natale said there are a "number of interested buyers," though no deal has been reached.

Natale said CICO's Hilo, Hawai'i, operation was sold recently to competitor Hawai'i Paper Products, but CICO was unable to find a buyer for its O'ahu operations. He said seven of the Hilo employees have been offered jobs at Hilo Paper, but the closure on O'ahu will leave about 40 people without work.

"It's going to happen pretty quickly," Natale said of the closure. "We're ... negotiating with a number of our competitors and large users of our product to take items in bulk."

CICO was incorporated in 1975 and purchased by two California-based investors headed by Lance Kerr in 2005. Natale said the previous owner was local resident Arthur K.K. Wong.

Wong could not be reached for comment yesterday.

At the time of the purchase, Natale said the company was "superficially on solid ground," but he said the investors ran into problems soon after acquiring the company. Natale would not go into detail on what the "hidden problems" were.

"There was inadequate cash to service the calls on those cash, such as payables and bank loans. The reason for those symptoms showing up are varied," he said. "It's my assessment that the purchasers of the company didn't get what they thought they were buying."

Natale is a "turnaround specialist" based in Chicago and was hired in May to see what he could do to save the company. When he first arrived, Natale said he knew CICO's problems were "severe."

He said he gave the company three options: restructure, sell or liquidate. But Natale said restructuring would have required a "significant compromise" by CICO vendors who would have had to accept a large discount on their claims.

To avoid an even costlier and time-consuming bankruptcy proceeding, Natale organized an "unofficial committee" of unsecured creditors to work out a settlement. He would not go into details of the settlement, but said that creditors so far seem to be satisfied.

"As of this date, we haven't had people pushing for that," he said of a bankruptcy filing. "Someone could file a Chapter 7 against the company, but that would only be advisable if they felt they would get more money under those circumstances."

Reach Curtis Lum at culum@honoluluadvertiser.com.