By: Frank Esposito
April 25, 2013
PORTAGE, WIS. — Less than a week after being threatened with liquidation, Spara LLC on April 23 regained control of Lexington Logistics, a Wisconsin-based thermoformer that previously operated as TriEnda LLC.
Lexington, Ky.-based Spara said longtime TriEnda CEO Curt Zamec has returned to the firm as president.
Spara said it "has immediately deployed a management team to assess and stabilize" Lexington Logistics, a 150-employee firm based in Portage, Wis.
Cincinnati-based Fifth Third Bancorp had filed a complaint April 18 in circuit court in Columbia County, Wis., asking that Lexington Logistics be placed in receivership for non-payment of a loan totaling almost $23 million. According to court documents, a court-appointed receiver would have had the authority to liquidate the property in order to pay the debt.
Spara and its parent firm — Revstone Industries LLC of Southfield, Mich. — had filed for bankruptcy in December. But officials with Spara and with Huron Consulting Group — the Chicago-based firm working to restructure Spara and Revstone — said the bankruptcy will not prevent Spara from putting together a new business plan for Lexington Logistics.
"The purpose of the receivership action…was not to liquidate the company," a Spara spokeswoman wrote in an April 24 e-mail. "Rather, it was to facilitate a sale of the company to a new owner and to repay the Fifth Third loan."
Spara said it is collaborating with Fifth Third Bancorp.
"With the corporate governance now settled, Lexington Logistics intends to demonstrate the stability of the company and eliminate the need for Fifth Third to proceed with the receivership," she added.
Fifth Third "pulled back on the [receivership] hearing" in order to give Spara time to put together a new plan, said Jim Lukenda, a deputy chief restructuring officer with Huron.
In November, financial firm Boston Finance Group of Clearwater, Fla., had removed five TriEnda executives and placed Zamec on a leave of absence because of an unpaid loan. Spara had used the loan — which, according to court records, was for $6.7 million — to buy TriEnda in a foreclosure sale in June 2011.
When Boston Finance took over Lexington Logistics in November, five Boston Finance officials were installed as managers. Lukenda said in an April 25 phone interview that Fifth Third's $23 million loan to Lexington Logistics was separate from Boston Finance's loan to Spara.
In an April 24 phone interview, Boston Finance executives John Fernando and Jonathan Golden said they were "shocked" by Fifth Third's receivership filing and suggestion of liquidating the company.
"Our goal was to stabilize and run [Lexington Logistics] and we had worked aggressively to turn the company around in these last four or five months," said Fernando, who had served as the firm's president from November until January, when Mike Ceming was brought in. "We weren't interested in liquidating and eliminating jobs."
"Order flow and revenue were increasing, but [Fifth Third] chose not to work with us, and we don't understand why," he added.
Fernando described the Fifth Third filing as "a very extreme measure," adding that once it was made, Boston Finance opted to return voting control to Spara, since it did not own the company in spite of the unpaid loan.
A Fifth Third spokeswoman declined to comment on Lexington Logistics or on the bank's court filing. Boston Finance "was very pleased with the customer base, the employee base and the vendor base" at Lexington Logistics, Fernando said, and officials believed that the firm "was headed in the right direction."
Golden added that Boston Finance had invested $750,000 of its own funds into Lexington Logistics since November to help the firm meet payroll and make vendor payments. He added that his firm was not confident it would ever get that money back, or be repaid on the initial $6.7 million loan it made to Spara.
Back in November, Jonathan Golden told Plastics News that Spara had not paid on the loan and that his firm elected to exercise its lender remedies by exercising its voting rights that were spelled out in the loan agreement. A Spara spokeswoman confirmed on April 24 that Spara had not repaid the loan from Boston Finance.
Lexington Logistics ranked as North America's 29th largest thermoformer in a recent Plastics News ranking. The firm's annual sales were estimated at $55 million.
Lexington Logistics occupies a 273,000-square-foot plant in Portage and specializes in the design and manufacture of heavy-gauge, single-sheet and twin-sheet plastic thermoformed products.
Zamec was 2007 Thermoformer of the Year, an honor bestowed annually by the Society of Plastics Engineers' Thermoforming Division.