Lawrence Powers wants to help build another company, possibly in plastics, now that he has settled lawsuits with Spartech Corp., a major sheet producer he cofounded in 1985 with Bradley Buechler, its current president and chief executive officer.
Last month Powers agreed to an out-of-court settlement with Spartech that gives him options to buy 900,000 shares of the Clayton, Mo., firm for $9 per share until the year 2004. Based on the March 13 selling price of $13 per share, if Powers exercised the options and sold the stock, he would make about $3.6 million.
The settlement also included Spartech picking up Powers' legal bills in the suits, which he estimated at about $1 million.
Powers sued Spartech in June 1992, alleging that its recapitalization that year diluted his stake. He charged fraud, breach of contract and breach of fiduciary duties. He also sued British Vita plc, a major Spartech shareholder that he said conspired to get rid of him and accentuated financial problems to make sure Powers was forced out. Powers publicly resigned Oct. 1, 1991, as chairman and CEO.
In a recent telephone interview from his home in Englewood, N.J., Powers said he agreed to the stock option plan in the settlement because he wants to hold a significant stake in Spartech.
``It was a wonderful company when I left, and it is even stronger today,'' Powers said.
Combined with his other stock options, Powers estimates he has options to buy about 1,360,000 Spartech shares. The firm has about 27 million shares outstanding.
Buechler said legal fees would have been larger than the settlement if Spartech had continued to fight. He called the settlement a ``business decision.'' Buechler claimed Spartech did no wrong in its 1992 recapitalization, when major shareholders took some Spartech debt in exchange for equity in the company.
``Powers didn't take [new] equity, but he thought his piece of the company should stay the same [as before recapitalization].''
Powers said he just now is looking to invest in a company because he was tied up in the litigation for five years and only recently ``recaptured my dilution in shares'' caused by Spartech's recapitalization.
``I'm a builder and I am a young 65,'' he added.
Powers had sought damages of $6 million to $8 million in his suits against Spartech and British Vita. He eventually consolidated the suits into actions against only Spartech in courts in New York and in St. Louis. He and Spartech settled out of court Feb. 11, just after a jury was chosen for the trial in New York. His suit against Spartech also sought undisclosed punitive damages.
Buechler estimated that all Powers' suits, if successful, could have cost Spartech more than $35 million in stock, stock options, damages and lawyer fees.
Ironically, Powers continued to sit on Spartech's board and acted as a consultant for the firm for about two years after he filed the lawsuits. Among his duties was leading Spartech's suit against former owners of Favorite Plastic Corp., alleging they conspired to make Favorite look more profitable than it was. Spartech purchased Favorite, a New York film extruder, in 1987. That suit was settled in 1992 for terms Buechler would not disclose. Powers said he got $500,000 from Spartech for his role in winning the case.
Powers personally also sued Favorite's former owners in 1992, blaming them for ``problems that led to my ouster at Spartech.'' He claimed the Favorite deal led to financial losses at Spartech. He settled that suit in early 1994 under confidential terms.
Powers and other officials put a positive spin on his ouster in 1991, claiming he resigned as a cost-cutting measure. Powers said recently he was caught in a squeeze play between British Vita of Manchester, England, and Seattle-based Trust Co. of the West, which in total owned about 46 percent of Spartech. Powers then owned 6 percent of Spartech. His CEO title was passed to Buechler.
Powers left Spartech in 1991 with a $2 million separation agreement to cover severance and pay. At that time he had 2.1 million stock options, most of which he eventually sold, to hold about 460,000, Powers claimed. He said he expects Spartech stock eventually to rise much higher than its recent trading price of about $13 per share.
Spartech announced at its March 12 annual meeting that its sales grew 30 percent to $113.4 million and profit rose 45 percent to $5.5 million for its first quarter, ended Jan. 31. Buechler said the results include Powers' settlement, paid out of reserves.
Spartech expects ``an excellent year'' in 1997 because of its acquisitions last year of Portage Industries and Hamelin Group, and because of ongoing production improvements. Buechler told shareholders Spartech will continue to expand and add products.