The local politics of plastics might have just gotten a bit more interesting.
Streetsboro, Ohio-based Aurora Plastics has appointed Darrell K. Hughes as its new CEO and installed Matt D. McDonald as chief financial officer.
That might intrigue local industry watchers, because McDonald is involved in a major lawsuit with Fairlawn, Ohio-based A. Schulman Inc., which says it was defrauded by McDonald, Calif.-based Huntsman Gay Capital Partners and Boston's Charlesbank in an $800 million acquisition in 2015.
That's when Schulman bought Indiana-based Citadel Plastics from Huntsman and Charlesbank in a deal that Schulman now says it made based on false information about Citadel's operations and finances. Schulman has twice since had to revise its earnings estimates downward, as it struggled with former Citadel plants and operations, leading to the ouster of Schulman CEO Bernard Rzepka in August, along with a sharp decrease in the company's stock price.
"If we would have uncovered the fraud in due diligence, we would not have done the deal," says current Schulman CEO Joe Gingo, who was chairman at the time of the Citadel transaction. He recently hired advisers with Citi to assist Schulman with a review of its business and strategic direction.
Schulman is suing Citadel's sellers, along with former Citadel CEO Michael Huff and former Citadel CFO McDonald, for an unspecified amount, over what it alleges was fraud in the representation of Citadel before the transaction.
In announcing its new executive team, Aurora Plastics noted that McDonald had experience with Citadel, but an Aurora spokesman declined to comment on the lawsuit.
Aurora did not say whether the new appointments are the result of the August acquisition of the company by Chicago-based Wind Point partners, which teamed with Canada's Ontario Teachers' Pension Plan to buy Aurora in August. Wind Point was also the previous owner of Citadel, before selling it to Huntsman in 2012.
McDonald, who was Citadel's CFO from 2007 to 2014, has prior experience with Wind Point from that role. In his new position, he is replacing Tony Lamorte, who was already planning to retire as Aurora's CFO this year before the recent change in ownership, said Kuwatch.
Aurora's outgoing CEO, Jim Domo, will remain with the company through the end of 2016 as an adviser. After that, Domo will leave to pursue "other interests," according to Kuwatch.
His replacement, Hughes, was most recently vice president and general manager of the California-based Avery Dennison's North American business for pressure-sensitive materials. Prior to that, he worked at GE Plastics as a general manager of global business development and several business units, according to Aurora.
Aurora did not say what, if any, other major changes would come with its new management team. Domo, however, expressed confidence in the new leadership.
"Aurora has a strong track record of organic growth based on excellent product technology, quality and customer service," Domo said in Aurora's announcement. "With the company's recent change in ownership to Wind Point Partners/Ontario Teachers' Pension Plan, and now the addition of Darrell and Matt, Aurora can build on its strengths and add additional focus on growth," he added.
Aurora is a private company that does not disclose its sales. Kuwatch said the company employs about 75 people in Streetsboro and its plant in North Carolina.