The pending sale of JT Packard announced last week shouldn't cause anyone to lose their jobs, a company official said Monday.
About half of the Verona-based company's 300 employees work at two offices in Verona at 275 Investment Court and just up the road at 312 Locust St., said Gregory Charleston, the company's chief restructuring officer.
In a letter dated Dec. 1, the company notified the state that it entered voluntary receivership Nov. 24 and that all 300 employees would be laid off and both Verona locations would be permanently closed by Feb. 1. But Charleston said that notice was just a formality required by the state in anticipation of a change in ownership.
The company later said it will be sold for about $14 million to Sangamon Industries I, Inc., an affiliate of Chicago-based private equity firm Pfingsten Partners, LLC, or possibly a higher bidder at a Jan. 20 auction.
The state notice was "misleading," Charleston said, adding that JT Packard remains profitable.
"The odd thing is... we've grown significantly in the past two to three years," he said. "There's no scenario where I'd expect any employees to be out of work at all, even if a deal fell through."
Founded in 1997, JT Packard's core business is servicing uninterruptible power supplies, which are basically large battery systems that prevent businesses from losing data during a power outage. That industry is strong and growing, Charleston said.
The problem, he said, lies not with Packard but with parent company S.R. Bray of Anaheim, Calif., which purchased JT Packard in 2006 through its subsidiary, Power Plus!
S.R. Bray invested heavily in construction services in recent years in California and other southwestern states hit hard in the housing bust of the past two years, he said. Saddled with debt, the company needed to sell off portions of its business to pay its bills.
"Their business really deteriorated in the last few years, which put a lot of strain on the entire company in terms of its inability to pay off (its) debt," he said.
JT Packard, which was founded in 1997 by high school dropout Jeff Cason, grew quickly earlier this decade, with Cason at one point predicting that yearly revenues would grow from $41 million in 2005 to $65 million in 2006. The company also made plans to build a new headquarters in Verona's Technology Park in 2007 and even secured tax-increment financing from the city to do so.
Plans changed in late 2006. Cason resigned after Packard lost two hard-fought legal battles that December with larger corporations that make the equipment Packard services. Those companies claimed Packard repeatedly stole trade secrets and violated copyright laws.
Despite that setback, the company reached $60 million in revenues in 2008 and expects to do equally as well in 2009, Charleston said.
The $14 million sale price includes all the company's assets but not its two buildings, which Packard leases, Charleston said. The purchase agreement specifically calls for all employees to be rehired.
"It's really not a risk," he said. "The buyer certainly needs all these people to run the business successfully. ... It should be really seamless for the employees."
The sale could spur future growth for Packard, too, he added.
"(The buyer) has intentions to invest in systems and potential acquisitions to grow the business," he said. "They definitely have a growth strategy for JT Packard."
That's good news for local leaders, who had a brief scare when the state-required notice was mailed last week to Mayor Jon Hochkammer.
"The news isn't as gloomy as I anticipated when I read the document," Hochkammer said last week.
Verona Press editor Jim Ferolie contributed to this story.
