Volume 10, Issue 5 - September/October 2008

AGR Reports
breaking news

COMPANY NEWS
PPG Agrees to Kohlberg Deal

PPG INDUSTRIES ANNOUNCED recently that it has signed an agreement with an affiliate of funds managed by Kohlberg & Co. LLC in Mount Kisco, N.Y., under which PPG will divest its automotive glass and services business to a new company formed by Kohlberg.

PPG will receive $330 million in gross cash proceeds plus a minority ownership interest of approximately 40 percent in the new company, subject to closing adjustments. Net of payments to former minority interests, transaction fees, expenses and taxes, the transaction will result in approximately $270 million in cash to PPG. At press time, the sale had not been completed, but was expected to close during the third quarter of 2008.

Kohlberg & Co. L.L.C. is a private equity firm that acquires “middle market” companies (valued from $100 to $150 million). The firm was founded in 1987 and has organized six private equity funds since that time.

“Kohlberg & Company invests in companies where it can work in partnership with senior management to identify growth opportunities and implement fundamental operating and strategic changes, resulting in substantial increases in revenue and cash flow,” reads information from Kohlberg’s site. Shortly after the sale announcement, the company also announced that the auto glass and services business would begin using the name “Pittsburgh Glass Works” (PGW) as of August 1. The business will continue to be known by PGW once the sale is complete

“The name, Pittsburgh Glass Works, captures the essence of our corporate culture,” says Frank Archinaco, who continues as president and chief executive officer of PGW. “It builds on the image and heritage that Pittsburgh was the center of glass making—even before PPG’s establishment in the industry. Keeping the word ‘glass’ and incorporating ‘works’ into our name conveys not only our desire to maintain a tradition within the glass industry, but communicates to our customers our formidable work ethic, strong values and intent to deliver the solutions they need.”

Company officials expected to begin updating trademarks on some products by end of summer, with the full transition being completed within the next year.

PGW spokesperson Laurie Cochran says the name was chosen as a result of a survey of employees and customers in late 2007. She says those surveyed liked the connection of the new name to the company’s history.

“It has a strong connection to maintaining our heritage,” she says.

And, so far, the reaction from employees has been good, she says. “I think people are quite excited to see what the future holds,” she says. Cochran was unable to comment on how the business might work once the sale to Kohlberg & Co. is complete.

Apogee chairman and chief executive officer Russ Huffer also recently announced that the company may sell its full interest in its joint venture with PPG (see sidebar for more information).

Service King Re-Enters
Auto Glass Market
Service King Collision Repair Centers in Dallas has announced that the company is entering the auto glass replacement and repair market. According to company spokesperson Jennifer Kirk, this is Service King’s second attempt at the auto glass business, having tried it once before approximately 10 years ago. Danny McKinley, vice president of operations for the company, says the company left the business before “because [it] did not accomplish an adequate level of success to sustain the business.”

Recently, though, the company received assistance from a long-time industry colleague, Gerber Collision & Glass in Skokie, Ill. “We’ve known Service King and its leaders for many years and we have a great deal of respect for them,” says Eddie Cheskis, chairman and chief executive officer of Gerber Glass.

“They provided auto glass repair and replacement in the past and didn’t accomplish what they hoped to accomplish, and, because we have been in the business for [more than] 70 years, we provided support to launch Service King Auto Glass.” Neither Cheskis nor representatives from Service could expand on what type of support was provided. At press time, Service King had 13 auto glass vans and 13 technicians, with hopes of growing both numbers to 20 in the next few months.

“So far, it’s been good,” Kirk says. “We’re busy, and that’s a good sign.” Service King says it is in the process of becoming registered with the Auto Glass Replacement Safety Standard (AGRSS) Council, according to Marshall Hosel, vice president of retail glass for Gerber. Hosel is assisting the company with this process. “Service King fully intends to be AGRSS-registered,” he says. “The necessary AGRSS application is currently being completed.”

L E G A L N E W S
Belron US Files Suit Against Two Former Employees Belron US has filed complaints against two former employees to prevent them from allegedly disclosing the company’s Belron’s trade secrets, soliciting or attempting to solicit current Belron employees and from conspiring with others to do so. The suits were filed against Michelle Levesque of Fall Rivers, Mass., and Edward Lee of Fishkill, N.Y., in the U.S. District Courts for the Districts of Massachusetts and Southern New York, respectively, on August 15.

Belron US alleges that while still  employed with Belron, “Levesque and Lee joined together to help establish a competing business venture and conspired to solicit current Belron employees to induce them to leave their employment with Belron and join [them] in their new venture, in violation of such employees’ existing agreements with Belron,” according to court documents.

Levesque previously served as Belron’s director of best practices - operations and performed the duties of a district operations manager for the company. Lee served director of retail initiatives for the Columbus, Ohio based company and had signed a non-compete agreement in May 2006. Both had previously worked for Diamond Glass, and were taken on as Belron US employees when it purchased Diamond’s assets in June. Lee had signed a non-compete agreement with Diamond in May 2006, which Belron US claims was transferred to it with the asset sale (see related story on page 48). Both Lee and Levesque were terminated from the company in late July, when Belron US says it discovered the actions claimed in the complaint.

According to court documents, current Belron US employees allegedly contacted and solicited by Lee and Levesque included David Dunn, regional director of the Northeast, Rob Roveto, regional sales manager for the Northeast, and Kristy Oliveira and Maria Karalis, assistant sales managers for territories in Massachusetts and Rhode Island. Belron US claims that Karalis was told the new business would be operating in the New York, Connecticut and Boston areas.

In addition, the complaint alleges that Lee and Levesque asked each of those contacted for copies of their non-compete agreements, “and said there [were] ‘ways around’ those agreements, or words to that effect.”

Likewise, the company alleges that Lee asked Roveto to save certain confidential financial information about Belron’s business “because it would be helpful to them in their new business.”

The respective complaints list numerous accounts against both Levesque and Lee, including Misappropriation of Trade Secrets, Breach of Contract (Lee only), Tortious Interference, Breach of Duty of Loyalty, Breach of Fiduciary Duty, Aiding and Abetting Breach of Fiduciary Duty, and Civil Conspiracy to Tortiously Interfere with Contracts and Misappropriate Trade Secrets.

Belron US spokesperson Jenny Cain declined to comment on these cases, as they are currently under litigation. Levesque’s attorney, Michael Boudett of Foley Hoag LLP, says she plans to file several counterclaims against Belron US in response to the suit.

“We are going to sue them back unless this is resolved somehow,” Boudett says.

Levesque denies the charges that she solicited current Belron employees to join a new venture, and denies that she is involved in a new venture, according to Boudett. He said when the acquisition of Diamond occurred there was talk throughout the company of what might transpire, leading to the claims alleged in the case.

“There was discussion such as, ‘what would happen if I am laid off from Belron, what will I do?’“ Boudett says. “There were two women who did have discussions with [Levesque] about what they might do if they left. They talked with her about whether they might have non-compete restrictions or not and they talked about whether they might have options if they were laid off.”

However, Boudett says Levesque encouraged her coworkers to remain with Belron US through the acquisition. “She had many, many conversations in which she was encouraging people to wait and see how things played out with Belron,” he says.

According to Boudett, Levesque had no plans to leave the company, until her employment was terminated on July 30 “with no warning whatsoever.”

“They [told] her she’d been soliciting, and she [told] them she ha[d] no idea what [they were] talking about,” Boudett says.

“The next day they [wrote] a cease-and-desist letter saying she [was] violating a non-compete agreement,” he adds. “This is false—she has no non-compete agreement; anyone could look in her personnel file and find that it had been superseded. And, they [told] her [they were] going to sue her.” (Boudette notes that Levesque did sign a non-compete agreement with Diamond at one time, but that it was superseded when she was hired for a new position in 2005.)

Boudett says his client had no plans to participate in a joint venture prior to her termination, and, while she is an associate of Lee, “they have no joint venture and they have never had a venture together.”

He also notes that of those named as objects of the alleged solicitation in the complaint, all of them are still with Belron US. “Even if she had solicited, which … she [has] not, none of them have left,” he says. Likewise, Boudett points out that the complaint was filed in an effort to prevent her from soliciting or attempting to solicit current employees of Belron US.

“They have no basis to stop her,” he says. “She’s gone now and they have no contract with her. She’s free to call up and solicit whomever she wants.” Among the counterclaims Boudett and Levesque plans to claim is a charge of defamation for the attention this suit has brought to Levesque.

“… They issued a company-wide memo saying she solicited and violated the company’s trust,” he says. “She has gotten phone calls about that communication, about [the news coverage], and she’s gotten calls from people in the glass industry, but not at Belron or Diamond about this, and she feels that Belron is basically making her ‘unhireable’ and ruining her career.”

At press time, Lee had not been able to be reached for comment.

K U D O S
Fannin Auto Glass Celebrates 50 Years Fannin Auto Glass celebrated its 50th year in business on April 8. The Springfield, Mo.-based auto glass wholesaler, which was founded by Jack Fannin in 1958, celebrated the occasion with an open house.

The open house/customer appreciation day included drawings and vendor displays.

While the shop originally began as a retail shop installing all types of glass, in June 1980, Jack Fannin and his son, Eric, who owned his own auto glass shop in Springfield, decided to merge. Just four years after their decision to merge businesses, the two decided a move into the wholesale arena was best, and in June 1984 the company took this leap.

Jack Fannin passed away in the 1990s, leaving his son, Eric in charge. Today, Eric serves as president and his son, Travis, serves as vice president. Travis handles most of the day-to-day operations these days, since his father has begun to ease into retirement the last several years. The company currently distributes glass to Kansas, Oklahoma, Arkansas and Missouri.

AGRR
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