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Eagle Convex to go head-to-head with competitors

by Julie R. Cryser


(September 13) Tom Hays will tell you up front that he's no good at being a long-term manager. And he'll tell you he's been managing Eagle Convex Glass Co. in Clarksburg a little longer than he would have liked.

He's a get in and get out kind of guy. Find a company struggling to stay afloat in competitive markets, turn it around and make it a top-notch competitor.

No company in the area, perhaps in the state, fits that scenario more than Eagle. When Hays, president of Nachman, Hays & Associates Inc., a certified turnaround company from Pennsylvania, came along in 1993, Eagle was trying to find its way through a fog of bankruptcy.

And just when things were starting to look up for the computer screen and tempered lighting glass company in early 1996, about half of the plant burned to the ground.

Two years later, out of bankruptcy and mostly rebuilt, the company is about to embark on a whole new phase of trying to make Eagle a thriving company. The plan: buy the company, grow it for five years and sell it to the managers.

"My preference is to have the managers be able to buy me out," Hays said recently from the company's new conference room.

So much for getting in and getting out.

But Eagle Convex hasn't been a simple case. First there was the bankruptcy, then the fire. Then deals -- deals with competitive companies -- fell through. Environmental hazards and the poor shape of the plant kept potential buyers at bay. This is a story, Hays will tell you, about a company that is trying to succeed against terrible odds.

Now, Hays is going out on a limb. He plans to buy the company, invest money and go head-to-head against deeply entrenched competitors.

"We have a rare opportunity to redo the way we fundamentally operate our business," Hays said.

For Hays, the saga began with a bankruptcy restructuring plan ironed out in January 1994. He advised the voting trustees to sell, but they wanted to wait. In June 1994, they put the company up for sale. They received a letter of intent from a company who Hays wouldn't identify.

But there were problems from the start of negotiations. Lead in the soil, a chemical etch process that was environmentally unfriendly, an ongoing risk created by bankruptcy and a lack of cash to reinvest into the company.

The deal fell through.

"They were afraid of one structural problem after another," Hays said. They dropped the price they were willing to offer and backed away from the table.

In early 1996, Hays came up with another plan: "grow the business, spend money on modernizing the appliance business."

Then came the fire. On March 17, a fire destroyed nearly 50 percent of the plant, including the company's ability to make glass for the appliance market.

The company battled back, reopened within weeks and began to rebuild. By September 1996, the company had another letter of intent. It was one of Eagle's former competitors, again a company Hays would not identify but to say it was a leader in glass manufacturing. Eagle would be a strategic acquisition.

It, too, backed out. Eagle was too small to fit its business plan, while the environmental liabilities were too big, he said.

"This is just an old property and the state and everybody are worried about the environmental risk," Hays said. Companies feared that if they bought Eagle the state would go after them with both fists to clean up environmental problems, he said.

Hays finally decided he would have to buy the business himself, help get it on its feet and get out.

"We as a company are now faced with the need to invest capitol in new equipment, so I signed a letter of intent with the company in November of last year," he said.

Already, Hays is at a disadvantage. The unnamed company signed a three-year non-competing agreement. That agreement runs out at the end of 1999. He's looking at a potential competitor that knows and understands Eagle's business processes, customer list and trade secrets.

"We're always going to have competitors, whether they are old or new," Hays said. "It's nice that we know who it is, what they are capable of and what we're up against.''

Things are starting to turn around, Hays said. The company has been profitable for several years now. But the obstacles are still there, including road blocks to his purchase of the plant, which he would like to close on at the end of this month.

Lead is still in the soil around the plant. On Aug. 20, the company submitted an application to the state Division of Environmental Protection for voluntary remediation, proposing to do an in-depth assessment of the site and confirm the accuracy of previous investigations, according to Bill Rheinlander, a spokesman with the DEP in Charleston.

The company is conducting soil boring and site tests. The company will also start an extensive paving process to help lessen the risks of lead seeping into ground water or fumes coming up from the soil.

"The blacktop would act as a barrier in those areas, but I don't know that that would be all they have to do all over the site," Rheinlander said.

Workers' Compensation rates are also a liability, Hays said. If he buys the company, he wants to negotiate a lower rate than the 25 cents for every dollar of payroll the company now pays.

A provision exists in the state code that could help him get a better rate if he can show the impact on the local community and the new company's safety plan.

"They have filed a petition here and that petition is now in our office of legal services," said Ed Burdette, executive director of the state Workers' Compensation Division.

Workers' compensation rates are based on the company's rate of accidents and claims, Burdette said. Another way to reduce the rate would be to lower accidents and claims, but the company wouldn't see a change in the rates for at least three years, he said.

Hays is also waiting on approval from about 30 shareholders. If he can't get them all on board, he'll go to court and ask a judge to force them to hand over their shares.

So the story about the company trying to succeed moves into another chapter, Hays said. It is a chapter that will be written over the next six months to a year and finished if and when he can sell the plant to 11 managers and then step out.

"The facts are going to have to be decided when we finalize things," Hays said.