business closure in Janesville since the Great Recession. [5] however, his actions have also drawn substantial criticism, including numerous lawsuits. According to Opengate Capital, the company withheld important documents . Too often, private equity firms like OpenGate extract cash from the companies they acquire and walk away richer, regardless of what happens to workers and communities. RSI operated PennySaver until its closure in May. Andrew Nikou Founder, Chief Executive Officer OpenGate Capital 10250 Constellation Boulevard, 30th Floor [28][29], Past closures also included PennySaver USA and Hamilton Scientific. As part of the transition process, OpenGate Capital has renamed the business to EverZinc. The firm first gained recognition for the acquisition of TV Guide Magazine in December 2008,[2] and the publication's turn to profitability in the first quarter of 2010.[3]. In the May 2013 filing, OpenGate claimed it was misled into buying the division it later renamed Hamilton Scientific, and that site visits before the sale had been structured to avoid discovery of the hostile encroachment and occupation of the Reynosa facility by cartel members. After laying off all 166 workers at Hufcor's Janesville plant, OpenGate Capital drove the company . Nikou and OpenGate executives wouldnt discuss PennySavers closing. I just dont find it funny to ruin peoples lives. You always pay your employees. [5], Under Nikou's leadership, OpenGate Capital bought founder-owned businesses and divisions of Fortune 500 companies such as Philips, Schlumberger, Arvin Meritor, Stora Enso and Cascades. In 2010, Nikou was named a Top Dealmaker of 2010 by Mergers & Acquisitions magazine. OpenGate, which Nikou started in 2005, has engaged in more than two dozen transactions. It would. . But there were no stocks because the elder Darden was never a part of the deal, it is alleged. This rating has decreased by -11% over the last 12 months. OPENGATE CAPITAL GROUP, LLC, OPENGATE CAPITAL MANAGEMENT . Other emerging managers in . Its the biggest business closure in Janesville since the Great Recession. Among them were a French childrens book publisher, a Finnish paper producer, the Nicole Farhi division of fashion firm French Connection and Models One Ltd., the modeling agency that has represented supermodels Bar Refaeli, Alessandra Ambrosio, Linda Evangelista and others. The owner, private equity firm OpenGate Capital in Century City, had turned over management of the firm in December to a restructuring and liquidation company, Realization Services Inc. in Bedford Hills, N.Y. And in the two months before the shutdown, the lender, a unit of Capital One Financial Corp., had placed one and sometimes two representatives at PennySavers Brea headquarters to monitor the operation and the companys financial condition, under terms of the line of credit it was using to pay employees, among other expenses. It agreed to provide $3.1 million in . Shortly after the presentation, senior PennySaver staff members were asked to write to OpenGate partner Jay Yook, outlining how they would turn around the company, said Elaine Buckley, who at the time was PennySavers vice president of outside sales. It is normal course and practice that all parties to a contemplated transaction withhold announcements to any outside parties until there is certainty there will be closure, Fahn said. But in some cases, as with PennySaver, external circumstances frustrate our ability to have our investments realize their full potential.. The case status is Pending - Other Pending. Coupon mailing company PennySaver USA was in default on its main operating loan for five months before it abruptly shut down on the eve of the Memorial Day weekend, something few of its roughly 680 employees knew before they were put out of work. What makes Janesville special in a lot of peoples minds is that we really had the real glory years here, former State Senator and activist Tim Cullen said. In 2005, Nikou founded OpenGate Capital with $30,000 from his own savings. Why is Frank McCourt really pushing it? After the Fusion facility closed in September 2014, the state launched several programs to retrain workers, Osten said. Emerging managers like OpenGate are seeking reception with limited partners, who generally have been happy to stick with their established relationships in uncertain markets. On May 27, 2021, 166 workers in Janesville, Wisconsin awoke to a nightmare. To date, OpenGate has laid off 678 California workers from the Pennysaver classified ad magazine, 100 Wisconsin workers at its Golden Guernsey dairy plant, 140 employees of the Connecticut boxboard company Fusion Paperboard, and nearly 200 employees in Texas, Arkansas, and Wisconsin, who worked for the laboratory furniture company Hamilton Scientific. The younger Darden pleaded guilty to his own Maxim-related fraud charges in November and is cooperating with prosecutors in their pursuit of Newkirk. Nikou instead tries to generate goodwill as a philanthropist and has even started his own foundation, which boasts of a mission driven by values empowering individuals and communities. Nikou still sits on numerous boards, including that of the Hammer Museum in Los Angeles. In February, the PennySaver building on Orbiter Street in Brea was sold for $14 million, according to public records. [22] The deal was the fifth platform investment from OpenGate's debut fund. The lawsuits allege that a company or individual violated securities laws and are brought on behalf of the class. On May 27, 2021, 166 workers in Janesville, Wisconsin awoke to a nightmare. Investment Represents Strategy to Create European Aluminium Solutions Group. Former PennySaver employees are administering a crowdfunding site to help those left in the lurch. Kasoff said that his sole focus after his company was brought in was on fixing PennySaver and that a shutdown was never contemplated until Capital One shut off credit without explanation. We look to establish collaborative relationships with companies to drive operational improvement and realize opportunities for long-term value creation. The lawsuit, filed in federal court in Los Angeles, alleged that Thermo Fisher had acted in bad faith by withholding documents and directing employees to conceal the drug gangs presence at the facility. A state claim for wages was filed in the dairys pending Delaware bankruptcy case. Workers are suing OpenGate in state and federal court, alleging it failed to provide adequate notice to workers about the shutdown and issued final paychecks that bounced. "OpenGate buys Cascades recycled box makers," Los Angeles Business, 6-14-2011. Its website says its businesses generate annual revenue of about $3 billion, making it a small player. OpenGate Capital, a Los Angeles firm that amassed $5 billion in revenue during its first decade in business, has run exactly that playbook in Janesville since acquiring Hufcor in 2017. . Do Not Sell or Share My Personal Information, Musk said hed never settle an unjust legal case against him. The closure of PennySaver only reaffirmed the Connecticut state senators opinion of OpenGate. OpenGate is moving the plant to Mexico anyway. Click But in court papers, Hamilton denied any illegal conduct. Fusion employees received 60 days notice in July and stayed on until the mill closed in September. [23] OpenGate rebranded the business EverZinc; within Umicore it had generated $425 million in revenue in 2015.[24]. 2:17-cv-04360-SB-E ("Underlying Lawsuit") under Private Equity Liability Insurance Policy No. Through it all, few employees understood the depth of the companys distress. Contact the writer: 714-796-2286 or lwilliams@ocregister.com. ), Concertgoer lets out a loud full body orgasm while L.A. Phil plays Tchaikovskys 5th, 8 best interview questions to land a top job, Bank rates are up. it's been delivered there. OpenGate uncovered that the facility was being used by senior local leaders of the Mexican Gulf Cartel, according to a federal complaint filed on June 12 . OpenGate Capital is talking to limited partners about launching its next flagship, which could target up to $850 million, sources told Buyouts. The suit claimed that Thermo Fisher had rushed negotiations and provided misleading answers to due-diligence inquiries. The cases that former employees have highlighted as OpenGate failures include: the shuttering of Golden Guernsey on a Saturday morning in 2013, with no notice to employees; the closure of Connecticut-based Fusion Paperboard shortly after it had received a state loan to stay put for 10 years; and the shutdown of OpenGates laboratory furniture business, Hamilton Scientific, after it discovered that a drug cartel had overrun its Mexico plant and it was evicted from its Texas facility. Securities class action lawsuits are filed on behalf of a class of investors or a class of holders of a particular security. Uber drivers and other app-based workers are facing an all-out safety crisis. Barry L. Kasoff, president of Realization Services who served as PennySavers chief restructuring officer, denied the assertion and said the decision to close with little notice was dictated by Capital One. Employees at other OpenGate-owned companies have voiced similar complaints. Andrew received a Bachelor of Science degree from University of Southern . Dean Starkman previously covered Wall Street for the Los Angeles Times; he left in 2016. Unless we do, Hufcor employees wont be the last to suffer at the hands of private equity and its ruthless profiteering. Founded in 2005, OpenGate Capital is a global private equity firm that strives to acquire and optimize lower middle market businesses throughout North America and Europe with a strategic focus on operational improvement, innovation and growth. The spokesman, who did not want to be identified because of pending litigation, said the company warned workers about the possibility of a plant closure when it learned of the eviction threat. Withdrawing funding is a last minute resort, Capital One spokesman Michael Bulger said in an emailed statement. June 16, 2021. [1] The firm is focused on the acquisition of lower to middle market businesses that are often privately owned, or non-core divisions of larger companies located around the world. We need to take legislative action in Congress to rip up the predatory playbook that these private equity firms use to leave workers with nothing but pink slips and lost livelihoods, Senator Tammy Baldwin of Wisconsin, , the first major effort to reform the private equity sector, in the last Congress. INTRODUCTION Before the Court is the Motion to Dismiss Pursuant to FRCP 12(b)(6) filed by OpenGate Capital Group, LLC, OpenGate Capital Management, LLC and PennySaver Investors, LLC's (collectively, "OpenGate"), which seeks to dismiss the Complaint filed by Don A. Beskrone, Chapter 7 Trustee for the estates of PennySaver USA Publishing, LLC, et al. In the last 16 years, Andrew's leadership has grown OpenGate into a global company with a reputation for innovation and deal-making. Janesville, Wis. - U.S. Former employees of at least three former OpenGate portfolio companies have filed lawsuits or complaints alleging OpenGate or the companies it owned violated labor laws requiring businesses to notify employees 60 days before mass layoffs. Likewise, OpenGate itself has continued to raise millions since bankrupting its previous companies, enabling these practices to continue unabated. To date, OpenGate has laid off 678 California workers from the Pennysaver classified ad magazine, 100 Wisconsin workers at its Golden Guernsey dairy plant, 140 employees of the Connecticut boxboard company Fusion Paperboard, and nearly 200 employees in Texas, Arkansas, and Wisconsin, who worked for Hamilton Scientific, an OpenGate-owned laboratory furniture company. With its global presence and deep focus on target sectors and investment types, OpenGate is known to bring innovation and transformational value to complex transactions. It was rough, but they didnt care. OpenGate failed to give workers at Pennysaver and Golden Guernsey the 60 days notice of business closure that is required under U.S. labor law. This spring, 166 workers in Janesville, Wisconsin awoke to a nightmare. [25] In that same year, the firm also completed six platform investments, and one add-on, all within the second fund. A court filing by the trustee overseeing the bankruptcy proceedings said Golden Guernsey owed $1.5 million because it had violated state labor laws that require 60 days notice to employees of mass layoffs. The employees say they didn't get money owed to them including their paychecks and vacation time. The first named plaintiff, OpenGate Capital Group LLC, and four of its subsidiaries named as plaintiffs are creatures of Delaware law as well. Official press release ScioTeq - EN. Register now to read this article and more for free. Don't have an account? Fahn points to OpenGates acquisition of TV Guide, auto part manufacturer Gabriel, and Europe-based companies NorPaper, Benvic, Kotkamills, and Fleurus Presse as a some of OpenGates successful turnarounds. In 2005, entrepreneur Andrew Nikou used $30,000 from his own savings to form a private equity firm, OpenGate Capital. Nikou grew up with a passion for trading baseball cards and competing in breakdancing competitions. . To me, you dont sign a six-year contract and decide to close a facility.. An investigation by the states Department of Workforce Development in 2013 cited the dairy for violating a federal law requiring a 60-day warning of mass layoffs and said it owed workers $1.6 million. [30][31][32], Nikou sits on the Board of YELLOW, the non-profit organization founded by Pharrell Williams. The acquisition financing was arranged via a unitranche by Deutsche Bank as . If we wanted the employees to be paid, we had to immediately terminate all the employees other than those that were needed to liquidate, Kasoff said. OpenGate is moving the plant to Mexico anyway. Wrong. Experience: Mr. Moazami is a Technology industry Senior Advisor to OpenGate Capital. A bankruptcy trustee subsequently alleged in a court filing that Nikou and OpenGate had obtained the company at a bargain purchase price when the fair value of assets exceeded liabilities by $10.9 million. Founder & Chief Executive Officer at OpenGate Capital . OpenGate Capital, a global private equity firm, announced today in a joint statement with its portfolio company, Hufcor Inc. ("Hufcor"), the world leader in the design, manufacturing and installation of movable partitions and flexible space management solutions, the appointment of Mr. Koben Miceli as Chief Executive Officer, effective immediately. It would curb the industrys worst abuses and prioritize people, not private equity profits. OpenGate Capital. of the Connecticut boxboard company Fusion Paperboard, and nearly. The Golden Guernsey plant employed over 100 workers. At OpenGate, we strive for a culture that promotes open communication and empowerment of fellow team members.. 66% of employees would recommend working at OpenGate Capital to a friend and 61% have a positive outlook for the business. A fully integrated team of origination, investment and operations professionals. Later that year, Nikou led OpenGate Capital's bid for McGraw-Hill Companies BusinessWeek magazine, then withdrew from the bidding. EverZinc is headquartered in Lige . After decades of pro-corporate globalization, people numb to its effects might write off Hufcors closure as a tragic but ultimately unavoidable consequence of a deadly pandemic and economic upheaval. To date, the firm has completed more than 75 transactions, including acquisitions and divestitures, and has acquired more than $8 billion in gross consolidated revenues. You should only be asked to sign in once. By continuing to use this site, closing this banner, or clicking I Agree, you agree to the use of cookies. "OpenGate Capital Acquires Philips Business Communications in Brazil," Latin America Venture Capital, 3-18-2010. The companys shares closed at $84.46 on Friday on the Nasdaq. By continuing to use this site, closing this banner, or clicking "I Agree", you agree to the use of cookies. They just dont flat out care about being a reputable business, from my perspective, Osten said. here to register, Not for publication, email or dissemination, Veritas-backed HMH buys educational services nonprofit NWEA, Professional services company FMP inks $36.5m from Alaris, NMS recaps environmental services firms Texas Pride and Texas Dumpster Companies, MSCP invests in services for homeowners; Patient Square launches platform for medical device makers, Leonard Green to acquire minority stake in HUB; plus Investcorp, Sound Partners, Odyssey invest in HVAC, 700 million people will make their home in African cities over the next decade, said DPIs Marc Stoneham. To date, the firm has completed more than 75 transactions, including . The firm focuses on the acquisition of lower-to-mid-market businesses in the industrials, business services, and technology sectors. However, after making a few payments, Fusion defaulted on a loan from the state of Connecticut, said State Sen. Cathy Osten, who is also the first selectman of Sprague the small town where Fusion was the main employer. The firm faced six different lawsuits after abruptly laying off Pennysaver employees in the middle of a work day and failing to give workers their final . Our six-week newsletter will help you make the right decision for you and your property. Opengate did not specify what damages it was seeking. Employees who started work later arrived to find the facility locked. in Texas, Arkansas, and Wisconsin, who worked for the laboratory furniture company Hamilton Scientific. This story has been shared 673,260 times. OpenGate Capital, the private equity firm that owns their employer, Hufcor, announced it was moving its plant out of Janesville, taking those workers jobs and livelihoods with it. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); ACCE Action, Action Center on Race and the Economy, AFL-CIO, American Federation of State, County, and Municipal Employees, American Federation of Teachers, Agenda Project, American Family Voices, American Federation of Government Employees, American Federation of Teachers, Americans for Financial Reform, American Postal Workers Union, Beneficial State Foundation, Campaign for Americas Future, California Reinvestment Coalition, Catholics in Alliance, Center for Popular Democracy Action, Communications Workers of America, Consumer Action, Consumers Union, Courage Campaign, Center for Popular Democracy, CREDO, Communications Workers of America, Daily Kos, Demand Progress, Democracy for America, Economic Policy Institute, Franciscan Action Network, Friends of the Earth US, Groundwork Collaborative, Hedge Clippers, Institute for Policy Studies, Jubilee USA, Main Street Alliance, Media Voices for Children, MO Jobs with Justice, MomsRising, MoveOn, The Nation, National Education Association, NETWORK Lobby for Catholic Social Justice, New York Communities for Change, Citizen Action of New York (CANY), The Other 98%, Patriotic Millionaires, People for the American Way, Peoples Action, Presente.org, Public Citizen, RootStrikers, SEIU, Strong Economy for All Coalition, UNITE HERE, United Auto Workers, United Food and Commercial Workers, Working Families Party, Social Activity 2017 | All Rights Reserved, The Save the Post Office Coalition on Closed Postal Board Meeting Aug 5-6, 2021, We Stand with the Asian American and Pacific Islander Community, Biden FY24 Budget Puts Working People Over Wall Street, Pandemic Profiteering: Private Equity Gets Bigger in Every Way, The House Always Wins if You Own the House: Private Equity Housing Billionaires during COVID-19, The Megalomaniac Supervising the Maniac: Schwarzman, Trump, and Anti-Democracy, The Save the Post Office Coalition reacts to Louis DeJoys 10 year plan, How Tax Laws Paved The Freeway for Wall Street Giants, Remembering Tulsas Black Wall Street on Juneteenth, Private Equity and Megabanks Continue to Crush the Housing Market for the Middle Class and People of Color, Erasing Black People From American History: Why We Need Popular Education, The Save the Post Office Coalition Reaction to USPS Announcement on Electric Vehicles.

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