Several months ago, both Blue Ridge and the Rank Group were vying to buy the Arkansas plant that made cardboard beverage cartons. If Blue Ridge had won, it would have controlled 89 percent of the Tropicana juice packaging market, according to Smoky Mountain Local 507 President Howard Taylor. But it didn’t.
“We were ready to buy it on a Monday, but he bought it the Friday before,” Taylor said of the Rank Group’s billionaire president Graeme Hart, whose company purchased the Pine Bluff business just days before Blue Ridge had planned to place its bid.
If Blue Ridge had won the market share, the buy-out of the mill last week could have taken on a much different form. Instead, the Rank Group continued its march to gobble up control of the drink carton industry with the buyout of Blue Ridge.
Blue Ridge Director of Regulatory Affairs Bob Williams described his company as being disappointed that it had not been able to acquire the Pine Bluff facility. He also said he was not surprised at the Rank Group’s subsequent purchase of Blue Ridge.
Both Williams and Taylor are hopeful the acquisition will turn out well for Blue Ridge’s Haywood County plants. Blue Ridge is the largest manufacturer west of Buncombe County, with about 1,300 employees at two plants in Haywood County.
Blue Ridge Paper was 55 percent owned by an venture capitalist group in New York that had been ready to sell and make a return on its investment. The mill was 45 percent owned by employees, who didn’t have a say in the buy-out, but whose will get compensated for their share of the company.
“From a financial perspective, there’s going to be $30 to $35 million going to the Employee Stock Ownership plan, which will result in a payoff to each employee,” Williams said.
This could result in as much as $20,000 per employee, depending on the amount of stock an individual owns. The ESOP constitutes about 39 percent of the common stock of Blue Ridge Holding.
Williams also added that Blue Ridge believes Rank “is making the acquisition because they see us as a key piece of their overall strategy,” and cited the fact that any existing debt held by Blue Ridge will be paid off through the acquisition.
Taylor said he believes the stability of Blue Ridge will be increased because of the wealth of the Rank Group and its president, who purchased the company with cash. He also said he was told that any loss of jobs would be the result of attrition rather than layoffs.
“I don’t want people to be worried about their jobs — we covered that when we negotiated the process,” he said.
However, union president Taylor wasn’t entirely pleased with the details of the purchase. He worries the employees he represents may not have gotten as fair of a deal as they deserve. The employees became part owners of the mill in 1999 when its long-time owner Champion International put it on the chopping block. Looking for a cheap investment, KPS provided cash, while employees chipped in by agreeing to wage cuts.
“We took a $5.20/hour cut in wages and benefits, so we went seven years without a raise,” he said.
Under the buy-out terms, employees won’t make back what they put in over the years. Taylor said it will come out to 18 cents on the dollar for employee’s investment. KPS is fairing far better, he said.
“You look at KPS coming out with $88 million, they come out (with) 2.5 times” their investment, Taylor said.
Taylor said the rank-and-file employees got the short end of the stick once again.
“Managers here (at Blue Ridge) have big bonuses, big salaries, five-year contracts signed after the buyout — so it looks like the only losers in this deal was us,” according to Taylor. “I don’t have any ill will against them, but I just don’t think we got a fair shake in this one. But my membership voted to support the buyout, and that’s what I’m going to do.”
The agreement for Rank to buy Blue Ridge was made last Thursday (June 14), but the deal won’t be final until it is approved by regulators.