Sargent Electric Co.'s plan to emerge from bankruptcy centers on seven investors who would take away ownership of one of the nation's biggest electrical contractors from the Sargent family after 99 years.
The reorganization being considered in U.S. Bankruptcy Court calls for an investor group known as Sargent Asset Partners to buy all the common stock of the Strip District-based company for $3.9 million and to take possession of the headquarters directly from family members or through a sheriff's sale.
Stephan Dake, an investor in S/D Engineers, based a few blocks from the Sargent offices, is one of the investors and would become Sargent's chief executive and president.
"It just seemed like a reasonably good investment, to buy a company like this that has been around for a long time," said Dake, who has worked with Sargent on several projects.
While Sargent needs to restore its asset base, credit and banking relationships, the company retains its good reputation, talented middle managers and workers and other pluses, Dake said, adding, "There wasn't much wrong with it."
In addition to Dake, who has more than 35 years of experience in engineering and construction, Gary Groom would take a key role at Sargent, as chief operating officer. Groom's background is in commercial finance for engineering, construction and manufacturing, and he has his own firm, Finance Specialists.
Other partners include Daniel J. Tis, a principal at S/D; local engineer David D. Moniot; Madison Realty Investments; and out-of-state investors Albert Nelson and Dale Keller.
Events on three dates in February could move the company toward the end of its financial woes, which followed cost overruns on four major jobs, an unsuccessful move into residential service and a weakened construction market in recent years. Sargent filed for Chapter 11 bankruptcy reorganization May 10.
Creditors have been asked to vote on a reorganization plan by Feb. 6. Bankruptcy Judge M. Bruce McCullough will hold a hearing Feb. 9, and could set a date for the plan to take effect a few weeks later.
A sheriff's sale for the Liberty Avenue headquarters and five other properties that family members own through a limited partnership could occur Feb. 22, if there is no agreement by then to transfer the building to Sargent's new owners.
Dating to 1907, Sargent Electric does electrical contracting and maintenance work for commercial, industrial and utility customers. The company also installs automated meter reading equipment for power, gas and water utilities, and builds and maintains wireless service towers.
The company has continued to operate in bankruptcy without additional, outside financing, and "had a good 2005, from the standpoint of new bookings," said Frederic Sargent, who has served as CEO and is to remain with the company as chairman.
Sargent Electric's revenues have dipped, from $153 million in 2001 to $47.7 million in 2004, and about $29.8 million from January through November 2005, the plan said. The company lost $4.43 million in 2002, $1.78 million in 2003 and $5.97 million in 2004.
Sargent Electric has 200 to 300 employees, a number that fluctuates based on needs at job sites, and two offices in Indiana.
KPS Special Situations Fund II LP, a New York equity fund, intended to buy the company last summer for $3.6 million, but the deal fell through when KPS opted to focus on larger investments, Sargent said.
