Employee Buyout at TRP

Source from:  Tobacco Reporter 05/09/2011

Tobacco Rag Processors (TRP) has announced the buyout of the company by its employees. TRP operates a cut-filler manufacturing plant and a cigarette filter company (NC Filter Corp.), both of which are located in Wilson County, North Carolina, USA. With approximately 100 full-time employees, TRP produces cut-filler tobacco, which is sold to a variety of domestic and international customers for their production of cigarettes, cigars, pipe tobacco, and roll-your-own tobacco products. The employee buyout is structured under an Employee Stock Ownership Plan (ESOP), which allows employees to earn an ownership interest in the company that will be paid out subsequent to their retirement. ESOPs are tax-qualified deferred compensation plans that were approved by the U.S. government in 1974 under the Employee Retirement Income Security Act. An independent trustee will oversee the plan for TRP and will operate on behalf of the employees. Financial institutions supplying the capital for the buyout include SunTrust Bank, Bank of Montreal and Wells Fargo. TRP's management team, including Chief Executive Officer Davis Miller and President Bobby Johnson, will remain. Miller and Johnson joined the company in 2001, after previously working for Standard Commercial Tobacco Co. Also continuing in their current roles are David Coleman, vice president of processing, and Walter Etheridge, vice president of administration. Coleman and Etheridge also worked for Standard Commercial prior to joining TRP. "With the ever-changing environment within the tobacco industry, we deemed it prudent to protect our business, our customers, and our employees, who have helped us achieve a high level of success over the last several years," said Miller. "With our new ownership structure, we anticipate increased customer satisfaction as a direct result of our employees' vested interest and pride of ownership in their company. The day to day activities of the company will remain unchanged. Our customers will continue to work with the same TRP staff with whom they are currently familiar." "The process to complete the ESOP transaction has been long and arduous," added Miller. "A full valuation process was completed by an independent firm. Several law firms have been involved, as have multiple banking institutions across the country. This process has taken roughly a year to complete." Because of the complex nature of an ESOP structure, there will be additional reporting and regulatory requirements. The addition of a chief financial officer to the TRP management team will solidify the company's resolve to protect its stakeholders as well as to ensure complete compliance with the fiscal and reporting responsibilities. An announcement naming the new CFO is expected in the next few weeks. Johnson commented, "Our employees have helped us grow the company to levels we would have never imagined. The ESOP structure will reward their hard work and provide yet another incentive to continue to look for improved efficiencies and creative ideas to expand the company even further. It's their company now. Our customers will reap the benefits." Enditem