DALLAS, March 6, 2018 /PRNewswire/ -- A Texas state district court has barred Deerfield, Illinois-based Pregis Performance Products LLC from paying a $1.5 million bonus to the president and chief executive officer of a competing company whose assets Pregis bought last month in an asset purchase agreement.
The temporary restraining order issued Feb. 26 in Tarrant County's 141st District Court prevents Pregis from paying the bonus to James Donald Tate of Keller, Texas, who was also ordered not to receive the payment. Tate is the president and CEO of Marysville, Michigan-based Rex Performance Products, LLC. Both companies manufacture polyethylene foam used in product packaging.
The lawsuit, which was filed on behalf of Rex Performance by Darrell W. Cook of Dallas' Darrell W. Cook & Associates, alleges that Tate negotiated a secret side deal to drive down the purchase price of his own company in exchange for a so-called "Super Bonus" that would be paid by Pregis.
Tate was entrusted with sole control to negotiate the sale of Rex Performance's assets when the company was approached last December by the Stamford, Connecticut-based private equity firm Olympus Partners, which owns Pregis. As part of the negotiations, Tate met in January with Olympus partner Manu Bettegowda.
Following the meeting, Tate reported that Olympus was offering $3 million less than what Rex Performance requested. After Tate's lobbying of fellow Rex Performance equity members to accept the lower offer, the company agreed to the sale.
However, according the lawsuit, Tate had secretly negotiated a $1.5 million bonus for himself and others in exchange for driving down the purchase price.
The alleged scheme came to light when Rex Performance discovered a series of exchanges on Tate's work email while conducting due diligence to close the transaction. In the emails, Tate and representatives from Olympus openly discuss their plans and the need to keep the side deal confidential from others at Rex Performance.
The lawsuit filed against Tate, Bettegowda, Pregis and Olympus seeks more than $1 million in damages based on claims for breach of common law fiduciary duty, conspiracy, and exemplary damages, among others. A March 9 hearing will determine how the case will proceed.
The lawsuit is Rex Performance Products, LLC v. James Donald Tate, et al., No. 141-298129-18.
For more information, contact Bruce Vincent at 214-763-6226 or email@example.com.
SOURCE Darrell W. Cook & Associates