Utility Buys Construction Company Roy Kay Inc. and Affiliates Then Ousts Founder and Family Before Completing Payout, According to LeRoy Kay.
MARLBORO, N.J., July 30 /PRNewswire/ --
The following is being issued today by LeRoy "Roy" Kay:
The founder of Roy Kay Inc., the 30-year-old family-owned construction company that was purchased last year by KeySpan, and his family are now in the midst of a multi-million dollar dispute with the utility company, which has abruptly terminated the former owners' contracts while still owing them approximately $23 million under the stock purchase agreement.
LeRoy "Roy" Kay, wife Janet, son David and daughter-in-law Alice, are fighting KeySpan in New Jersey Superior Court after being ousted from the construction company's operations on April 20th of this year. Moreover, they are charging that KeySpan and others conspired in violation of securities law and RICO to induce them to sell their firm.
What appeared in January 2000 as an opportunity for growth and expansion, has turned into a battle between the giant utility and the family that founded and nurtured a construction business for more than three decades. According to the purchase agreement, two-thirds of the money -- roughly $23 million -- would be paid in future payments, of which $12 million was based on "earn out" while the Kays continued to operate Roy Kay Inc., Roy Kay Electrical and Roy Kay Mechanical. In addition, in order to make the deal with KeySpan, Roy Kay signed with 26 building trade unions.
The Kays point out that KeySpan officials misled them by not revealing that Roy Kay Inc. would no longer be able to perform general contracting work - fully 30 percent of the business - or get additional work from KeySpan affiliates building co-generation and other power plants.
Both Roy and David Kay had three-year employment contracts with KeySpan, but on April 20th, a few days after questioning utility company officials about limiting their general construction work, a group of security guards employed by KeySpan suddenly arrived at Roy Kay Inc.'s Market Street headquarters in Freehold, NJ and attempted to take over the premises. Freehold Police subsequently intervened and stopped the security guards' hostile actions.
Furthermore, according to Mr. Kay, at the same time that the KeySpan security group was downloading computer files, including several of David Kay's personal documents, KeySpan president William K. Feraudo was having what appeared to be a congenial lunch with Roy Kay at the nearby Empire Diner. Feraudo had orchestrated the meeting on the pretense of discussing some of the current issues facing the newly acquired company. Feraudo was also aware that Roy's son David was not joining them because he and his wife were on their way to an employee's wedding.
A frightened staff member, Mr. Kay adds, called him at the diner to alert him about KeySpan's security force attempt in taking over the premises. The employee related that all 50 office employees had been suddenly dismissed for the day. When Kay returned to the table and confronted Feraudo, he was handed four termination documents - one for each family member. Not only were the terminations totally unexpected, KeySpan ignored the employment agreement which stipulated 20-days written notice.
On June 27, 2001, KeySpan filed with the Securities and Exchange Commission (SEC) and "conceded" that the companies acquired from the Kays would give up all of their general construction work in an attempt to convince the SEC to retain the companies. The utility also requested that it be allowed to maintain the affiliates and not divest them as may be required by a forthcoming coming SEC order. However, in an earlier filing with the SEC, KeySpan misleadingly described Roy Kay Inc. as a company that did "incidental general construction work."
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|Date:||Jul 30, 2001|
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