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Blacks buy Tractor Co.

The January acquisition of a construction and heavy equipment distribution company provides an interesting look at how blacks and whites are forging new business partnerships. Three black businessmen acquired a 52.5% controlling interest in Hickory Hills, Ill.-based Tractor & Equipment Co. (TECO), even though they collectively contributed less than 50% of the financing for the deal. The trio are among five partners who purchased the company for $5.1 million.

TECO sells, rents and leases construction and heavy equipment to government agencies, municipalities, private contractors and corporations in the Chicago metropolitan area. Under the name TECO Acquisitions of Illinois Inc., Edward Lindsey, chairman and CEO of TECO, and his partners bought the stock and debt responsibilities of the 63- year-old company, while retaining its existing service contracts.

Two commercial loans totaling $3.9 million, an $800,000 subordinated loan and $400,000 in personal equity financed the deal. Lindsey, his longtime friend Emile Godfrey (who is black) and TECO President and Chief Operating Officer Ronald Rake (who is white) worked together to draft the initial purchase proposal. Later, Gary Mingle (who is white) and John E. Wilson (who is black) added financing to solidify the deal.

According to Lindsey, Mingle and Wilson account for 60% of the financing for the deal, but own only 40% and 2.5% of the company stock, respectively. Lindsey, Godfrey and Rake own 30%, 20% and 7.5% of TECO stock, respectively. "When [Mingle and Wilson] came on the scene, most of the paperwork for the deal had already been done," says Lindsey. "You can't always trade dollars equally for all the human effort that is done."

The company was more than $2.5 million in debt when Lindsey's group purchased it. "One of our strategies will be to leverage our MBE status to promote growth. We're now qualified to bid on state and municipal projects in Illinois, Wisconsin and Georgia, as well as on federal contracts," says Rake.

Lindsey projects revenues of $10 million this year, up from $7 million in 1991.
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Title Annotation:Tractor & Equipment Co.
Author:Jones, Dasha
Publication:Black Enterprise
Date:Sep 1, 1992
Words:339
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