GAC Chemical Corp. has joined the ranks of prominent Maine companies such as Cianbro and Sargent Corp. that are owned by their employees. The Searsport-based company announced on Monday that its founder and owner, James A. Poure, was selling his ownership in the business to GAC’s employees by way of an Employee Stock Ownership Plan, or ESOP.
“Mr. Poure had come to a decision that he was ready to retire,” GAC President and CEO David Colter told Mainebiz in a conference call on Monday. “It was my job to make the transaction happen. The ESOP was the one option that had many benefits for both our employees and the owner … The company could have been sold to a competitor or another chemical manufacturer who wanted to gain access to the markets we serve. If that had been the case, the buyer probably would have moved the business out of state and many local, good-paying jobs would have been lost. The ESOP was an attractive alternative, which provided business continuity.”
In simple terms, an ESOP is a trust that a company sets up on behalf of its employees, into which it directs a portion of its profits. The trust uses that money over time to buy the owner’s shares. Colter said GAC’s ESOP was structured by Bellview Associates, a Chicago-based financial advisory and consulting firm specializing in ESOP transactions that also had worked with Sargent, the Stillwater-based heavy construction firm, on its ESOP sale in 2013.
Susan Scherbel, a principal of Bellview Associates who lives in Maine, designed the ESOP structure for GAC. Details about the company’s value under the ESOP transaction, which closed on June 23, were not revealed. Employees learned about the sale the next day, Colter said. “The reaction of our employees has been extremely positive,” Colter said, noting that all employees became vested in the ESOP starting on June 23. “An ESOP is a retirement benefit plan … what employees are getting is an opportunity to share in the success of the company.” Colter said the company’s owner, who formed GAC Chemical in 1979 (then under the name of General Alum & Chemical Corp.) and has operated the Searsport facility since purchasing it in 1994 from Delta Chemical, is particularly pleased that the ESOP removes much of the uncertainty for employees, customers and the host community that would have accompanied a sale to outside parties.
“GAC is ‘Maine’s chemical company,’” said John Wolanski, vice president of sales and marketing, referring to the company’s unique status as the only company in Maine capable of manufacturing, distributing and warehousing chemicals at one site. Its primary markets include pulp and paper companies, power plants, industrial manufacturing, agriculture and municipal water and wastewater facilities. “Our company’s customers are very supportive of this exciting new chapter for our company.”
“The ESOP is going to be a very positive recruiting tool for us,” said Barbara Haase, the company’s executive vice president and HR director, who joined Colter and Wolanski in the conference call with Mainebiz. “Giving employees the opportunity to share in the company’s success, from a recruiting standpoint, is one more benefit we can offer that is very, very attractive.” Colter credited the Small Business Administration’s Maine District office with helping to “get the deal to the finish line” by providing a 75% loan guarantee through a program specifically designed for funding ESOP transactions. Bar Harbor Bank & Trust partnered with SBA on the ESOP transaction. “This is one of the largest and most complex transactions the SBA has done in the state of Maine,” Maine’s SBA Deputy Director Diane Sturgeon said in the release announcing the ESOP transaction.
Steve Gurin, senior vice president of business banking at Bar Harbor Bank & Trust, echoed Colter’s comments about the assurance the ESOP gives to GAC Chemical’s employees and to its host community and the general Waldo County economy. “Successful business owners spend years serving clients and providing a livelihood for their employees,” he said in the company’s announcement. “When it’s time to retire, they want to see what they have built live on … GAC has been a fixture in Searsport for more than 20 years.
This transaction makes it likely the company will be here for at least 20 more.” GAC Chemical is a leading worldwide producer of high-purity ammonium sulfate and a number of industrial, specialty and fine chemicals (both organic and inorganic). It received the Maine Governor’s Award for Business Excellence in 2014 and was a co-recipient in 2015 of the Maine Foreign Investor Award for partnering with the Mexican company Dalegip Inc. on a specialty chemical manufacturing joint venture at the Searsport facility.