Bid for more growth prompts Air-Cure firing Stockholders explain removal of firm's chief

March 05, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

The sudden ouster of Michael Lawlor, the chief executive of Annapolis-based Air-Cure Technologies Inc., was driven by a small group of shareholders who say they wanted to pick up increase the pace of growth of the pollution control company.

The group also believes a different strategy for Air-Cure can boost profits, improve the stock price and make Air-Cure the company a well-known name in the environmental control industry.

"I'd like to think we can double the size of the company in the next 18 months," said Mark E. Johnson, a majority shareholder who led the move leading to Friday's firing of Mr. Lawlor.

"This was nothing personal about Mike. It was a philosophical difference about the direction of the company," said Mr. Johnson, co-general manager at Allied Industries, a Houston-based manufacturer of pollution control equipment that merged with Air-Cure in December in a deal worth an estimated $16.2 million to Allied's private owners.

Industry analysts who follow the company had credited Mr. Lawlor with steering the company Air-Cure from an unremarkable position in the air pollution control industry with just $7 million in sales to that of an emerging player with operations overseas. Mr. Lawlor has said that he thought the company could have sales of about $250 million in three to five years.

Mr. Lawlor's strategy for growth was to build the company through paced strategic mergers and acquisitions, including operations in Germany and Singapore, though many of the subsidiaries retained their own names after the deals.

Ironically, Mr. Lawlor orchestrated the merger between the Annapolis-based air pollution control company and Allied Industries late last year.

At the time the merger deal was announced, Mr. Lawlor said, "It's the right fit for us."

The deal, estimate analysts say, should help Air-Cure's revenues jump to more than $100 million in 1996, from $75 million in 1995. Allied is expected to post 1995 revenues of $40 million.

The merger gave Mr. Johnson and his partner at Allied, Pierre S. Melcher, the two largest single stakes of common stock in Air-Cure. Combined, they hold 35 percent of Air-Cure's common shares. Mr. Lawlor owns 2.2 percent.

Meanwhile, Mr. Lawlor, who had been president and chief executive officer at Air-Cure since 1992, said yesterday he had no warning that Mr. Johnson had pooled a small group of shareholders for a takeover.

Mr. Lawlor said he was overseas on business when he got the news he was out of a job.

"I had no idea it was coming. I received a fax in Germany while doing an operational review of our subsidiary there," said Mr. Lawlor. "I thought the company was headed in the right direction."

He said neither Mr. Johnson nor Mr. Melcher spoke with to him prior to before Friday about regarding their concerns about his strategy for the company.

"I have no problem with what they did, but how they did it. It showed a lack of class and ethics," said Mr. Lawlor, 55.

To form a majority group with a controlling 55 percent stake in the company, Mr. Johnson and Mr. Melcher convinced Kamlesh R. Tejwani, who holds 11.4 percent of Air-Cure's common stock and who founded the company in 1990, that it was time for a change.

Mr. Johnson said the three then enlisted the support of two other shareholders with strong stakes in the company -- John J. Halligan and Robert L. Labbe, top executives at Amerex Industries Inc., an Air-Cure subsidiary in Georgia. They each hold about 4 percent of Air-Cure's common stock.

The group named Mr. Johnson to take over Air-Cure and decided to shift Air-Cure's headquarters operation and its six employees from Annapolis to Houston.

Mr. Johnson said the group decided to fire Mr. Lawlor and four other members of the board to avoid a fight over replacing Mr. Lawlor.

"It may have been overkill. But we felt we had to do this in such a way that we didn't get the company into a protracted proxy fight or which would result in a shareholder suit that would hurt the company," said Mr. Johnson.

Melville Cody, director of research at Sanders, Morris, Mundy Inc., a Houston-based investment house that tracks Air-Cure, said the management change, while unexpected, shouldn't hurt the company's value in the short term.

"Lawlor did a very good job," Mr. Cody said. "It seemed to boil down to a philosophical difference over the direction of the company. The new management team wants to grow the company much faster.

"Once they have their business plan in hand, they'll have to pencil in the details for Wall Street."

Mr. Johnson said all of the board members who were terminated Friday have been invited back on the board, except Mr. Lawlor.

Two of them, John E. Drury, an executive at USA Waste Services in Texas, and Richard J. Heckmann, president of U.S. Filter Corp. in California, have declined.

Lawrance C. McAfee, Air-Cure's chief financial officer, and James L. Rainey, an Oklahoma businessman, have not yet made a decision, Mr. Johnson said.

Pub Date: 3/05/96

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