Sweetheart CEO is out 50 people are laid off

Uleau replaces McLaughlin amid restructuring by Fonda Group Inc.

Manufacturing

March 19, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Sweetheart Cup Co. Inc. President and Chief Executive Officer William F. McLaughlin has been replaced and about 50 workers laid off as part of a restructuring plan by the company's new controlling shareholder group, the Fonda Group Inc., a Sweetheart executive confirmed yesterday.

Fonda President Tom Uleau has assumed the positions of president and chief operating officer of Sweetheart, said Dan Carson, general counsel for Sweetheart.

McLaughlin, 49, had been at the helm of the paper and plastic foodware maker since May 1994. Carson said McLaughlin leaves with a severance package, though he declined to disclose its terms.

McLaughlin's compensation package for 1997 included a $491,661 salary, stock options and $125,000 under a "special incentives" agreement, Securities and Exchange Commission records show.

Carson described McLaughlin's departure as "amicable" and not unexpected.

"Anytime you have a change in ownership, it is not unusual to also have a change in management," said the lawyer.

But it is also true that Sweetheart had a bad financial year last year, losing $47 million -- a big reversal from its 1996 profit of $5.7 million.

Since Friday, St. Albans, Vt.-based Fonda has laid off about 50 of the 500 administrative employees at Sweetheart's Owings Mills headquarters. Carson said it was too early to estimate potential costs savings to Sweetheart and Fonda from the job reductions.

Carson said the layoffs were aimed at eliminating duplication in the combined administrative operations of Sweetheart and Fonda.

"We see these job cuts as an adjustment needed to avoid redundancy and duplication, and to get some greater efficiency out of the company," said Carson.

He said major additional job cuts are not forecast.

"There won't be draconian cuts," said Carson. "We see combining resources of the companies as a very positive event. There are a lot of synergies and growth opportunities ahead."

Carson said the new management structure includes Dennis Mehiel, chairman and chief executive of Fonda, assuming the role of chairman and chief executive officer of Sweetheart.

Hans Heinsen, chief financial officer of the Fonda Group, was named vice president and chief financial officer of Sweetheart. He replaces William F. Spengler, who has been with the company since March 1997.

In the debt-leveraged transaction, which closed last week, Fonda Group formed a holding company, SF Holdings, which bought 100 percent of the outstanding stock of Fonda. SF Holdings, whose name is made up of the first initials of both companies, also bought 48 percent of the voting stock of Sweetheart Holdings Inc. and all of a new class of nonvoting common stock. As part of the deal, SF issued its own preferred stock to Sweetheart shareholders.

RTC SF Holdings now controls 90 percent of all Sweetheart shares outstanding. The companies did not disclose financial terms of the deal.

With 2,000 employees in Owings Mills, Sweetheart is one of the Baltimore region's largest employers.

Pub Date: 3/19/98

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