Consolidated Minerals Inc. (CMI), a manufacturer of specialty aggregates used in construction products with operations in Leesburg and Orlando, became a 100 percent employee-owned company in June.
Chairman Randy Simpson told GrowthSpotter the establishment of an Employee Stock Ownership Plan (ESOP) has allowed the company to keep its operations in Florida, particularly the headquarters in Leesburg, and pave the way for future growth.
The CMI story has an unusual twist in that its founder F. Browne Gregg, who passed away in 2014, left the entire company that he started in Leesburg in 1987 to two nonprofits: Leesburg Regional Medical Center and Cornerstone Hospice.
An near-vertical company, CMI includes subsidiaries CL Industries, which is the core business; Universal Aggregate Solutions; Aquavations; and Mallard Global Logistics (a fleet of trucks).
The company, which specializes in aggregates that are used in pool, deck and pavement finishes, employs about 80 people and maintains operations in Orlando, Leesburg and Fort Worth.
As a way of showing his commitment to Leesburg, Gregg named the medical facilities as beneficiaries of his estate.
However, Simpson explained, "It's not in the business model of a hospital and hospice to own a private company. They started talking with us about how they could turn this tremendous gift into cash that they could put into their projects."
Simpson pointed out that if CMI were sold to a third party, it would be unlikely that the operation would stay in Leesburg.
"The wonderful thing is they were committed for the company to remain here," he added. "And so there was a lot of discussion. We hired PCE Investment Bankers in Winter Park. They focus on working with companies that want to do ESOPs.
"We needed a tremendous amount of money to do this," Simpson continued. "We had to borrow money as the hospital and hospice wanted a value up front so they could reinvest. PCE helped us to arrange it and put it in place with Fifth Third Bank."
Since CMI is a private company, Simpson said he could not reveal the amount of financing, but noted the company got financing from Fifth Third Bank. The hospital plans to use the money to build an emergency room honoring Gregg and his wife Juanita.
According to Simpson, establishing an ESOP has its benefits for the company.
"Statistics show that employee-owned companies grow faster and are more profitable," he said. As time goes on the stock will really be worth something as a retirement benefit. No cash comes out of the employee's pocket.
Because of the heavy debt load required to create the ESOP, Simpson said, "We won't be expanding in the next couple of years. But in years to come we'll look to expand. This is a growing industry, swimming pool finishes. Think of all the pools that were built from 2002 to 2007 when the economy was good. A finish lasts about 10 years. Now the economy is strong again, and a lot of pools are being refinished right now."