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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis-based Fortune Industries Inc. wants to exit the professional employer organization business in favor of becoming a skilled-nursing operator following the recent death of its founder.
Fortune Industries submitted its complicated restructuring plan late last month to the Securities and Exchange Commission for its review.
Under the unusual proposal, Fortune Industries would remain a public company and abandon its previous plan to be taken private.
The restructuring hinges on shareholder approval of a merger agreement with skilled-nursing operator Ide Management Group LLC of Greenfield.
The merger would be accomplished by giving IMG CEO Mark Ide shares in Fortune Industries. Founded by Ide in 1997, IMG owns or manages 20 skilled-nursing facilities in Indiana, Illinois, Iowa and Wisconsin.
Carter Fortune, 70, majority shareholder of Fortune Industries, had been diagnosed with a potentially terminal disease before his death in late August, according to an SEC filing.
Fortune Industries disclosed Fortune’s illness as it worked on a sale of the business to CEP Inc., a holding company led by Fortune Industries CEO Tena Mayberry and Chief Financial Officer Randy Butler. The planned management-led buyout, which would have resulted in the business going private, valued the company at $30.5 million.
Under the deal, Carter Fortune’s ownership stake in the business would have shrunk from 60 percent to 20 percent.
Mayberry and Butler now plan to acquire those shares from Carter’s estate and use them to buy out Fortune Industries’ PEO subsidiaries, which would operate within CEP.
CEP would be privately held and based in Nashville, Tenn. Both Mayberry and Butler would no longer be a part of Fortune Industries.
Mayberry became CEO of Fortune Industries in January 2010 and previously had served a dual role as president of both Fortune and subsidiary Century II Inc., a Brentwood, Tenn.-based provider of human resources services.
Meanwhile, Fortune Industries on Friday reported annual earnings for the fiscal year ended June 30.
Company profit fell to $926,000, or 6 cents per share, from $1.3 million, or 9 cents per share, the previous fiscal year.
Revenue declined 5 percent, to $60.9 million.
Fortune Industries attributed the drop in revenue to the loss of two large clients.
Company shares rose 1 cent Monday morning, to 24 cents each.
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