Article from today's Charleston Post & Courier:
Boss hog: Troubleshooter to lead Struthers
Sunday, April 8, 2001
BY JIM PARKER
Of The Post and Courier staff
Struthers' new president Mariano M. Raigo wants to make two things clear.
Although he does not have the "chief executive" designation of his
predecessor, "I will be running the company," Raigo said. "It's nothing more
than a title."
But Raigo said his role as top officer does not mean he's the featured
performer. The stars are the 42 other employees, Raigo said. "I'm the bus
driver."
Charleston-based Struthers raises and sells hogs using genetic breeding,
sells semen, develops biotech devices for artificial insemination, and
markets and sells its Tender Prime pork products from its own swine herds and
those of family farmers.
Raigo, an Asheville, N.C., business consultant and troubleshooter, was named
president March 19. It's been a busy few months for the young company:
• On April 2, publicly traded Struthers released its earnings report for
2000; the company lost $3.2 million on $3.49 million in sales.
• In the report, Struthers disclosed it had reached a deal in late March for
a $10 million infusion from Alpha Venture Capital Inc., an offshore company
that invests in emerging smaller and midsized companies. (Alpha, for
instance, recently provided $40 million in equity financing to Science
Dynamics Corp., a New Jersey-based online infrastructure company). In
exchange, Alpha gets stock in Struthers.
• The financial news came on the heels of Struthers' five-member board making
a series of top-level changes, including Raigo's appointment.
It ousted Douglas W. Beatty as president, chief executive and chairman. Rhett
C. Seabrook, the company's vice president, no longer has the duties of
secretary and chief operating officer. Seabrook and Beatty, whose background
includes working with motivational speaker Tony Robbins, spearheaded
Struthers' move in late 1998 from Canada to Charleston - which is hometown to
both. They remain on the board.
The new chairman is Richard S. Lane, the company's legal counsel. The new
secretary/treasurer is Dennis Gourley, a doctor of veterinary medicine and
designer of a scope used to assist in nonsurgical reproductive procedures.
The management shuffle followed weeks of speculation, primarily from
shareholders on Internet message boards.
Less than four years old with no appreciable sales until fall 1999, Struthers
nonetheless is one of the more heavily traded stocks on the Nasdaq bulletin
board. It's not uncommon for 1 million or more shares to change hands in a
day. It has 26,000 stockholders, including 2,000 in South Carolina.
Shareholder rumblings escalated in recent months after the company struggled
with its first-time federal securities filings and then reported quarterly
earnings losses. In the meantime, Struthers' stock price - which had risen as
high as $1.21 a share last April - sagged to 9.5 cents a share in March. It
traded last week around 10 cents.
"I think it's a great company and is going to be three years from now," said
Keith Smith, an X-ray technician from Calhoun, La., who recently sold 30,000
shares of Struthers stock while holding onto 20,000 shares.
"I was kind of sucked in with Doug Beatty's charm," he said. The talk last
year was that the stock, trading at 40 cents a share in February 2000, would
zoom as high as $5, Smith recalled. "I was so in love with the company."
Instead, the price tanked.
BIG PLANS
Beatty said Thursday the management change came in an emergency board meeting
by phone. He said it followed a board meeting where he "adamantly opposed"
plans to relocate headquarters to the Midwest to be closer to the company's
farm operations. Beatty said he didn't want to uproot Charleston's
six-employee staff, and noted that sales of its trademarked Tender Prime pork
are primarily in the Southeast.
He said the change in management made sense, since he does not plan to leave
Charleston.
Beatty said he wants to stay involved with Struthers in developing its
business plan.
He said Raigo has helped the company for the past six months integrate its
financial records and computer systems after a series of acquisitions in 1999
and 2000.
"I'm sure he will do a fine job," Beatty said.
The former chief executive said he's most proud of taking over a company that
in 1998 was in tough financial shape, trading a half-cent a share and with
"1,000 unhappy shareholders." In three years, it grew into a diverse company
with 24,000 shareholders and established biotech, supply and swine-breeding
businesses.
In a pre-ouster interview March 6, Beatty said he knew all about the Internet
rumors, but at that time denied he was on the way out.
He acknowledged that Struthers struggled last year. "I'm glad 2000 is behind
us," he said. "Definitely, 2001 is seen as a great year for Struthers," he
said.
Struthers moved into a new expanded office last fall and recently introduced
a new logo with the design of a lighthouse and the slogan "World Leaders in
Animal Reproductive Technology."
Meanwhile, the company planned to come out with catchy products for Tender
Prime such as a half-sized ham called a "Hamlet," he said. Chefs at Johnson &
Wales University whipped up dishes using its meats. Tender Prime pork chops
showed up on the menu at Port City Grille, he said.
Beatty also said he was working on a deal to market Tender Prime meats via TV
commercials produced by the National Shopping Club, whose members can order
food and other goods.
"The TV is a wonderful medium," he said last month.
TIME FOR A CHANGE
In explaining the management shuffle, Raigo said, "The board analyzed
different things. They came to the conclusion it would be better for Mr.
Beatty to pursue other interests. They approached me."
Lane, a New York attorney who helped with the company's securities filings,
said the board selected Raigo because he was seen as the right man for the
job. "So far, he is," the chairman said.
Raigo, in prepared remarks, said, "My immediate goal is to unify our
subsidiaries and focus on the basic concept for which this company was
founded, namely reproductive biotechnology.
"I want the world to know about our high health breeding programs, including
our artificial insemination and embryo transfer."
The new president did not elaborate much in an March 28 interview with The
Post and Courier. "I don't want to telegraph my plays," he said.
He was noncommittal about where the company will be headquartered.
Shareholders have speculated for weeks about a move to the Midwest to be
closer to the operations in Minnesota, Iowa and South Dakota. "We'll have a
presence in Charleston," Raigo said, adding that Struthers also likely will
have a base of operations in the Asheville area.
The new president said that Struthers intends to be ready to assist farmers
worldwide to bounce back from infectious outbreaks such as mad cow and
foot-and-mouth disease.
"When the smoke clears with all the disease going on, we will be able to
supply," he said.
The company also wants to capitalize on its genetic breeding programs, which
"gives the smaller farmer the advantage of the next generation technology,"
he said.
Struthers, meanwhile, has set up corporate entities in Germany and in The
Philippines and is open to "any country that wants our product," Raigo said.
In its first two years as an operating company, Struthers grew through
mergers. The company will continue to look at acquisitions but, "I have
enough on my plate to focus and consolidate the company," he said. Raigo
indicated that goods and products would more likely be sold through
traditional supply routes such as meat packers rather than straight to
customers.
"The direct marketing will not happen the way that he (Beatty) envisioned
it," he said.
The remarks reflect Struthers' earnings report, which noted that sales slid
last year when the company shifted focus from a wholesale meat supplier to
the direct sales strategy.
Meanwhile, the company said it planned to vastly expand its swine herds this
year and to promote its biotech and genetics products and services.
Raigo acknowledged he won't have time to field every call or e-mail from
shareholders. But he said they will be kept informed by way of federal
securities filings, press releases, a newsletter and through the company's
Web site at www.struthersinc.com.
Lane, meanwhile, said he's optimistic about 2001 and is unfazed by the
company's losses last year. "We look forward to move the company, certainly,
into the plus column," he said.
COMPANY PROFILE
Formed: 1997
Headquarters: Charleston
Employees: 43
Officers: Mariano M. Raigo, president; Richard S. Lane, chairman; Dennis
Gourley, secretary/treasurer; Rhett C. Seabrook, vice president; Bertram K.
Remley, chief financial officer.
Financials (2000): Lost $3.2 million on $3.49 million in revenues.
Operations: Boar stud farms in Bricelyn and Wells, Minn.; research farm and
lab in Spencer, Iowa; production center in Waukon, Iowa, for its Tender Prime
brand of pork.
Acquisitions: (1999) Minnesota-based Legred Genetics, which manages swine
breeding herds; (2000) Iowa-based Elite Visions Inc., proprietor of the
Gourley Scope device used in delivering semen and transferring embryos
without surgery; and Sioux Falls, S.D.-based Muller A.I. veterinary supplier.
Financing: Reached agreement for a $10 million line of credit from offshore
lender Alpha Venture Capital Inc. in March.
http://www.charleston.net/pub/news/bizpage/boss0408.htm
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