Douglas P. McLaulin, Jr. et al. - Page 5




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            series of renewable notes (the notes).  Beginning in 1984, and                             
            until 1989, Ridge stood as a guarantor of the notes.  Borrowings                           
            pursuant to the notes reached $2 million by 1989.  On                                      
            February 26, 1990, the board of directors of Ridge (the Ridge                              
            board) authorized the withdrawal of Ridge’s guaranty of Sunbelt’s                          
            debt to the bank (the Ridge guaranty) if there was not "a prompt                           
            cessation and controlled liquidation of the millwork division."                            
            Ridge could not force a shutdown of the millwork division because                          
            it was unable to outvote Hutto, who, like Ridge, was a 50-percent                          
            shareholder in Sunbelt.  The Ridge board reasoned that, without                            
            the Ridge guaranty, Sunbelt would be unable to obtain new funds                            
            to cover future losses, and, as a result, Hutto would be forced                            
            to shut down the millwork division.                                                        
                  On May 18, 1990, Ridge withdrew the Ridge guaranty and,                              
            shortly thereafter, the millwork division was liquidated.  On                              
            September 17, 1990, Ridge purchased Sunbelt’s 1989 note (the 1989                          
            note) from the Bank for $630,000, the balance due.  Thereafter,                            
            Ridge financed Sunbelt directly by extending and modifying the                             
            1989 note on numerous occasions.  In that way, Ridge was able to                           
            exercise control over the management of Sunbelt.                                           
                  In mid-1992, Hutto decided to sell his shares in Sunbelt and                         
            leave the company.  Hutto’s decision culminated several months of                          
            negotiations between Ridge and Hutto, in which Ridge sought                                
            either to purchase Hutto’s interest in Sunbelt or sell its                                 
            interest to Hutto.  Ridge instigated those negotiations because                            




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