In a statement to the Cleveland Daily Banner, the Bradley County native and successful entrepreneur said Jones CapitalCorp. will continue its efforts to buy the assets of the domestic suit manufacturer.
Last Thursday, Jones acknowledged he was on the verge of withdrawing his offer to acquire Cleveland’s oldest manufacturer after a ruling by U.S. Bankruptcy Court Judge Shelley D. Rucker that sliced his $200,000 expense reimbursement request to $100,000.
However, after sharing the same courtroom with 16 worried Hardwick Clothes employees, some of whom had worked for the clothing manufacturer more than 30 years, Jones conceded to the group after the hearing that he couldn’t just pull the plug on his offer.
“I was ready to withdraw [the offer],” Jones admitted to the workers at the close of the 2 1/2-hour hearing.
Facing the semicircle of workers in the hallway outside the courtroom Thursday, Jones told the group, “I couldn’t withdraw with all you sitting there. I need to cool down and think.” He also told the longtime employees, “I very much appreciate you coming today.”
Twenty-four hours later, and apparently with a cooler head and straighter of thought, Jones repeated his commitment to keep working to negotiate a deal that would keep the 134-year-old manufacturer operating and its 220 workers on the payroll.
“While we were disappointed with the amount the court set as the reimbursement for the expenses we have incurred in the event we are not the successful bidder, we respect the very difficult decision the court was forced to make in light of the objection filed by the PBGC (Pension Benefit Guaranty Corporation),” Jones said. “We accept Judge Rucker’s decision and plan to move forward in saving this company and its many loyal employees.”
Jones’ comments came the day after a PBGC attorney balked at his request for the $200,000 expense reimbursement. Attorney Courtney Hanson, representing PBGC, told the court she was aware of no precedents for such a large percentage of sale cost — in this case, 10 percent — to be required. Hanson suggested the amount in the judicial district historically hovers around 1 to 2 percent.
However, Joe Oliver, senior vice president of Jones CapitalCorp., testified that almost $132,000 had already been spent on pre-bid activities like assessments of facilities, engineering and legal fees. He projected another $200,000 will be expended before the process is concluded.
Such costs are traditionally a part of these types of business acquisitions in order to ensure that an original bidder’s cost (in this case, Jones) for the work necessary to make such a bid is also incurred by other bidders.
In further testimony in Thursday’s hearing, Hanson also pointed to a discrepancy in Jones’ initial bid of $2 million. She said a 2011 assessment valued the Hardwick Clothes property at $3.7 million.
In response, Hardwick President Tommy Hopper said selling the company’s assets “piece-meal” was no guarantee it would bring the assessed value.
He said company leaders have worked to keep the business going forward in their prior negotiations with PBGC. Selling off the assets would mean eliminating 220 jobs, Hopper contended. He credited Jones for viewing the employees as assets.
Although respectful of Rucker’s decision in court Thursday, Jones contended in Friday’s statement that PBGC’s refusal to compromise on his proposal “... puts more than 220 jobs in jeopardy.” Many of the jobs, he added, belong to third and fourth generation employees of Hardwick Clothes.
“Hardwick is the oldest privately owned suitmaker in the U.S.A. — founded in 1880 in Cleveland, Tenn. — and we are not giving up that longstanding tradition without a fight,” the Check Into Cash founder stressed. “Surprisingly, the PBGC is delaying and potentially threatening everything we are working to rebuild.”
Taking PBGC to task over what he perceives as a move toward liquidation, Jones assured Hardwick Clothes workers he is not ready to throw in the towel.
“From the hearing, it became obvious that the PBGC is strongly suggesting the idea of liquidation,” Jones said. “We don’t feel closing down the U.S.A.’s oldest suitmaker makes any sense.”
In this case, liquidation could mean selling off all Hardwick Clothes assets in order to satisfy more of the debt of the faltering company. Liquidation could mean shutting down company operations, meaning a major loss of jobs. That’s what the Cleveland businessman said he wants to avoid.
In Friday’s statement, Jones maintained the right combination of leadership and capital could help Hardwick Clothes to regain much of the business it has lost since the 1980s. According to previous reports, Hardwick’s workforce has dwindled from about 900 to just 220 over the past 30 years due to plummeting sales.
While acknowledging that Hardwick’s recovery won’t come without challenge, Jones said it is worth the fight because the garment maker is a part of Cleveland history and its employees are a part of the community.
“The biggest asset is not on the balance sheet,” Jones stressed. “It’s the 134 years of tradition and all the long-term employees. It’s hard to put a value on that. That’s what I’m placing my value on. The purchase price is just a drop in the bucket of what it will take to turn this company around.”
During Thursday’s hearing, and after a 20-minute meeting in the judge’s chambers, Rucker agreed to a request by Jones CapitalCorp. attorney Jerrold Farinash to allow both sides to continue negotiating until Tuesday. By then, either an agreement or a withdrawal of offer will be filed, the judge and attorneys agreed.
That’s what led to Jones’ statement Friday. He sought to assure Hardwick Clothes employees that he would continue to bargain in good faith as Tuesday’s newest deadline approaches.