Trouble Trumps All in 2010’s Top 10

(For 2010’s Best & Worst, click here.) 

Sad but true, 2010 was marked by even more troubles than the year before.

The majority of the business news was bleak, as is reflected in our annual Top 10, but a good bit of it was carried over from problems that began with a handful of developers in ’07 and ’08.

Despite the dreary din, there is a feeling in the Northwest Arkansas market that the worst is behind, the bottom found. And there have been a few spots that shine bright with promise. 

Principals of Crystal Bridges Museum of American Art finally revealed an opening date – not as far off as once thought – and some state banks are profitable, while others are making investments in regional expansion.

And then there are the Hogs. Arkansas loves its football, and this year Bobby Petrino delivered a grand spectacle that was, at the very least, a unifying distraction.

Here’s hoping Arkansas’ Sugar Bowl experience is sweet, not sour. We can’t think of a better launch point to a prosperous 2011.

 

1. Market Maker – No name in Northwest Arkansas’ real estate market conveys power and prestige more than Lindsey, so when news of Jim Lindsey’s youngest son’s whopper of a bankruptcy filing spread, so did shockwaves.

In the end, John David Lindsey claimed liabilities totaling almost $170 million, and his first meeting of creditors in April attracted more than a few curious onlookers in addition to a busload of lawyers. The question was whether any of Lindsey’s multitude of creditors would accuse him of misrepresenting financial statements in order to secure loans.

There were no fireworks that day, however, and only a couple of creditors eventually pushed forward with lawsuits. Details of those cases remain confidential.

The trickle-down effects of Lindsey’s bankruptcy, meanwhile, are hard to quantify. At the very least, though, hundreds of creditors with unsecured claims will get pennies on the dollar, if that.

More than 400 lots, 200 acres and 200 homes were involved. That wasn’t good news for an already struggling market.

Jim Lindsey later said he hoped to come out of the ordeal with more credibility attached to his name than when it started. To that end, as of the end of August, Lindsey had purchased 99 properties formerly owned by his son and his partners at a cost of more than $20 million.

 

2. Barber Bounce – Failed Fayetteville developer Brandon Barber continued to show up in the news. In June, he was pulled over in Fayetteville for not wearing a seatbelt, then arrested on a hot check warrant out of Nevada.

That got settled, but his dealings with Legacy National Bank of Springdale did not. In November, U.S. Bankruptcy Judge Ben Barry denied Barber a discharge of debt, ruling “Barber was actively engaged in transferring and concealing his available money with the intent to delay, hinder, and defraud his creditors” for a year prior to his bankruptcy petition.

It means Barber could be on the hook for $30.6 million worth of unsecured claims.

 

3. Pinnacle Purchases – What can $46.1 million buy in today’s economy? About 488,308 SF of Class A office and retail space.

The year started with an unclear picture of what would happen in the Pinnacle Point area of Rogers – Village on the Creeks was bank-owned and Bill Schwyhart was locked in a legal battle with Metropolitan National Bank over property down the road. The bank eventually took possession of Schwyhart’s 10 Pinnacle buildings and the court appointed lawyer and former Cooper Communities exec DeWitt Smith as the receiver.

In early September, silent partners and Smith, who was also the receiver for Village on the Creeks, purchased the 271,560-SF VOC from Arvest Bank for $22 million.

In late September, Hunt Ventures LLC, managed by Johnelle Hunt and Tim Graham, purchased the 10 Pinnacle Point buildings and 22 acres for $24.1 million at auction. The sale represented about 216,748 SF of Class A office space.

 

4. Baldor Buzz – Need some perspective on the November sale of Baldor Electric Co.?

Consider this: It’s biggest deal involving an Arkansas-based company since the sale of Alltel to Verizon, announced in June 2008. 

The Fort Smith-based maker of electric motors and drives was sold to Swiss power and technology company ABB in a move unanimously approved by both of its boards. The deal was valued at $4.2 billion.

Under terms of the agreement, publicly traded ABB agreed to pay $63.50 per share in cash. That represented a 41 percent premium over Baldor’s stock price the day before the agreement was announced.

The deal is set to close in the first quarter of 2011. ABB said it will retain the Baldor brand, the company’s Fort Smith headquarters and its management.

Baldor is the seventh-largest publicly traded company in Arkansas by revenue, with $1.52 billion in sales in 2009 and $1.95 billion in 2008. It employs about 7,000 people throughout North America, England and China.

 

5. National Stock – National Home Centers Inc. of Springdale officially became Stock Building Supply in April.

The company, founded by Dwain Newman, made a 38-year run as a family-controlled retailer. It operated as a private company for 29 of those years, sandwiched around a nine-year stint in the public arena.

Among private companies in Arkansas, National ranked as high as No. 31 in 2006, with revenue of $273.1 million for the fiscal year that ended Jan. 31, 2006.

The company filed for Chapter 11 bankruptcy on Dec. 8, 2009. Stock, a North Carolina-based company, bid $15 million for the assets.

“They were the only one that made a sincere bid,” Newman said.

 

6. Culture Shock – There was a steady stream of announcements regarding the Crystal Bridges Museum of American Art over the past year, but none created more buzz than the news doors will open on 11/11/11.

It will have been a long time coming, but what is expected to be one of the finest collections of American art anywhere surely will be worth the wait. The estimated valuation on the project – the brainchild of Wal-Mart heiress Alice Walton – is $150 million.

Walton and her staff stayed busy acquiring more pieces of art, too, and though officials don’t discuss the prices paid, it’s fair to say more millions are involved. Internal Revenue Service forms indicated more than $220 million in “art acquisitions” from 2006 to 2008.

The presence of Crystal Bridges also was a factor in the recent decision to expand the Walton Arts Center to include a 2,200-seat theater in Bentonville.

Additionally, a 130-room 21c Museum Hotel – valued at $28 million – will be built within walking distance of Crystal Bridges. The hotel will feature 12,000 SF of exhibition, meeting, and event space.

 

7. Razorbacks Resurgence – The University of Arkansas’ football success in 2010 can be illustrated as easily with dollar amounts as with touchdowns and tackles.

When athletic department officials unveiled the Razorback Seat Value Plan in August, it was clear expectations for the upcoming season were high. How else do you justify a plan designed to bring in as much as $5 million annually through fees charged to purchase season tickets?

October losses to Alabama and Auburn might have made some wonder if digging deeper into their wallets next season would be worth it. Alas, Coach Bobby Petrino’s Hogs responded by closing the season with a six-game winning streak good enough to earn the school’s first Bowl Championship Series bid.

Arkansas will play Ohio State in the Allstate Sugar Bowl on Jan. 4 in New Orleans. Petrino, meanwhile, will take the field with a new employment agreement under his belt. The coach and the university agreed to a seven-year contract extension that pays him an average of $3.56 annually.

 

8. Management Changes – A flurry of management changes at Wal-Mart Stores Inc. and J.B. Hunt Transport Services Inc. over the last six months made headlines beyond Northwest Arkansas.  Here’s a recap:

• J.B. Hunt announced Kirk Thompson will relinquish his role as president and CEO on Dec. 31. Thompson, who became CEO in 1987, will replace Wayne Garrison as chairman of the board.
• Wal-Mart announced Charles Holley as the successor to Tom Schoewe as the company’s CFO. The move was effective Nov. 30.

“Under his leadership, the company has continued to increase its returns to shareholders, and through the first half of this fiscal year gave back $9.4 billion through dividends and share repurchase,” CEO Mike Duke said of Schoewe. 

• Jeff Davis was promoted to succeed Holley, under the title senior vice president and treasurer. Davis is responsible for treasury operations, capital markets, investor relations and risk management.

 

9. Bank Buys – Four Arkansas banks are capitalizing on the economy by snapping up good buys in out-of-state markets they want to grow.

Fayetteville-chartered Arvest Bank purchased a single Missouri branch in 2010, but central Arkansas banks have made more aggressive moves.

Centennial Bank of Conway purchased six failed banks in Florida, and Bank of the Ozarks of Little Rock acquired one each in Florida, Georgia and South Carolina. Pine Bluff-based Simmons First Bank picked up one bank in Missouri. 

 

10. Notable Deaths – Northwest Arkansas lost two community pillars in 2010, Gene George and Jack Shewmaker.

George was the chairman of George’s Inc. in Springdale and an original investor and director of J.B. Hunt Transport Services Inc. of Lowell and Hudson Foods Co. of Rogers. He was 88.

Shewmaker, who was 72, worked at Wal-Mart Stores Inc. in various roles, including president and chief operating officer, vice chairman and chief financial officer. The Shewmaker family also made seed donations of more than $3 million to the NorthWest Arkansas Community College Foundation.

Other notable passings include Fort Smith’s Jim Hanna, 78, founder of Hanna Oil & Gas, and attorney Eddie Christian Jr., 48, who became a familiar name in the state when he sued University of Arkansas officials on behalf of John David Terry in the wake of an athletic department scandal.

Lisa Blount, an Oscar-winning Fayetteville native died at 53. Donald Earl Wright of Bella Vista, a former member of the Arkansas Entertainers Hall of Fame’s board of directors died at 75.