Wellspring doesn't own Lionel?

[prewardude]

I just got out of the Lionel chatroom. There were a lot of interesting questions, but the most interesting thing that Jerry Calabrese said was that Wellspring doesn't own Lionel. He said that the estate of Martin Davis, Neil Young, and Richard Kughn are the owners. I knew about Kughn and Young, but when did Wellspring leave the picture?

[spankybird]

It’s hard to tell how the corporations are divided. Here is a couple of links to look at

http://www.wellspringcapital.com/portfolio.html
click on read more under Lionel

Here is something else to look at

http://www.highbeam.com/library/doc0.asp?DOCID=1G1%3A17592727&refid=ip_almanac_hf

[Big_Boy_4005]

I wanted to get into that chat room, but when I went to download the JAVA software, it froze my computer. I had no chance to hear that conversation.

Aren't there two parts to owning Lionel? One part is the train manufacturing business, and the other part is the name. My understanding is that Wellspring only owns the name. The manufacturing company pays Wellspring for it's use.

This is my understanding, is it correct?????

[Buckeye Riveter]

It is now as clear as mud.

From Wellspring's web site.

Lionel L.L.C., headquartered in Chesterfield, Michigan, is the world’s leading manufacturer and marketer of model trains and accessories. Established in 1900, the Lionel name is the most widely recognized brand name in the model railroad industry and one of the most recognized brands in America.


Prior to its acquisition by Wellspring, Lionel was privately owned. Through a relationship with a financial intermediary, Wellspring, together with an existing joint venture partner of the company’s, was able to structure an acquisition proposal that satisfied the seller’s valuation expectations and need for an expedited closing. As a result, in October 1995, Wellspring was able to preempt an auction of the company and structure an acquisition that was attractive to the seller and the company’s senior management.


Since the time of the acquisition, the company has successfully streamlined its manufacturing processes, enhanced its supplier base and significantly expanded its distribution capabilities. Additionally, as part of the strategic plan developed at the time of the acquisition, the company has begun to leverage the brand equity of the Lionel name into several new product areas and licensing opportunities. All of the above have resulted in substantial profit margin expansion and revenue growth opportunities.


"From the beginning Wellspring and the management team have worked together to develop strategies and formulate action plans to generate revenue growth and cost savings. Creative, aggressive licensing has expanded the brand’s presence into new markets. Refinements in product development and sourcing have opened new avenues for continued improvement. Wellspring’s financial expertise and solid relationships with the capital markets have insured the resources for taking measured risks and strengthening industry leadership through some bumpy market conditions. They have repeatedly demonstrated their understanding of our company and its business, as well as both supporting and challenging us to drive for the objectives we have agreed upon."


William L. Bracy, CEO

[Big_Boy_4005]

I read that Buck, and thought it was just a bunch of coroprate mumbo jumbo and double talk. No wonder there is so much speculation, everyone has to read between the lines.

QUOTE: Since the time of the acquisition, the company has successfully streamlined its manufacturing processes...

Let's not mince words, the literal translation of that quote is "moved manufacturing to China".

Anyone care to try their hand at some translation?[swg]

[prewardude]

By the way - for those who missed the chat, Lionel is supposed to put the transcript of it on their site.

[Big_Boy_4005]

QUOTE: Originally posted by prewardude

By the way - for those who missed the chat, Lionel is supposed to put the transcript of it on their site.

Thank you, I am very anxious to see that.[:)]

[Buckeye Riveter]

QUOTE: Originally posted by Big_Boy_4005

I read that Buck, and thought it was just a bunch of coroprate mumbo jumbo and double talk. No wonder there is so much speculation, everyone has to read between the lines.

QUOTE: Since the time of the acquisition, the company has successfully streamlined its manufacturing processes...

Let's not mince words, the literal translation of that quote is "moved manufacturing to China".

Anyone care to try their hand at some translation?[swg]

After 30 years of reading technical specifications for steel and concrete combined with a healthy dose of reading legal papers, I too found it to be the biggest piece of garbly gook. Is the meaning of their word, acquistion the same as the meaning of my word acquisition? Does is mean is?

BTW, how's the Light Rail project running? I think ours is heading into the tank.

[Big_Boy_4005]

Hey Buck, the light rail is going good. Only one dead and a few injured. Ridership is higher than expected, and the final segment is going to open in a couple weeks. More free rides that weekend, should be fun. The extension has the best parts of the line, including tunnels under the airport and it's runways.

Last stop Mall of America, everybody off. Too bad I'm not there still.[swg]

[jkerklo]

So, how does "LionTech" fit into all this?

Reading Lionel's website, they seem to develop all the products, or at least new stuff.

John Kerklo
TCA 94-38455
www.Three-Rail.com

[Anonymous]

Martin Davis was a founding partner of Wellspring. The way Wellspring's partnership is/was legally structured left ownership of Lionel to Davis' widow after Davis died. So yes, Wellspring does not "own" Lionel, Martin Davis' heirs do. Wellspring manages Lionel for its owners.

Neil Besougloff
editor, Classic Toy Trains

[Anonymous]

Mike thought he was suing a unit of Wellspring Capital Management, however he was actually suing a company which is owned by a small group of people who bought the company because they have a passion for the products. Certainly, Lionel is expected to financially perform, but if Lionel is attacked the owners will strike back. There is a saying, "It's not personal, it's business" -- That philosophy may fit Wellspring but Wellspring is just a "straw owner" in all of this. The real owners have a LOT more money than Mike Wolf. And they share a PASSION for the toy train business. Even if Lionel were to agree to a full settlement., "Jerry's kids" (TOP lawyers) are going to investigate the ENTIRE toy train industry going back years and let the chips fall where they may.

[nblum]

There are potential cases to be made for both trademark and patent infringement that are currently being explored from what I've heard. John's point about very rich, powerful and influential people who now know that MTH is trying to take THEIR money and property from them is probably quite on the mark. The morals of the story could well ultimately wind up being "be careful who you cross," and "make sure your own house is clean before you start trying to strong arm others into cleaning theirs" :).

[Buckeye Riveter]

Neil, my grandma told me to pick my battles carefully.

[Anonymous]

johnblair and nblum: You've got to be kidding, right? Rich owners don't give a dam about toy trains. All they care about "is Lionel making me money?" Lawyers are in this thing to suck the money right out. Lionel is going to be in worse shape in two years. That's when the real story will begin. And we will be very sad with the outcome. [:(]

[nblum]

Neil Young owns about 20% of Lionel and he cares about toy trains. *** Kughn owns another 5% and he cares about toy trains. Martin Davis's heirs care about Lionel staying in business and solvent because if Lionel files chapter 7 their investment of tens of millions of dollars goes bye bye. JP Morgan Chase and PNC Bank care about toy trains because if Lionel doesn't do well, they may get pennies on the dollar for their loans to Sanda Kan and Lionel respectively. Money made and good marketing and whizzy product all go hand in hand, IMO. JL Cowen wasn't in the business because he felt philanthropic towards kiddies, nor was AC Gilbert. They were businessmen first, toy train lovers second.