Content area
Full Text
Steve Hilbert has been ousted as CEO of Indianapolis-based MH Private Equity after a bitter battle with John Menard, the hardware store king who financed the $500 million private equity firm.
Menard's company, Merchant Capital LLC, on Feb. 19 won a temporary injunction against Hilbert from a state court judge in Eau Claire, Wis., where the Menard Inc. hardware store chain is headquartered. That decision was the culmination of an 18-month dispute between Hilbert and Menard, who had been close friends for more than two decades.
Now, Menard Inc. and Merchant Capital are managing the three companies that MH Private Equity's funds own and have indicated they want to sell them. The three together employ about 825 people, including about 275 at Indianapolis-based New
Sunshine LLC, a maker of tanning lotions and creams.
Eric Weber, the president of New Sunshine, and Scott Matthews, the company's senior vice president, were let go on March 1, according to sources with knowledge of the situation.
Menard wanted Hilbert out because MH Private Equity's investments have lost 70 percent of their value, according to a lawsuit filed by Merchant Capital and Menard Inc. in Wisconsin in November. MH Private Equity spent $495 million to buy or invest in eight companies. Yet those investments have lost $344 million of their value, the lawsuit stated.
Not only that, Menard, 73, contends that Hilbert offered a "kickback" to Menard's own lawyer and then-fiancee to persuade a reluctant Menard to make his initial $400 million investment that created MH Private Equity in 2005. And Menard also claims that Hilbert was filing redundant invoices for management or advisory fees to enhance his own income.
"Milking as much money as possible out of [MH Private Equity] and Merchant Capital is, and always has been, their primary goal," wrote Menard's attorneys about Hilbert and his team.
But Hilbert, 67, sees the situation differently. In a response to Menard's suit filed in Wisconsin, he argues it was Menard who pushed him to start a fund with Menard as the sole investor. And Hilbert contends Menard was informed monthly about the funds' progress and potential investments.
Hilbert also said the companies MH Private Equity owns have generated enough gains for MH Private Equity to pay Menard $44.7 million...