Newport Material's Cunning Ploy
Full details in the Lowell Sun, where you can read more here: http://www.lowellsun.com/todaysheadlines/ci_15484505
But short story appears to be that at the last minute Newport "discovers" that the land they were planning on building an asphalt plant on has granite reserve. Imagine that, land formally owned by a granite quarry has granite reserves. Who would have thought?
According to Newport, this makes the land far more valuable and they want to be paid for it. Well, not them exactly, since they don't actually own the land. It is really the mysterious 540 Groton Rd., LLC that owns the tract, right? But if you poke around the Secretary of State's corporate filings database enough you get the impression that they are really just a a folder in a filing cabinet at Cathartes Private Investments in Boston. Has anyone figured out who the puppet master really is?
In any case, as far as I can tell their argument seems to be based on an agreement between the Town and Fletcher back in 1981, where the Town supposedly agreed not to rezone the land for Fletcher and successors, or if they did to purchase the land at fair market value.
I am not a lawyer, but this seems far from a slam-dunk to me. First, when did Westford changing the zoning? I don't recall seeing that happen. Certainly they clarified that asphalt was not considered light manufacturing, but that is not a change. Never before was an asphalt plant considered light manufacturing in Westford, right?
Second, who thinks they are the successor to Fletcher Granite? Maybe we will see a successor in a few weeks, if the stories are true that Fletcher is being liquidated. But Merely owning some property is not the same as being a successor, right? Otherwise every resident in Greystone could claim to be a successor and demand the right to manufacture aslphalt. Wouldn't that be fun? It would be interesting to see if the contract refers specifically to successors of the corporation. Of course, if 540 Groton Rd, LLC, thinks that they are the successors of Fletcher Granite, then I'm sure Fletcher's creditors will be relieved to hear that.
Last, fair market value analysis is fishy. A month ago Newport said the land was worth $10 million. Now they are saying it is worth $46 to $113 million, based on their "surprise" finding of granite. According to their geologist's estimate, "if a 300-foot deep quarry was dug, nearly 78 million tons of granite could be removed and sold at 60 cents to $1.45 per ton at the current fair-market rate". So multiply that out at the market price of the granite is $46.8 million to $113.1 million.
Hmmm.. But the granite is still in the ground, right? So there is a cost to extract it. And I assume you don't get it all out at once. It takes a few years, and comes out over a few years, but your money is tied up during that time. So you really want to estimate the prevent value of a set of cash flows which would include up front improvements necessary to begin mining, positive cash flows from mining operations over a period of years, as well as clean up operations and the residual value of the land at the end of mining operations. Take that series of cash flows and discount to find the present value. That is one way of calculating the fair market value. But it seems rather naive to just value the extracted mineral rights based on the spot price of the stone, as if you could get it all in year #1 at no extraction cost.
Of course, that's not the only way to find fair market value. You can also look at comparable sales. But the nearest comparable for granite mining in the area is Fletcher, and they are liquidating, right? So I don't think that helps Newport much.
All very interesting. I wasn't following this whole asphalt thing closely before, But now I will.
I love this quote from the website you linked to:Originally Posted by rcweir
This allows us to envision a project from multiple perspectives and find the most effective way to create value-whether that involves repositioning, redeveloping, or simply maximizing return on a property's inherent value through aggressive management.
Also: Cathartes Principals (Bios) Anyone recognize the names?
Last edited by Amber; 07-10-2010 at 03:35 PM.
Think of it this way. If they really thought the FMV was $100 million then it would be in their best interest to find a buyer at that price and broker a deal. Why risk the lawsuit? Why gamble on a jury's decision? If the land is really worth that much then sell it and keep the quick profits.
Still doesn't pass the sniff test.
Intimidation and bullying consistent with how they've treated other boards in town? Hope the BoS sees through the tactic and stands firm to defend the residents and not sell us out.
Hmmm... and wasn't the plan for the asphalt plan to get their aggregate from the Fletcher Quarry? That seems to be a game changer right there, if Fletcher has stopped operations. I wonder what that does to Newport's profit margins if they had to truck in their aggregate? Its gotta hurt. And what that would do to the traffic? That would double the number of trucks, right?
Check out the "Certificate of Amendment" to the Articles of Organization on the Secretary of State's site. It lists the management of 540 Groton Road, LLC. Manage includes the Johnston guy from Cathartes, Steven Testa, who I do not know AND "Massimo Marino", of Modern Continental infamy.
Modern Continental filed for bankruptcy. Marino now has "LM Holdings", heavy civil construction, which used to have their business address at 540 Groton Road, but has recently changed it to 10 Commerce Way.
Check the Amendment to the Articles of Organization on the Secretary of State's site. It lists the management of 540 Groton Road, LLC:
Johnston, at Cathartes
Massimo Marino, of Modern Continental infamy
Steven D. Testa, of Testa Corp, a demolition company
These guys are smart. I dont' think this is over by a long shot, they just may have the town over a barrel.
I'm hoping they are smart guys. That's our best hope. Smart guys with several other business ventures are looking to make money. They aren't in this as a grudge, or because of personalities, or to prove a point. It is all about return on investment. They went into this project thinking it would be a quick rubber stamp approval. It is now taking many years, with their permit denied, and possible years of litigation with an uncertain end. For all their sunken costs in this project, they have yet to move a shovel of asphalt. Even if they got Town approval they face private and public nuisance lawsuits. If they are smart guys they are surely factoring this into the calculations, along with looking at what alternative investments their capital could be used for. I like smart guys. Smart guys know when to walk away.
These guys are trying to get out with something!! They were expecting a rubber stamp approval and that failed. They never expected the Rt 40 Coalition!! Now,they figure they'll pull this to get out of ton with as much $$ as they can. I think they have sorely underestimated the town and residents once again.
Posting Permissions
Reply With Quote
Bookmarks