ASHLAND, Ky. (KT) – Braidy Industries founder Craig T. Bouchard filed a lawsuit against the company he started three years ago and against some of its stockholders.
Bouchard’s action comes about a month after he was ousted as the CEO and board chairman of the aluminum rolling mill being proposed in northeastern Kentucky.
He filed the lawsuit on Valentine’s Day in the state of Delaware, where the company is incorporated, to exercise his rights under a 2018 voting agreement that gives Bouchard the “unequivocal right to promptly remove the defendants and fellow board members from their board seats,” according to the suit.
Bouchard claims in the lawsuit Braidy Industries’ investors refused his Feb. 5 request to vote their shares to remove the four non-Bouchard members of the Braidy Industries board of directors.
Defendants in the case are:
-The company itself, Braidy Industries, Inc.
-Braidy board members and stockholders Michael Porter, John Preston, Christopher Schuh and current board chairman Charles Price.
-Commonwealth Seed, LLC, the organization which the state government invested $15 million of public money in 2017.
-Hannah Management, LLC, which Bouchard said is a Braidy stockholder controlled by Price.
In ousting Bouchard on Jan. 28, the board members jeopardized $260 million in potential equity investments from new investors, the lawsuit said. After Bouchard’s removal, prospective investors may now have elected to wait for the resolution of the dispute over control of the company, with a planned investment of $60 million from “one of the world’s largest companies” sidelined because of Bouchard’s removal, according to the suit.
Bouchard said he told the board that in was in discussion with investors to fund the entire $1.8 billion needed to build the aluminum rolling mill plant in East Park near Ashland.
“It seems evident that the named defendants put three years of progress and stockholder value at risk,” he said. “We must simply remove these individuals from the board, as they are no longer showing proper judgment, and replace them with directors who have more experience in the areas that have now become critical to building the company.”
Bouchard said he had “no choice but to file this lawsuit” to enforce his contractual rights – under the voting agreement – to designate and terminate board members.
Bouchard is asking for an expedited court resolution by March 13, 2020.
Last week in Frankfort, Braidy executives expressed confidence that the plant will become a reality, along with 1,500 construction jobs and more than 650 full-time mill jobs that have been promised.
“I'm as confident today as I was three years ago when we started this project," said Tom Modrowski, who stepped in to replace Bouchard as interim CEO and president.
Modrowski said the company has $65 million on hand and commitments for $200 million in financing for the project. The company still needs to raise $500 million, which it hopes to do before the end of its current fiscal year, he said.
As for removing Bouchard, Modrowski said, “The board made these changes because they want to see more progress, faster. We are confident the changes we have made will yield that progress.”
The company issued the following statement about Bouchard’s suit.
"The board of directors was not pleased with the status of financing for the mill in Boyd and Greenup counties, and has other concerns regarding his performance as CEO," the statement said. "Thus, as part of its fiduciary role on behalf of the shareholders, the board voted to take action that it believes will be upheld in court under Delaware law.
"Mr. Bouchard, as CEO, must be held accountable and the board of directors is willing to do what it takes to ensure that occurs. We intend to get this project built as promptly as possible."