Felon Watch: Nan buying Grace Pacific from A&B
by Andrew Walden, November 14, 2023
Is Nan buying Grace Pacific from A&B?
A source at DCCA confirms that the agent for the newly created ‘Grace Pacific Holdings, LLC’ is Fooney Freestone, CEO of Nan, Inc. The listing is so new that its DCCA BREG listing still reads: “Records for this new entity are not yet available online.”
UPDATE Nov 15, 2023: The record for ‘Grace Pacific Holdings, LLC’ is now visible on DCCA BREG. It is dated November 6, 2023 and indicates Fooney Freeman as 'agent' and Nan, Inc as sole 'member'. A&P and Nan are sending out a joint news release announcing the sale: LINK.
Nan Inc is owned by convicted felon and rail contractor Patrick Shin.
UPDATE Nov 15, 2023: A&B filed a report of an 'unscheduled corporate event' with the SEC today. The report states:
In November 2023, Alexander & Baldwin, Inc. (the “Company”), closed on two transactions with a combined sales price of $60.0 million, which consisted of the sale of the Company's interests in Grace Pacific LLC ("Grace Pacific"), a materials and construction company, and AB Maui Quarries, LLC, owner of quarry land on Maui (collectively, the “Grace Disposal Group”), as well as the sale of Grace Pacific's 50% interest in Maui Paving, LLC, a paving company.
On November 15, 2023, the Company sold the Grace Disposal Group to Nan, Inc., an unrelated third party, for total consideration of $57.5 million (the "Transaction"), which consisted of cash proceeds of $42.5 million and a $15.0 million promissory note (the “Seller Note”). The Seller Note has a maturity date of January 5, 2024, and does not accrue interest. In connection with the Transaction, the Company has been released by Grace Pacific's third-party sureties from all indemnity obligations relating to Grace Pacific's construction bonds (bid, performance and payment bonds).
Prior to the Transaction, on November 6, 2023, Grace Pacific completed the sale of its 50% membership interest in Maui Paving, LLC to GBI Holding Co., an unrelated third party, for $2.5 million in cash.
A&B SEC filings prior to November 15, 2023, include no mention of any actual sale of A&B’s Grace Pacific subsidiary but a November 3, 2023 10Q included the following tid-bits:
“Reclassifications: Prior to December 31, 2022, the Company operated and reported on three segments: Commercial Real Estate; Land Operations; and Materials & Construction ("M&C"). During the fourth quarter of 2022, the Company's wholly-owned subsidiary, Grace Pacific LLC ("Grace Pacific") and Company-owned quarry land on Maui ("Maui Quarries") (collectively, the "Grace Disposal Group"), which made up the majority of activity in the Company’s former M&C segment, met the criteria for classification as held for sale and discontinued operations….”
“As a result of the Grace Disposal Group's classification as held for sale as of December 31, 2022, the Company measured the disposal group at its fair value less costs to sell and recorded an impairment charge of $89.8 million for the year ended December 31, 2022….”
“Bonds related to Grace Pacific totaled $357.4 million as of September 30, 2023, and represent the face value of construction bonds issued by third party sureties (bid, performance and payment bonds)….”
“While the ultimate outcome of the plan to dispose of the Grace Disposal Group is neither certain nor guaranteed, the Company intends to conduct the respective businesses in the ordinary course in substantially the same manner in which it previously has been conducted until a sale occurs.”
“Income…from discontinued operations (net of income taxes) during the third quarter ended September 30, 2023, increased $2.9 million, to $3.9 million due primarily to higher volumes from Grace Pacific's asphalt and paving operations and liquid asphalt sales product mix.”
“The last date Jerrod M. Schreck is expected to serve as Executive Vice President of the Company is December 31, 2023. In connection with Mr. Schreck’s departure from the Company and Grace Pacific, the Company and Mr. Schreck have entered into a letter agreement, dated October 30, 2023.”
Nan is a major construction contractor. Grace Pacific owns the Makakilo Quarry and is a major HIDoT contractor with several active repaving contracts.
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