Forced Out: Former CEO Says Hunt Snatched Firm's Reins

by Mark Friedman  on Monday, Feb. 27, 2012 12:00 am  

Hunt and Phillips invested in BioBased in 2003 and shortly thereafter invited Muccio to invest with them. BioBased is a research and development company that sells a soy-based spray foam insulation used in a number of applications for homes, carpets and automotive seating.

“I was not interested in this just being an investment,” Muccio said in the December 2009 hearing held in bankruptcy court. “So I was giving up a very lucrative post-P&G career in consulting and speaking to be involved in the BioBased business, and I want to make sure that there was a commitment from everybody to see that through.”

J.B. Hunt didn’t want to be actively involved in the company, but he’d help fund it, Muccio said. “We were going to go forward until it became successful,” he said.

Muccio became its CEO in 2004. Muccio and his son invested $1.2 million in the form of loans and stock purchases and held a 41.81 percent interest in BioBased. Phillips and Hunt each owned 26.88 percent of the company. Other investors accounted for the rest of the ownership.

Johnelle Hunt invested $7.2 million in the company, mainly through loans made by companies she controlled. Phillips also had put in $1.2 million through loans and stock purchases.

The goal “all along was every year to improve the sales and reduce the costs” to make the company look good so it could be sold to outside investors, Muccio said. “And that’s what we tried to do.”

The plan seemed to be working, Muccio said. But J.B. Hunt died suddenly at the end of 2006, and his interest in the company passed to his widow, Johnelle.

Even though BioBased wasn’t profitable, Muccio claims venture capital firms, suppliers, customers and competitors had all expressed interest in buying or investing in the company.

In 2007 or 2008, one venture capital firm placed the value of the company as high as $63.9 million, according to Muccio. He said the VCs saw the potential in BioBased.

“They could see that it was a huge, huge market, that we had a breakthrough product,” Muccio said, adding that the venture capital firms had experts validate the quality of the product and the company’s intellectual property.

Although, Muccio said, everyone “was extremely excited about the valuation,” a deal couldn’t get done with any of the offers.

Muccio blamed the Hunt and Phillips camp for dragging its feet on getting a deal approved, and it eventually collapsed.



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