Board member quits amid strategy standoff

Tredegar Corp.'s headquarters at 1100 Boulders Pkwy. (Photo courtesy of Commonwealth Commercial Partners)

Tredegar Corp.’s headquarters at 1100 Boulders Pkwy. (Photo via Commonwealth Commercial Partners)

Tensions are rising in a local boardroom.

Three weeks after members of a powerful local family publicly exerted their leverage in attempt to steer the direction of Richmond-based Tredegar Corp., a member of the company’s board of directors resigned.

Thomas Slater Jr., a Hunton & Williams attorney and director at Tredegar since 2011, submitted his resignation from the company’s board in a letter Sept. 25.

Slater is the brother-in-law of John Gottwald, one of Tredegar’s largest shareholders and its former chief executive. Gottwald and his brother William in September made a public filing with the SEC signaling their desire to see Tredegar pursue “strategic alternatives.” That could include a potential sale of part or all of the company.

In a letter of resignation addressed to Tredegar Chairman Greg Williams, Slater pinned his decision to factors surrounding the Gottwalds’ filing.

“As indicated at the conclusion of the Tredegar Board meeting today (Sept. 25), I am greatly disappointed at the lack of process and consultation in response to the recently filed Schedule 13D, including the process followed in adopting the resolution to create a special committee of the board today,” Slater said in the letter. “Accordingly, I hereby tender my resignation as a director, effective immediately.”

At that Sept. 25 board meeting, the company established a special committee to “address matters that may arise in connection with the filing” made by the Gottwalds.

The instances highlight a rift that might be forming between the two Gottwald brothers, who along with their father Floyd Gottwald Jr. own a combined 23 percent of the company, and the rest of the board and its management as to the company’s near-term direction.

John Gottwald, who ran the company from 2006 until 2010, had a hand in appointing members of the Tredegar board and installing current chief executive Nancy Taylor.

In response to questions about Slater’s resignation and any actions it might take regarding the Gottwalds’ desires, Tredegar commented only through a New York public relations firm.

“The management team at Tredegar is executing a strategy to position Tredegar for sustainable growth in attractive markets,” it said in a prepared statement emailed to BizSense. “This strategy is delivering results and the Company has achieved meaningful net sales and earnings per share growth. The Tredegar Board, other than members of the Gottwald family, stands firmly behind the management team and its plan. Both the Board and management team remain confident that they are taking the right actions to enhance value for all stakeholders.”

Slater, who graduated from VMI and received his law degree from the University of Virginia, could not be reached for comment at his Hunton & Williams office.

A message left for John Gottwald at the office of Westham Partners, out of which both brothers work, was not returned by press time.

The public display of an internal conflict is unusual for Tredegar, said Robert Marshall, an analyst with Richmond-based Davenport & Co. who follows the company’s performance.

“This company has always been very private,” Marshall said. “It’s a family feud. You have [the Gottwalds], who think company should be sold, and management and it seems the majority of the board that feels it’s too early to sell the company.”

Marshall said Tredegar, which mainly produces aluminum and plastics products for industrial uses, has made some recent large investments that will take time to show a substantial return.

“Management has done a good job of clarifying what Tredegar is and rearranging the chess pieces so they should have some more growth going forward,” he said.

That included the $188 million acquisition of a Brazilian plastic film manufacturer announced in 2011.

“They’d like to see those new operations be given time to bear fruit,” Marshall said of the company’s management.

The company reported revenue of $244.37 million in the first quarter of 2013. That’s up from $218 million a year ago. It reported $28.25 million in profit in 2012, up from $24.85 million in 2011.

Marshall said the moves the company has made could eventually pay off.

“Over time, that should be a pretty good bet,” he said of the investment in Brazil. “In the near or medium term, that’s a little bit bumpy.”

Marshall said he that does not hold a position in Tredegar and that Davenport has not received any investment banking fees from the company.

Tredegar is headquartered at 1100 Boulders Parkway in the Boulders office park development on the Southside.

Its stock, traded under the symbol “TG,” closed Thursday at $26.64 per share, up 0.34 percent.

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Ethan Lindbloom

Mario Gabelli was a guest on CNBC on Wednesday, and he singled out Tredegar as one of his favorite investment ideas, citing the action of the Gottwalds as unlocking shareholder value. Interesting that this situation is getting national attention.