27 November 1997: The US firm Apogee Enterprises Inc. is currently involved in legal action against the French partners in a joint venture between Apogee“s European subsidiary and a firm owned by the…
27 November 1997: The US firm Apogee Enterprises Inc. is currently involved in legal action against the French partners in a joint venture between Apogee“s European subsidiary and a firm owned by the three Sahyoun brothers. Apogee and its subsidiaries are asking for damages of over US$ 75,000 for breach of contract, breach of fiduciary duties, and accounting. Harmon Europe S.A. – a joint venture between Europe Facades (owned by the Sahyouns) and Harmon Contract (an Apogee subsidiary) – last year lost US$ 8 million on sales of US$ 70 million. According to Apogee, Harmon put more than US$ 25 million into the business to fund three acquisitions and the working capital needs plus other obligations of the firm, while the Sahyouns contributed nothing beyond their initial investment. The venture began in 1993 when Harmon (which manufactures and installs windows, curtain walls, and other related materials for commercial buildings) and the Sahyouns (who own a company that manufactures aluminium framing systems for atriums) took over the assets of a bankrupt French company called CFEM Facades. The combined investment at that time was about US$ 4 million. In July 1994, the Sahyouns became responsible for the ongoing profit, cash flow, and asset management of the joint project, and their share of the business increased from 20% to 30%. According to a civil complaint filed on 10 June in the US District Court in Minneapolis, the Sahyouns “insisted” on taking over as day-to-day managers during the search for a management team. Once in control, the Sahyouns allegedly refused to cooperate with Harmon or to provide the US company with detailed financial information, and misrepresented the financial condition of the company. According to the complaint, the joint venture was profitable for about a year under American management, before the French took over. The complaint says, “During the period that the Sahyouns controlled the day to day operation of the company; the Sahyouns repeatedly told Harmon that they should trust the Sahyouns and represented that they were worthy of Harmon“s utmost trust and confidence.” For all the assurances of trust, the financial information provided to Harmon was inaccurate, the complaint adds. To rectify the situation, Apogee put Americans in the place of many French nationals in the company last March. The Sahyouns remain partners in the business, but Gabriel Sahyoun was removed as president in June. Commenting on the affair, Apogee“s chief executive Donald Goldfus said: “These are not bad people. It is just that we have a different management philosophy. We were just losing too much money.”