A federal judge has granted preliminary approval to a $5.5 million settlement in favor of original and minority shareholders in fast-growing Restaurant Technologies Inc. who charged that they were shorted by a Boston private equity company and RTI senior managers during a 2009 recapitalization of the company.
The settlement, reached late last week, requires RTI to compensate the former shareholders and may include additional payments in the event of the company's sale. The case was certified earlier as a class-action lawsuit on behalf of the founders and about 260 individual shareholders who invested early in the company's 12-year life.
"We believe this settlement represents a reasonable resolution of hotly disputed claims," said Robert Moilanen, who represented the minority shareholders.
RTI, which delivers and recycles used cooking oil for thousands of restaurants nationally, was spun out of Minnesota Valley Engineering in the late 1990s by founders Mike Tate and Joe Shuster and other plaintiffs, who raised capital through the sale of common stock to individual investors.
RTI brought innovation to a messy, sometimes dangerous business by installing on-site tanks at restaurants and automating the delivery and disposal of oil so workers at McDonald's, Kentucky Fried Chicken, Burger King and other eateries no longer had to lift heavy containers and handle hot cooking grease.
Eagan-based RTI grew quickly and Parthenon Capital, a private equity firm based in Boston, made a major investment in 2001 and got several board seats. Several years ago, Parthenon and ABS Capital Partners of Baltimore purchased a majority stake in RTI, got a majority of the board seats and brought in a new management team.
According to the complaint against RTI, the majority owners and management used a 2009 recapitalization of the company and a low valuation of the common stock to buy out the minority shareholders cheaply and capture the higher value of the company for themselves.
Jeff Kiesel, who joined RTI as CEO in 2005 from General Electric, said the defendants decided to settle rather than go through a long and expensive trial.
"We deny any wrongdoing and we believe wholeheartedly that we acted and continued to act in good faith in all aspects of managing the company and fiduciary responsibilities in connection with RTI share issuances and business decisions," Kiesel said.
The company, which employs more than 500 people, expects revenue of about $250 million this year and operates 36 sales-and-service depots that cover restaurants in 50 of the largest metropolitan areas in the United States.
A hearing on the fairness of the proposed settlement has been set for Nov. 29 before Chief U.S. District Judge Michael Davis.
Neal St. Anthony • 612-673-7144
