Owner Douglas Harmon is selling his stock to employees of Twin City Die Castings (TCDC), under an Employee Stock Ownership Plan (ESOP).
“I’ve worked with the TCDC executive team to come up with a plan that includes all of you as the new owners of TCDC, through an Employee Stock Ownership Plan,” Harmon told TCDC’s nearly 250 employees in December, according to a company statement. “Through the years I’ve seen how you have dedicated yourself to our company and customers. I’m excited for you to directly benefit from our future success.”
Sales Director Samir Mesanovic said the full-service aluminum and magnesium die casting provider has been family-owned for nearly 100 years.
After 41 years with the company, long owned by the Harmon family, Harmon will sell over several years to the employee retirement plan.
Harmon will remain indefinitely as chairman of the company and work with an independent trustee established to represent the employee’s owners as the rest of his stock is acquired over several more years.
The company did not announce a sale price. A bank loan will be used to partly fund the deal, on top of cash flow.
The Southeast Minneapolis company, which supplies the medical, HVAC, vehicle and other industries, has sales of about $50 million . Employees of century-old TCDC are paid $15-to-nearly $30 per hour, plus benefits, according to Mesanovic.
Chief Financial Officer Todd Olson, who also has succeeded Harmon as chief executive, said an ESOP was selected as the best way for the company to maintain its family culture. ESOP experts say they are the best way to spread wealth into the ranks, on top of good pay and benefits.
The most successful ESOPs are financed conservatively and involve growing, profitable companies.
As TCDC grows profitably, the employee-owners should see their shares in the ESOP grow, Olson said. That should mean they will have more money saved for their retrement, as they cash out of the ESOP when they leave the company.