Thor Construction, embattled by lawsuits, financial trouble and the departure of key staff, is shutting down after four decades, its founder said.
The action comes following lawsuits in recent months by key lender Sunrise Banks and others seeking payment less than a year after the opening of Thor’s new headquarters building in north Minneapolis. Thor was the project’s builder and a key partner with Hennepin County, Target Corp. and other investors.
“We’re folding,” Thor founder Richard Copeland said last week in an interview. “Thor Construction will not be doing any more construction.” He added that millions of dollars worth of work for Target and other clients has been given to other contractors.
Copeland said that other arms of parent company Thor Cos., which provided consulting, design, and development services, will continue in some capacity though he didn’t specify which ones and added that they might not carry the Thor name.
Thor’s administrative staff, earlier estimated to number about 50, has been cut by at least half.
Ravi Norman, Thor’s former chief executive, said he is leading an investor group that wants to buy Thor’s stake in the headquarters building and parking ramp on Penn and Plymouth avenues.
Copeland said Thor got into a financial bind due to cost overruns during construction of the $36 million building and attached parking ramp and a lack of business generated by some of the company’s other entities that drained the cornerstone construction enterprise as Thor tried to expand its scope the last couple of years.
“We never got our market share,” Copeland said. “We never were given the opportunities that we thought we deserved in this market. … The volume was never there even in our construction business. And then we had a bad job.”
Thor, the state’s largest minority-owned company and one of the biggest black-owned businesses in the country, has worked on projects like the Xcel Energy Center in St. Paul and U.S. Bank Stadium in downtown Minneapolis. Thor’s development, design and construction divisions had been part of the team led by developer United Properties tapped to remake the Upper Harbor Terminal along the riverfront in north Minneapolis. Former Thor CEO Norman is a consultant on the project, United Properties has confirmed.
Copeland, 63, who began in the industry as a concrete subcontractor, said the firm’s financial trouble was compounded by the Sunrise Banks suit that asked a Hennepin County judge in January to appoint a receiver to assume control of Thor and order the company to pay more than $3 million the bank alleges it is owed for a loan. In the suit, Sunrise alleged that Thor is not paying its debts including payroll obligations to its employees, which Copeland denies. A hearing is scheduled on the lawsuit next month.
Since then, Copeland and Thor have faced numerous other suits including a $3 million suit filed by Oklahoma-based surety bond writer Granite Re Inc., a nearly $1.8 million suit by Old National Bank over a loan, and smaller suits by subcontractors.
Copeland indicated during an interview last week that Thor was “very close” to a settlement with Sunrise. However, the bank earlier this month filed a second lawsuit that alleged that Thor transferred a residence acquired in 2007 for $267,000 to a Thor insider and friend of Copeland’s for less than $500 “to hinder, delay, and defraud Sunrise.”
Copeland declined to comment on the litigation other than to say he is hopeful of a settlement. Manchester Cos., a restructuring firm, is working with Thor to shutter the construction business and reconcile matters with Sunrise Bank.
North Side success story
Just last September, local corporate and government officials, including the chief executive of Target and then-Gov. Mark Dayton were on hand to celebrate the grand opening of Thor’s headquarters building, called the Regional Acceleration Center (RAC).
The $36 million, 92,000-square-foot headquarters and a small-business incubator operated by minority-business counselor MEDA (which earlier had attempted to help Thor negotiate with Sunrise), is part of a $100 million public-private redevelopment of three corners of the Penn-Plymouth intersection, including Hennepin County’s expanding NorthPoint Health & Wellness Center, a new Estes funeral home and a parking ramp. The RAC also is home to retail businesses on the first floor and the Minnesota African American Heritage Museum & Gallery, which is on the same floor as Thor’s offices.
Target invested about $2 million in a seven-year lease for the fourth floor of the RAC. It has leased portions of its space back to Thor and MEDA and will host a co-working space for its employees and community organizations.
Earlier this year, Target announced it had paid Thor subcontractors more than $7 million for work performed on stores after they had not been paid by Thor. Target spokeswoman Jenna Reck said last week there is an agreement in place that settles the claims between Target and Thor, but the details are confidential.
Thor Construction had been hired to help remodel seven Target stores across the country this year, but at Thor’s recommendation, the general contracting work was moved to longtime partner construction company Mortenson.
Hennepin County invested about $22 million for the top floor of the RAC space, for administrative offices for expanding NorthPoint, as well as county human services and community corrections, and for 420 spaces in the adjacent 620-stall parking ramp.
“We are monitoring the situation,” said County Administrator David Hough last week.
Norman said in September that Thor had invested $12 million in the RAC.
Norman stepped down as chief executive of Thor Cos. in December to begin his own development company. Last week, he blamed Thor’s failure on several things, including chronic undercapitalization, and “continuing losses” in its “self-performing” concrete business in which Thor did the work instead of subcontract it.
“I led the diversification strategy out of construction,” Norman said. “We were in early stages and getting some yield, but not the profitability we wanted. If we didn’t have the diversification, we probably wouldn’t have made it earlier.”
Last year, Norman told the Star Tribune that Thor’s revenue had increased from $140 million in 2016 to $368 million in 2017. An unspecified amount of that increase came through its 2017 acquisition of JIT Energy Services, which Copeland said nearly doubled the size of the company. Copeland declined to specify the purchase price. The Excelsior company provides energy management and related services.
As the firm he founded looks to wind down its core business, Copeland vowed that he would resume a construction career, either as a consultant or through a new company.
“I will be doing construction until I don’t do anymore work,” he said. “… I’m trying to get everything resolved … I’d like to move on with my life.”