Windows pain a stain on the reign of Kane

An acquisition saga has clouded the track record of outgoing Boral boss Mike Kane amid a related accounting scandal.

It should have been the deal of a lifetime.

Billy Robinson had reaped the best part of $US240m ($372m) selling his Texas windows business Krestmark, reward for a 40-year career after following his father into the industry.

The payday arrived in early August 2016 after Krestmark was scooped up by US building products group Headwaters.

But it wasn’t the only deal in play.

In the background Australia’s Boral had opened talks to mount a takeover for Headwaters, even as its target was locking down the windows transaction.

And the events of the next few months would sour Robinson’s windfall, spark fraud accusations and cloud the track record of outgoing Boral boss Mike Kane amid a related accounting scandal.

Just a month earlier, Kane and his finance boss, Ros Ng, had met with Headwaters chief executive Kirk Benson to discuss a takeover that would catapult the Australian construction supplier into North America with a thud.

While Boral nutted out a price to get a deal over the line, Headwaters was also busy sewing up the Krestmark purchase.

Robinson was forbidden from competing or soliciting new business in the vinyl and aluminium windows industry for five years, a standard contract clause to prevent the Texas owner from taking staff and setting up a rival firm.

Some $US12.4m of the sale proceeds had been set aside to ensure that happened.

Retention payments were made for select members of staff, including $US1.5m for Headwaters Windows vice-president David Decker and $US2m for its plant manager, Margarita “Mo” Tovar.

After Boral’s $US2.6bn takeover of Headwaters landed in November 2016, the 66-year-old Robinson initially accepted a role as senior adviser for the business, renamed as Boral Windows, which included the Krestmark, Legacy and Magnolia brands.

Almost immediately, trouble started to brew. Robinson was just weeks into his new advisory role when he asked Decker to go into business with his son James Robinson, contravening the non-compete clause.

“Billy said that he planned to funnel money to start up a competing windows business that would be run by his son and myself and to use his connections to assist us with the business,” Decker said in a US court affidavit.

Tensions between the two deteriorated further once Decker was named president of Boral Windows.

“When Billy heard I had been offered the president position, he called and asked me not to sign the paperwork and again mentioned sitting out for a year and going into business with his son,” Decker said. “I elected to stay on as president of Boral.”

Robinson met with Boral Industries executive Joel Charlton on May 22, 2017, and the two agreed “to part ways”.

But the Texan’s interest in the tightly knit windows industry remained.

He was spotted soon after talking with a vinyl supplier at a Las Vegas trade show while also entertaining Boral’s clients at his South Texas ranch, asking if they would buy products from his son’s windows company.

Boral accused him of helping set up a competing business, Elevate Windows, run by his son James Robinson and friend James Grisham.

Boral immediately had its suspicions.

“James Robinson has never run a windows plant, never managed a production line, never overseen a sales team. Grisham only worked for a brief time in the sales department in the windows industry, and that was over 20 years ago,” Decker said.

Worse was to come.

Once some of the former Krestmark employees received their final retention payment from Boral, they simply jumped ship.

1 2 3 4 5

Tovar, who had worked with Robinson for over 30 years, quit and took all of Boral’s supervisors to work at the new rival, Elevate, according to Decker’s affidavit.

Confidential pricing information was allegedly swiped off Boral’s computers and 35 staff left Boral to work for Elevate.

One employee who had resigned walked through Boral’s window plant in regular clothes, taking photos of its equipment, windows and sketches to help a new windows and door company that the previous owner Billy had opened, a separate affidavit said.

Decker said he was dismayed by the fallout.

“I have heard from several Boral employees that these former employees are being paid to sit at home in an effort to create chaos in the market by putting Boral’s production behind and provide an opportunity for Elevate,” Decker said in the court document. “This significant loss of institutional knowledge and experience, and general loss of person power, has resulted in a substantial slowdown in Boral’s ability to produce enough windows to timely meet customer demand.”

By October 2018, Boral had reached breaking point, filing a lawsuit against Robinson saying he had breached his non-compete clause and seeking an injunction.

But the Australian giant’s court move had little immediate effect, with Robinson showing no sign of handing over legal documents that may have shown his hand.

Instead, it inspired an unusual offer from Robinson to bury the hatchet. The four-page letter from “one business man to another” doubled as Robinson’s affidavit and was sent to Boral’s North American boss, David Mariner, shortly after Boral’s lawsuit landed. Robinson rejected the “unfounded allegations” in the lawsuit and said he had no interest or ownership in his son’s window company and did not even know the Elevate name until Boral filed its legal papers.

“Regarding my son and his business, he became a changed man when he was fired. I love my son and wish him success, but he is an absolute pain in the ass when it comes to business, or if he has his mind set on something. With a newborn baby girl and a wife with cancer, he got hungry really fast,” Robinson explained.

While conceding he held stakes in glass manufacturing and wrapping businesses, neither were in direct or indirect competition with Boral Windows.

Rather than Texas, Robinson said he was now pursuing an opportunity to supply “window industry know-how” in Colombia, Kenya and Puerto Rico to help rebuild inner-city slums with shipments to set sail from Houston.

The sighting at the Las Vegas trade show was to discuss a supplier making window panes for the proposed international projects, court documents said.

“I am 66 years old. I do not want back in the cut-throat, dog-eat-dog window business in the southern United States, but I am excited about the international opportunities described above,” Robinson said.

Boral Windows had taken “the wind out of my sails” by terminating his job, Robinson added.

“I did not even have an opportunity to say goodbye properly to people I had worked with for years.”

Mariner was asked to shelve the litigation and allow Robinson to return to Boral Windows to rescue the operation in exchange for travel expenses and four nights a week in a hotel room.

“And now for my proposal for you. I know Boral Windows is struggling. I am ready, willing and able to give you six months’ onsite consultation into the current state of operations and help in any way I can to get Boral Windows on track again.

“Despite the allegations in Boral Windows’ lawsuit, Krestmark was my baby and I would hate to see it falter. Let me help. I can give you a real rundown of what is wrong, why it is wrong, and what I believe it will take to fix the company. I can put the right people in the right places.”

The offer was rejected and if anything the legal standoff has escalated. An attempt by Robinson to call Boral’s directors into the argument was dismissed by a court.

Boral added a fraud claim against Robinson on September 13, 2019, but the two sides remain at loggerheads.

A court date is now set in Dallas for September 22 this year.

“The litigation involving the former owner of the Windows business is ongoing so we cannot comment on those proceedings at this stage,” a Boral spokeswoman said. Lawyers for Robinson did not respond for requests to comment.

Either way, the Windows fiasco has emerged as a stain on Kane’s CV and raised questions over the due-diligence process for Headwaters. Boral revealed on December 5 it had suffered financial irregularities at its US windows business resulting in a one-off hit of up to $US30m.

The Weekend Australian is not suggesting any wrongdoing by Robinson.

Decker, who sparred with Robinson in the last few years, was immediately “isolated” from the financial side of the business and moved from his president windows position to a business development role.

A further management reshuffle on Friday saw Mariner stepping down at the end of May and leaving Boral completely in June.

Kane is also on his way out in August after a nine-year stint although a replacement has yet to be found.