‘Everything just broke down’
Marport’s departure a travesty, says former CEO
The disappearance from Newfoundland of leading ocean technology company Marport is a travesty, says its former CEO.
Karl Kenny, speaking about Marport for the first time since its September 2013 receivership, said the company he co-founded in 2003 had a bright future, but needed help to grow.
“The company grew, we needed more capital, and to finance that growth we went out and did a deal with a private equity firm out of Boston,” he said.
That firm, Hastings Equity Partners, was a good fit at first, said Kenny, but soon Hastings — which became Marport’s leading shareholder with 65 per cent of the company — became more interested in investing in fracking, and was looking to cut costs elsewhere.
Kenny said things changed when Hastings installed a new CEO and Kenny became chief strategy officer — “I still don’t know what that means,” says Kenny, who then handled the company’s advanced-technology portfolio.
“I could see the writing on the wall — I was a fairly high-paid guy there and they were cutting expenses,” he said. With Hastings looking to cut research and development, Kenny instead proposed spinning off the company’s sytheticaperture sonar research into a new company, Kraken (see related story).
“They said, ‘We’re going to shut this whole thing down,’ which I thought was wrong,” he said.
Kenny established Kraken in the fall of 2012.
A year later, Marport was being restructured, and Kenny — although he had left Marport, he was still a shareholder — was dismayed to learn that offers from Airmar Technology and Moog for a total of $13 million for parts of the company fell through and Marport was put into receivership.
Talks between RBC, the lone secure creditor, and Hastings ended in acrimony. Kenny says he doesn’t know why.
In the end, Airmar, which had offered $7 million for Marport’s commercial fishing division, ended up buying it for $3 million.
RBC got its $2.5 million back, but other unsecured creditors were out of luck.
The Atlantic Canada Opportunities Agency recently sued to get its $2.3 million, but the Business Development Bank of Canada was also owed $3 mil- lion, and other private shareholders were owed about $10 million.
Kenny said he lost more than $2 million in the receivership.
“Everything just broke down,” he said.
“Why? How did we lose $10 million of value in two weeks? That’s what happened here. It’s as simple as that.”
Kenny is focused on Kraken now, but he says he was devastated to see the end of Marport in the province.
“You build companies, it’s akin to having kids,” he said. “You nurture it, you grow it, you build it up, you get it mature, you get it stable. In many cases they move on and they make their contributions and they move ahead. That was 10 years of my life. … (But) the important thing, the takeaway, is don’t give up.”