The new chairman of Winn Enterprises, the parent of ailing Knudsen Corp., said on Tuesday that his first task will be to "return harmony and maintain the viability" of the dairy products company.
Daniel C. Montano, a Tustin investment broker and prominent Orange County Republican, acknowleged that Knudsen, which supplies more than 90% of Winn's revenue, is in financial trouble, but he said that its businesses were sound. "It has excellent products," he said. "That part of the business is not in trouble at all. Its problems lie in its financial structure," he said during a telephone interview.
Montano emerged as the victor in a management shake-up at Winn Enterprises on Saturday, when Winn co-founder Ted D. Nelson abruptly resigned from the board after a sometimes heated 13-hour board meeting. Philip Scaturro, a managing director at the New York investment firm of Allen & Co., also resigned on Saturday.
Knudsen and its sister company, Foremost, face involuntary bankruptcy actions in Los Angeles and are heavily in debt. Knudsen's day-to-day operations are financed with a $20-million weekly cash infusion from its lead banker, Citicorp Industrial Credit Bank. The company has said it is looking for a buyer for some or all of its assets and has already sold three milk processing plants in California.
When Winn announced the management changes on Monday, it attributed them to "philosophical differences." On Monday, Winn also named a consultant, John P. Brincko, president and chief executive of both Knudsen and Winn. He replaced Kenneth Glass, a consultant who served as Knudsen's interim chief executive and president, and a three-man committee that functioned as Winn's chief executive. Montano, Nelson and Dee R. Bangerter--Nelson's half-brother and a Winn trustee--formed the committee.
The management shake-up was the latest in a series of changes that began in January, when Nelson replaced Bangerter as chairman of both Knudsen and Winn after Nelson invested $10 million of his own money in the company to keep it going. In July, several top executives, including Knudsen's chief executive and president, quit when the company missed an $18-million milk payment to dairy farmers.
Montano, who joined the board of the Los Angeles company in August, declined to detail his plans for Knudsen, which supplies one-quarter of the state's dairy products. He also refused to discuss why Nelson left the board because, he said, it would result in "disharmony."
"I am still a friend of Ted Nelson," he added. "I never allow friendship to interfere with rational business decisions."
Nelson and Bangerter could not be reached for comment on Tuesday, and Scaturro declined to comment on why he left the board.
A source close to the board said, however, that Winn's board was split over what role Kenneth Glass, a professional crisis manager, should play at Knudsen. Glass, a consultant from the Gilbert C. Osnos firm in New York, had been hired by Knudsen as an interim chief executive and president.
During his month at Knudsen, Glass trimmed the company's payroll and reduced other overhead costs. The source said that Nelson and Scaturro were pleased with Glass' role at the company, but the rest of the board wanted to install consultant Brincko in his place.
Brincko, who heads his own crisis management firm in Los Angeles, declined commenton Tuesday. He was hired by Knudsen about two weeks ago as a consultant and became chief executive and president of both Winn and Knudsen at Saturday's board meeting.
According to another source close to the board, the issue of Glass' role at Knudsen may not be settled. "He may still play some role," the source said.