March 29, 2024

HALO makes good on one Newton Manufacturing promise

Community Bank has warehouse building for sale

As HALO Branded Solutions moves through the next steps of its acquisition of Newton Manufacturing, the Sterling, Ill. company is paying off some of the debt owed to affected businesses.

Meanwhile, one of the facilities once owned by Newton Manufacturing is in the possession of a more local entity.

Last year, HALO bought assets of Newton Manufacturing out of Chapter 11 bankruptcy, it set up a program to ease the pain of Newton’s unsecured suppliers. Last week, HALO made good on its promise, paying more than $450,000 to affected businesses — the first-year distribution from the Newton Supplier Recovery Program.

The program is the first of its kind in the promotional products industry.

HALO isn’t legally obligated to make the payments to Newton’s suppliers and decorators, but management made the decision with an eye on long-term growth.

The first distribution will pay more than 500 suppliers about 15 cents on the dollar on Newton’s unsecured trade debt, with additional payments possible next year.

“While 14.9 cents on the dollar might not seem like a lot to any one supplier or decorator, I hope the industry recognizes that our first-year payment represents a very significant investment in our relationships with all industry suppliers and decorators,” HALO CEO Marc Simon said.

The payment formula was based on 10 percent of HALO’s revenue in excess of $12 million during the 12 months ended June 30 from account executives selling for Newton during any portion of 2014 or 2015.

The $12 million bar was set as the amount of annual Newton-based revenue HALO needed to bring in to justify the cost of the acquisition.

The Sterling company sees the payments as an investment in its future.

“We are protecting our existing account executives and reinforcing to our suppliers that HALO is the best option they can recommend to many of their distributor customers, whether or not they may be experiencing financial challenges,” Simon said.

Account executives from Newton had a difficult time getting orders serviced as the Iowa company’s financial situation worsened. Some looked elsewhere, and HALO management hoped the recovery program could bring that talent back into the fold.

Some of the Newton Manufacturing staff were offered positions with HALO, which rents a small office in a northeast Newton complex. However, real estate signs are still posted around the red brick building on First Avenue East that housed the building for many years. The 37,000-square foot office building and the 38,000 square foot warehouse occupied by the recently departed Avalanche Composites have both been vacant for most of the past year.

“The account executives we have added from Newton have been a great addition to the HALO team, and their success with HALO is translating directly into recovered debt for our valued suppliers,” Simon said.

Community Bank of Indianola, which has a Newton branch, has taken possession of the warehouse half of the property. The property has not been promoted in typical real estate for-sale listings, but the Newton Daily News confirmed it is for sale, and Community Bank is entertaining offers.

The warehouse property has an assessed valuation of about $310,000.

The main office building is still unoccupied, and its valuation is more than $1,000,000. There is still a Hilco Real Estate sign in front, advertising the previously established Jan. 28, 2016 deadline for accepting bid offers.

The Newton arrangement closed July 1, 2015, the same day plans for the recovery program were announced to the suppliers in a conference call.

Boston-based private equity firm Audax Management Co. has majority ownership in HALO, while a management group retains a smaller stake in the company.

Pam Eggmeier of Shaw Media contributed to this report.

Contact Jason W. Brooks at 641-792-3121 ext. 6532 or jbrooks@newtondailynews.com