Devcon names new president, looks to acquire
BOCA RATON, Fla.--Although it's still dogged by a disgruntled investor who's taking legal action, Devcon is following up the March announcement of the sale of its construction division with movement on several fronts in early May: reorganizing its executive management team and discussing its intention to move into acquisition mode--soon.
Robert Farenhem was named president of the regional security company on May 1. Farenhem, who has served as chief financial officer, comes from Royal Palm Capital, the private equity firm that bought into Devcon in 2004 with the idea of morphing it into a pure-play security company. Farenhem replaces Ron Lakey, who will continue to serve in an advisory role.
"This will give Ron more flexibility to help out with the transition of legacy businesses," Farenhem said.
Robert W. Schiller has been named chief financial officer. Farenhem brought Schiller on board this winter as vice president of finance "with the idea that he could become CFO," Farenhem explained. In addition, Keith Godsey has been promoted from vice president to president of Devcon Security Services Corp. "Our intent is to flatten out our organizational structure and to leverage the resources we have at our disposal," Farenhem said. "[The management reorganization] is news and it's a progression. What we have been about in the last couple of months is cleaning up Devcon so we can get more focused on the security business," said Farenhem.
This team will stay in place for a while, but chief executive officer Rick Rochon will eventually step down. Management has previously announced an intention to replace Rochon--who like Farenhem is a partner in Royal Palm Capital--with a permanent CEO once the business gets its feet on the ground.
According to the April 20 conference call, this process is well underway. Rochon and Farenhem explained to investors that Devcon has been distracted in the last year with selling its legacy businesses and integrating its three security platforms--two in Florida (remnants of Adelphia, Guardian International and Coastal Security) and one in New York (mostly Guardian legacy). The integration of these platforms is largely complete, they said, and with the infusion of cash from the $5.3 million sale of the construction division, Devcon is ready to pursue some "tuck-in" acquisitions, Rochon said.
In March, Devcon also announced it had entered into a forbearance agreement with investors to restructure its debt. One of those three investors did not favor the forbearance agreement and, as mentioned above, has filed suit against Devcon. Because a majority of the three investors endorsed the forbearance agreement, Devcon believes the agreement is binding on all three investors. "Our position [regarding the dissident investor] remains unchanged. We do not believe he has a case," Farenhem said.