ATCHISON, Kan. — This largely industrial community hard by the Missouri River has been on edge since spring.
By MARK DAVIS
The Kansas City Star
Residents’ angst stirs from a rancorous public fight for control of one of the largest local employers. MGP Ingredients Inc. also is the source of unmatched local philanthropy through its founding family, the Crays.
“There’s a war in upper management and the board of directors. That’s scary to the whole community,” said Galen Pruett, the owner of Arensberg Pruett Funeral Home.
Many of Atchison’s 11,000 fear the company may be sold to new owners willing to move its high-paying jobs out of town or even shut down the plant.
MGP’s towering still on Main Street produces high-grade alcohol for vodka and gin sellers. The site also produces food ingredients from wheat starch and protein. It is the only Atchison-based business that trades on Wall Street.
The battle has pitted the Cray family against six members of the company’s board of directors, none of whom are family members. The Crays have campaigned to oust Tim Newkirk, MGP’s chief executive officer and also not a family member.
Newkirk declined to be interviewed.
The two camps have exchanged jabs in court and the local newspaper. Each side has impugned the others’ motives and accused the other of making personal attacks.
At key moments, each side has blocked the company’s annual meeting of shareholders, which still hasn’t happened though it originally was set before Memorial Day.
Both camps now say they’re working to settle their differences and put the focus back on business.
There have been more casualties than the town’s peace of mind.
A quarter-century long friendship has ended between Bud Cray, whose father founded MGP during World War II, and Kansas City businessman Michael Braude, one of the directors battling the family. Braude ran the Kansas City Board of Trade for many years.
“It kills me that I’m on the other side from him,” Braude said of Cray. “He’s a wonderful man, but he’s turned everything over to his daughter.”
Cray, who turns 91 next week, said he’s “absolutely with” his daughter, Karen Seaberg. She has taken the family lead, he said, because she has the energy to do so.
Cray agreed with Braude one on point. They’ve had a falling out because of what’s happened.
MGP began in 1941 when an investment banker from Detroit, Cloud L. Cray Sr., came to inspect a failed grain alcohol plant. He’d come to disassemble and ship it north.
Instead, he reopened the Atchison operation to provide fuel for the war effort, recalls the founder’s son and namesake whom everyone knows as Bud. Richard B. Cray joined his brother and father in the family business.
After the war, production shifted to drinking alcohol, “white goods” for vodka and gin labels. For more than 40 years, the company also owned the McCormick Distilling Co. in Weston, producing “brown goods” for bourbon and whiskey. The Crays’ company bought a flour mill other businesses in the Midwest.
More recently, as MGP, it has sold some businesses outside of Atchison but gotten back into brown goods with the purchase of a plant in Lawrenceberg, Ind.
Lawrenceberg has been a boon for the struggling company, coming cheap and just as that market began a surge.
“Right now, brown goods are sexy,” Seaberg said.
MGP’s current “crisis,” as a local banker called it, began with a mid-May phone call to Seaberg about selling the company.
A well known competitor, whom she won’t name, said he’d set up a meeting with Newkirk, the CEO, to talk about a sale and figured he ought to be talking to the family, too.
That much made sense. Although MGP’s shares have traded publicly since 1988, the Cray family controls a second class of shares called preferred stock. It alllows them to name five of MGP’s nine directors and wield an effective veto over any sale.
The call was the first that Karen Seaberg or her father, both of whom are on MGP’s board, knew about talk of a sale, she said.
“This tipped us over the edge,” said Seaberg, who contends the family already was unhappy with the company’s performance under Newkirk.
In reaction, the family refused to vote its shares at MGP’s annual shareholders meeting in May. Because they controlled most of the preferred shares, their withdrawal meant there could be no meeting.
The battle was on.
A week later, the company announced it formed a special committee of those six directors and hired a financial adviser for a review of MGP’s “strategic alternatives.” Such reviews routinely weigh the market for a sale, either in whole or part.
“Atchison is worried that we’re going to lose it,” said Leola Grantham, 93, a resident for 13 years.
In mid June, the company sued to challenge the family’s withdrawal from the annual meeting. It charged that two family members were not competent to participate in the decision: Richard Cray because of his advanced Parkinson’s disease, and Ladd Seaberg, Karen’s husband and the last family member to serve as CEO, because of his progressive supranuclear palsy.
Karen Seaberg called the court filing particularly hurtful, showing for example the deterioration in her husband’s signature because of his rare debilitating disease.
“There have been a lot of hurtful things,” she said. “We’re trying to stay very professional and above board. Obviously, we have said some pointed things.”
The family’s mailings to stockholders have complained of Newkirk’s “arrogance” and an employment agreement the company have him in August. It provided him for the first time with a large severance package.
Seaberg also claimed Newkirk “lied to me” about the competitor who called her.
Though Newkirk isn’t talking, the company has attacked proposals the family asked shareholders to approve that would lead to a shake up the company’s board of directors and could strengthen their hand.
A late July newspaper ad by the company charged that the Cray group, “as led by Karen Seaberg, is attempting to seize control of MGP for their own interest” and that this would be “bad for stockholders, MGP and ultimately Atchison.”
That’s not how Atchison residents have seen it. They’ve rallied behind the family.
“I have no problem with Tim Newkirk or the other people, but we’re better off with the Crays controlling it,” said Jerry Kuckelman, a stockholder for 10 years who had run Atchison’s original Jerry’s restaurant for decades.
Liz Wagner, his daughter, opened Jerry’s Again a dozen years ago and shares his support for the Crays.
“If things don’t work out right, the Crays could lose control of the plant,” Wagner said.
There are obvious reasons for Atchison to take an interest in the MGP fight.
“As MGP goes, Atchison tends to go. They’re a vital company for us,” Mayor Dave Butler said.
MGP provides a lot of high-paying jobs in a small community and these help support its restaurants, shops and other local vendors.
“At lot of farmers work there evenings or the night shift,” said Carolyn Tacy, 77. “It would affect the whole county.”
MGP also is the largest customer of the water company. And that means it pays the biggest water bill. Take that away and everyone else would have to pay 15 percent to 20 percent more, Butler said.
Residents have rallied behind the Crays because of their long list of civic and philanthropic efforts individually and through the company.
Jacque Pregont, president of the Atchison Area Chamber of Commerce and an MGP stockholder, said family members are good for more than a check, though they have written plenty of those.
She remembers Bud Cray leading the effort to open the Royal Theater downtown after the town’s only movie house had closed.
Ladd Seaberg, when he was CEO of MGP, worked nights and weekends to help build a Kanza lodge that was part of the city’s Lewis and Clark celebration in 2004.
Karen Seaberg led the first Amelia Earhart Festival in 1997 as well as each that has followed.
“People see that and they’ve seen it for years,” Pregont said.
Atchison also benefits from the contributions and efforts of other prominent families, such as the Mizes and Bergers. But many say the Cray-Seaberg family stands out.
Stephen Minnis, president of Benedictine College in Atchison, said the Crays have been behind “just about anything that moves the city forward.”
Meeting of minds
MGP shareholders, however, have been in limbo since Aug. 22.
They had been set to vote the next day on two directors’ seats. Chairman John Speirs and director John Byom, who have opposed the family, are up for re-election. Karen Seaberg said reports from proxy solicitors show that shareholders were ready to back overwhelmingly the family’s candidates for the board, Kansas City businesswoman Jeannine Strandjord and beverage alcohol industry veteran John Bridendall.
Instead, the company won a stay from the Kansas Court of Appeals preventing the vote.
The court lifted the stay effective last week. No meeting has been set but the delay may have begun to clear the air.
Braude said the two sides are closer than their acrimonious fight suggests.
“The battle has become more important than the objectives for both sides,” Braude said. “It’s an unfortunate battle that escalated way further than it should have.”
Kansas City businessman Gary Gradinger, who like Braude is one of the independent directors battling the family, agreed. And, he said, attorneys for each side may have come up with a settlement that both will accept.
And that could allow the board to reconvene, set a shareholder vote and get back to business.
“God, I hope so,” Karen Seaberg said.
To reach Mark Davis, call 816-234-4372 or send email to firstname.lastname@example.org.