Hundreds of PennySaverUSA employees were suddenly left twisting in economic uncertainty over the Memorial Day holiday as financial engineering executives at OpenGate Capital ignored federal labor laws.
A feeling of despair, loss, and resentment-filled emptiness, echoed from the words of laid off PennySaverUSA employee Luann Benton, who abruptly learned after they met their weekly deadline Friday that the company was shutting down. On camera Benton told CBS2’s Adrianna Weingold, “I’ve been with the company for over 30 years and everything is a complete shock. We had no idea the company was going to shutdown. We worked all week long.”
“We haven’t heard anything,” added Anita Steinle, referring to her last check and concerned about getting COBRA insurance which presumably is an immediate a concern for hundreds now unemployed. A local TV Station showed a hand written sign posted at the PennySaverUSA Brea office that read, “Sorry folks, we are no longer in business.”
PennySaverUSA’s Twitter page reads, “The largest direct mail shopping publication in the U.S. with a leading online classifieds network with quality neighborhood discounts & freebies.” A recent post announces, “Free Friday Freebies: Hey! You can win a $50 Visa gift card! As of Tuesday morning there was still no information posted about the shutdown or how the public might recover payments they might have made to PennySaverUSA as recent as Friday afternoon.
The direct mail shopping publication got its start in 1962 as the Huntington Beach PennySaver . As the publication grew through the years, it found its way into mailboxes across California helping people save a little cash on appliances, cars, insurance, handyman services and garage sale classifieds. In March, new CEO Ron Myers announced a strategy that targeted a more productive middle class neighborhood demographic, reducing circulation of 9.1 million to about 7.2 million while consolidating its print operations in Brea. However, Myers may have been intentionally misleading the public and employees last month when he publically announced that PennySaverUSA would continue to grow its digital business, which he expected to increase.
Surely, it was executive deception that allowed unwitting PennySaverUSA employees to take orders and payments from the public throughout Friday until the weekly deadline was met, despite having already made arrangements with hired security to have them escorted off the premises of the Brea facility, if needed, at the end of the day.
Was PennySaverUSA’s failure to comply with the federally mandated 60 day notice requirement of The Worker Adjustment and Retraining Notification Act strategically ignored? Will there be any real consequences for these executives who apparently thumbed their corporate noses at federal labor law and allowed self-interest to deceive unwitting employees, advertisers and the public?
Only a few weeks ago the PennySaverUSA’s corporate headquarters in Brea was acquired free and clear of existing debt by Intercontinental Real Estate Corporation. It’s not known whether OpenGate Capital—which owns PennySaverUSA—participated in the April 10th acquisition or provided any equity for the transaction. However, announcing the completed transaction, Intercontinental Senior Managing Director Anthony Brent emphasized the investment as having a “stable and long-term cash flow” while noting that PennySaverUSA was the only tenant occupying the entire property.
Quarterbacking CEO Ron Myers’ cowardly shutdown maneuver is OpenGate Capital which acquired PennySaverUSA less than two years ago. In May of 2014, OpenGate Capital followed with an expanding acquisition of three publications which included The Monthly Mailer explaining that they were “an excellent complement to PennySaver’s weekly direct mail business and digital services.”
According to Bloomberg research, OpenGate Capital was founded by Andrew Nikou (38) who is also Chief Executive Officer, Managing Partner, Chairman and a member of the Investments and Portfolio Committee responsible for deal origination, overall management, strategy and operations.
OpenGate Capital first made its way onto the public radar when they acquired TV Guide Magazine in 2008. They are self-described as a global private equity firm with a portfolio of businesses generating approximately $3 billion in revenue.
According to the OpenGate Capital website—written in the antiseptic language of financial engineering with phrases like “operational initiatives,” “cutouts” and “turnaround acquisitions’—they’re “seasoned professionals” who possess the critical skills needed to build successful businesses, yet they make nothing. Their website claims a commitment to various charities and states, “We live in a world where at times our sensitivity, decency and compassion are lost in the traffic of life.”
On the OpenGate Capital “Meet The Team” page, everyone wears a jacket, no tie and it would appear from the photos, that everyone is under 40 years old. They are financial engineers equipped with a new technical know-how to turn money into more money, while bypassing the intermediary messiness of actually producing something—just another mutation of the asset stripping transactions of the 1980s and 90’s.
OpenGate Capital’s self-described competence is “corporate divestures.” They are part of a “shadow banking” system that grew alongside conventional institutions that destroyed the economy supplanting regional banks while contributing to downward mobility and the exploitation of labor.
The question going forward really is when did the lives of PennySaverUSA employees become less important than the type of financial engineering that ignores federal law and leaves hundreds of people suddenly twisting in economic uncertainty over what otherwise would have been a holiday weekend?
Surely, the PennySaverUSA brand and 50 years of goodwill won’t be recklessly Lost in the traffic of life, just the sensitivity, decency and compassion to their employees.