News: Colby - Fiesta Corporation #6

Contact: Kathleen E. Englebretson

Email: kathy@wiclarkcountyhistory.org

Surnames: Brandt, Outlaw

---Source: Marshfield News-Herald (30 April 1983)

COLBY -- The chief executive officer of Fiesta Corp is hoping for a summer wedding.

The bride is the corporation William A. Brandt has been heading since last June when its controversial former owner was deposed by a federal bankruptcy court at the request of Fiesta creditors and government attorneys.

When Brandt arrived in Colby, he was optimistic that he could revitalize the firm, located just east of the city on County Trunk N. To many, however, it seemed Fiesta Corp. might die an old maid.

A year later, the actions of the company's former leader have taken a back seat to Fiesta's recent success. Officials report profits for every month of 1983 and eagerly look toward a future that appears to be full of military contracts.

Brandt had said it would take a year to get the company back on its feet and ready to be sold. A year later, an unsettled dispute with the government has been settled, federal charges may be filed against its former owner, and Fiesta officials are planning a name change to further improve the firm's image.

"Once we've got the bride all cleaned up and in a white dress, we will go out on the street and look for a groom, It's not too hard, if you know what I mean," Brandt said.

It took considerable time and effort, to get fiesta to this point, however. The corporation's problems began long before November 11, 1981, when J. Raymond Outlaw filed for reorganization under Chapter 11 of federal bankruptcy laws.

Outlaw joined Fiesta in 1976 as a senior salesman after a North Carolina appliance center he operated failed. As a Fiesta salesman, "he apparently sold everything they could make and then some," Brandt recalled. He eventually bought Fiesta Corp., which originally made disposable barbecue grills at a plant in Hancock.

Under Outlaw, Fiesta expanded operations by adding the Colby plant and began getting military contracts for military heating equipment.

He had no problem winning contracts but many times those contracts were won on overly deficient bids. Brandt said those low bids and loans of company funds to Outlaw apparently stripped the company's assets and led to bankruptcy.

"He found himself basically unable to pay his bills in the fall of 1981," Brandt said.

Outlaw allegedly received $1.3 million in company funds in 1981 and early 1982, according to Brandt. That money is regarded in corporation records as a low-interest loan which is perfectly legal between a corporation and a shareholder - Outlaw.

Outlaw has said he paid himself $24,00 a month while the firm was in bankruptcy court and twice that amount before filing for reorganization. Brandt, however, said the funds most likely came through loans and the rent Fiesta paid Outlaw for its facilities in Hancock and Colby, which he owned.

Then in late May 1982. Outlaw was ousted as the result of growing discontentment among creditors with his management of the bankrupt firm. He still owns much of Fiesta's stock, but it has been put in a trust for creditors and has no value.

That was the situation confronting Brandt, a partner in a Chicago corporate consulting firm, when the court appointed him to head Fiesta, which produces various heaters, stoves and other items used by the military. He came to Colby, met with Outlaw and "got the keys to the plant."

As federal investigations continued into alleged improprieties by outlaw Fiesta officials attempted to regroup. Brandt's firm, Development Specialists Inc., specializes in "damage control" involving bankruptcies, stockholder disputes and insolvencies. Brandt, who is currently heading several other corporations through Development Specialists, said his job involves moving from crisis to crisis. That experience appears to have paid off.

"The company had been losing money in bankruptcy," Brandt said. Fiesta lost money in June, July and August, the the tide changed in the fall and a profit has been recorded ever since.

In fact, Brandt said that he expects 1983 to be the first year Fiesta will realize a profit since moving to Colby.

A major reason for that outlook are recently awarded military contracts that could total from $1.02 million to as much as $4.4 million if the government exercises it option to purchase additional items at the bid rate.

The company's profit margin also will be strengthened by a recent facility consolidation and equipment purchases. The Hancock fuel valve assembly operation was moved to Colby a few weeks ago, limiting overhead costs, and new metal forming and fabricating equipment was purchased. That equipment will allow Fiesta to produce more product components itself and will double the number of items needed by the military which it's able to produce.

These factors also mean many Fiesta employees will be going back to work soon. Most of the approximately 50 plant employees are laid off, but Brandt expects all of them and maybe a few new employees may be needed by September.

The recently awarded, multi-million-dollar contracts symbolize the major strides the corporation has made in the last year.

Fiesta has received Defense Department contracts in the past year, but they were relatively small ones and they didn't involve progress payments which the government pays to contractors before delivery to cover purchases of production materials.

The government was hesitant because Outlaw had received $3 million in progress payments for contracts that were never completed. That dispute is expected to be settled May 6 and, as a result, Fiesta will once again be "in the good graces of the military buying command," Brandt said.

"The (military) has finally established confidence in Fiesta again," he said.

The Military's discontent was a result of problems with Outlaw, not necessarily Fiesta.

"They don't want to see us go out of business," he said. "They don't want to see this place shut down. They'd bend over backward to keep us going."

Now that the problems with the military have been settled, Brandt said attention will be directed to settling $4.1 million in debts to banks, approximately 200 unsecured creditors and other concerns. Fiesta also owes $200,000 in taxes from before the bankruptcy declaration.

Brandt admits that Fiesta's assets "are no where near that," but it is optimistic about the company's profit picture. He said $3 million in contracts is needed to break even this year and he is confident that will be the case.

Five to 10 parties have indicated an interest in purchasing the firm, including a "division of a major aircraft manufacturer," Brandt said. A sale could come this summer.

Brandt, however, is committed to selling Fiesta to a local concern or any party that will keep the operation in Colby.

The recent consolidation is expected to help ensure that, but Brandt admitted that there is no obvious reason for a defense contractor to have a plant in this area.

"to get defense jobs in Central Wisconsin, that's cream on top of the coffee.... This isn't a dairy-related industry where if somebody didn't make this in Colby, somebody else would," he said. "There's no reason for aircraft pre-heaters to be made here in Wisconsin. That's frosting on the cake."

Fiesta, however, made a commitment to Colby when it became the lone resident of the city's industrial park, Brandt said.

"Fiesta will stay in Colby and be a viable part of the community,' he said. "I foresee a very rosy future for Fiesta.