An Indianapolis entrepreneur who's often said he wants to become the richest man alive has run into trouble with one
of his lenders.
Evansville-based Old National Bank says in a Dec. 1 lawsuit that Tim Durham's Indianapolis-based holding company, Obsidian Enterprises Inc., is in default on $2.6 million in loans that came due Nov. 1.
Durham, Obsidian's CEO, personally guaranteed the loans, records filed in Marion Superior Court show. Also providing personal guarantees were Obsidian's chief operating officer, Terry Whitesell, and Whitesell's wife, Julia.
Not to worry, said Durham, whose company in recent years acquired a collection of manufacturing and transportation-related firms through leveraged buyouts.
"I anticipate we will get it worked out with them, and get some kind of extension," Durham said. Attorneys for Old National declined to discuss the suit.
Durham, 43, is one of Indianapolis' most high-flying executives. An avid car collector, he as of a year ago owned nearly four dozen vehicles, including a Duesenberg Cabriolet that originally belonged to William Randolph Hearst.
In a 2004 interview with WISH-TV Channel 8, Durham said: "At the end of the day, when I breathe my last breath, I'd like to be worth more than anyone else in the world."
He helped his cause a few years ago by betting big on Brightpoint Inc. stock during the company's darkest days--a move he figures yielded a profit of more than $30 million.
At issue in the lawsuit are loans to Obsidian's Pyramid Coach Inc., a Nashville, Tenn., firm that leases luxury buses to corporations and the entertainment industry.
According to Durham, Obsidian discovered about a year ago that the manager of the business was embezzling money, as well as neglecting operations. Durham said authorities intend to bring charges against the man, who he said took between $500,000 and $1 million--a substantial sum for a business generating about $5 million in annual revenue.
"It's a situation where financials at Pyramid were not so good because of embezzlement, so they did not want to renew the loan," Durham said.
"The Old National loans are only part of the financing" for Pyramid, he said. "We have six or seven million on other coaches. The other lenders aren't worried about it at all."
Old National management is turning up the heat on Durham at a time it's trying to orchestrate a turnaround. The bank, part of Evansville-based Old National Bancorp, is trying to boost profit, in part by improving efficiency and reducing problem loans.
Key measures of Old National Bancorp's loan quality improved in the third quarter, financial statements show. For example, non-performing loans totaled just $44.9 million, down 56 percent from two years earlier.
In a late October conference call with analysts, Chief Financial Officer Christopher Wolking called such progress "the payoff ... for all of the hard work and the resources we've devoted to credit risk management and our unrelenting focus on sound underwriting."
Pyramid represents a small slice of Obsidian, which posted revenue of $65 million in the fiscal year that ended in October 2005, its last before converting from public to private ownership.
At the time, Obsidian was stumbling, having posted cumulative losses of $22 million over the prior three years. But since Durham and about two dozen other investors bought out Obsidian's other shareholders, the company has performed "very well," he said.
Durham said Obsidian put one problem behind it by liquidating Maryland-based Danzer Industries Inc., a maker of truck bodies that had been hobbled by the bankruptcy of a key customer.
Meanwhile, he said, other divisions are on the upswing. Units that make specialty trailers had seen demand fall after a sharp increase in the cost of steel, aluminum and wood pushed up prices. But now, he said, customers are adjusting to the higher prices and boosting orders.