Composite Power sues ex-chief executive, CFO

Grace Leong

Friday, Sept. 10, 1999 | 10:58 a.m.

Composite Power Corp. of Las Vegas won a temporary restraining order against its former chief executive and chief financial officers, after alleging the two used confidential information to try to induce its partners to pull out of a multibillion-dollar green energy project planned for Nye County.

Wednesday's order bars former CEO William Arrington and former CFO Robert Nikoley from using the confidential information and partner contact list. The two resigned in late August.

Composite Power, a publicly traded company, manufactures composite material electricity poles. But its most ambitious project is the Nevada Green Energy Project, a proposed renewable energy project near Armagosa Valley, 110 miles from Las Vegas. With an estimated cost as high as $1.8 billion, the project has drawn the interest of such companies as Duke Energy Corp. and Siemens.

State Judge Valorie Vega issued the restraining order stopping Arrington and Nikoley from using Composite Power's confidential information to interfere with its business relationships, contacting its strategic consortium partners and financiers and ordered the immediate return of the information to the company.

A Composite Power lawsuit alleges Arrington had, at the time of his resignation, removed confidential information including his personal files, correspondences, business plans, financial statements, company qualifications, brochures, memorandums of understanding with the company's strategic business partners, engineering data, feasibility studies, names and contact persons of its partners. The lawsuit was filed Tuesday in Clark County District Court.

The suit said Arrington and Nikoley had the documents shipped to Arrington at an address in Golden, Colo.

A hearing will be held Sep. 20 to determine whether the order should become a preliminary injunction. If an injunction was issued, this would likely stay in effect until a trial is held, said Composite Power attorney Georlen Spangler.

Composite Power alleged it had suffered business losses and opportunities because Arrington had used its confidential information to induce its business partners to enter into a competing project with him.

As a result of Arrington's actions, at least one strategic partner had notified Composite Power it is withdrawing and a second partner had indicated it intends to follow suit, the company claimed.

Composite Power's chairman and founder, Roger McCombs, declined to reveal the identity of the two partners, but said the company is still in negotiations with them.

"The project is still there, and on the surface, we're not losing any more project partners," McCombs said. "Everyone is taking a second look after what happened. Arrington spread a lot of lies and rumors and tried to take over the project.

"No one is really going to leave the project. The possibilities of this project are just awesome, and the two partners are now reconsidering coming back to the consortium."

The company announced in early August it will lead a consortium of 10 energy suppliers, including Duke Solar and Siemens Power Transmission and Distribution, to produce up to 1,000 megawatts of electricity through solar, wind and geothermal power in southern Nevada over the next three to four years.

If the project takes off, it will prove that renewable solar and wind power can be generated at prices competitive with fossil fuels or nuclear power. The electricity generated could potentially be sold across the country.

The proposed project, which spans 5,000 acres, would consist of hundreds of generation units that use the sun and wind to generate the volume of electrical output now possible only with large coal, natural gas or nuclear power plants.

McCombs said a $70 million to $80 million pilot project of the first phase of Nevada Green Energy project will be built to test the consortium partners' renewable energy technologies and will have a capacity of 50 megawatts.

The construction of the actual $1.5 billion to $1.8 billion first phase of a proposed 10-year project, which has a capacity of 1,000 megawatts, is planned to begin at the end of 2000.

The company soon plans to announce how the renewable power will be marketed as well as the identity of the potential power sellers in the coming weeks, McCombs said.

"We have secured conditional commitment for the project's financing from three to five large financial partners," he said, declining to reveal their identity.

"Arrington was initially brought on as a consultant to find sources of financing for the project. He was an excellent (spokesman) and could make good presentations," said Spangler. Arrington was hired as a consultant on Aug. 1, 1998 and was promoted within four months to president and chief executive.

Composite Power last week hired a new president, Robert E. Jones, who it said has extensive experience in startups, operation and restructuring of energy-related consumer and business services.