Ready Mix sale linked to suit

Grace Leong

Monday, Feb. 18, 2002 | 10:38 a.m.

Meadow Valley Corp. of Phoenix, a big highway contractor in Las Vegas, said a planned $12 million sale of its subsidiary Ready Mix Inc. to RMI Enterprises LLC may result in dismissal of a lawsuit filed by disgruntled Meadow Valley shareholders.

Bradley Larson, Meadow Valley's president and chief executive, said the planned sale of Ready Mix to RMI, a company owned by Stuart R. Engs Jr., includes a return of 560,100 Meadow Valley shares by two Meadow Valley shareholders, Silver State Materials Corp. of Las Vegas and its chairman and treasurer, Cyrus Spurlino, to Meadow Valley.

The sale is expected to close in March and includes $4 million in cash and RMI's assumption of debt and leases of about $8 million.

Silver State and Spurlino sued Meadow Valley and its board of seven directors in November, saying they were unhappy with the firm's stock price and alleging the company is being mismanaged.

Steven Hill, Silver State's president, declined comment on the transaction.

Engs, also the owner of Truck Parts and Equipment Co., which supplies truck parts to Meadow Valley, Ready Mix and Silver State, could not be reached for comment.

"I don't know what or how Silver State will benefit by returning the shares," Larson said. "Silver State is not affiliated with RMI Enterprises. I'd be speculating here but Silver State could be acting as a broker in this deal."

"This lawsuit remains in limbo until the transaction is consummated," Larson said. "But the terms of this nonbinding letter of intent (for the sale of Ready Mix) allow for a dismissal of the lawsuit."

Meanwhile, Larson said the sale of Ready Mix, which provides ready mix concrete and gravel products from its North Las Vegas plant and two Phoenix plants to Meadow Valley and other contractors in the Las Vegas and Phoenix markets, is expected to improve the company's cash flow and reduce its debt.

Larson said Meadow Valley's cash flow was hurt by problems with collecting $29 million in alleged outstanding payments for heavy construction projects it completed in New Mexico and Las Vegas from the New Mexico Department of Transportation and the Clark County Department of Public Works.

"The combination of reduced cash flows, reduced bonding capacity, a reduction in construction projects occasioned by the recession and the difficulty in collecting the New Mexico and Clark County claims contributed to the company's decision to sell Ready Mix," he said.