Longaberger – JRJR Networks In Trouble Sued By AT&T
Basket-maker Longaberger and its parent company, JRJR Networks, are under scrutiny from various quarters over unpaid phone bills and late financial filings.
And a potential source of revenue, its iconic basket-shaped headquarters in Newark, isn't attracting much interest from potential buyers.
The latest issue to arise faces the parent company. Dallas-based JRJR Networks owns direct-sales firms including Longaberger.
Late Thursday, the publicly traded company announced it will file its quarterly earnings report late — again. It was also late in filing its annual report and and its first quarter report, too.
Issues like this can threaten the company's ability to trade shares on the New York Stock Exchange.
It doesn't lend an aura of confidence, said Eleanor Bloxham, a corporate-governance expert based in Westerville. A late filing does happen, but it's not usual.
After its tardy first-quarter report, JRJR presented a plan to the NYSE outlining how the company intended to regain compliance with stock exchange rules.
Likewise, the company told the NYSE in its most recent filing that it has a plan to regain compliance. If the company fails to file the second-quarter earnings report by Oct. 17, the stock exchange may give an extension of as much as six months to the company — or could drop JRJR Networks altogether.
Sometimes (a late filing is) a one-time thing, but sometimes companies wind up getting delisted, Bloxham said.
In its note to the Securities and Exchange Commission, JRJR Networks said that the company needs additional time to compile and review certain information and consequently to provide such financial information to its auditors so that they can complete their quarterly review.
JRJR officials did not reply to requests for comment. Continued issues like this do not put a good face on the company.
The best advice for companies like this that have gotten into an accounting mess is to move with every dispatch to get the problem resolved and keep investors informed, Bloxham said.
(Not) providing financials on time gives a strong appearance of being a riskier investment.
Meanwhile, Longaberger is being sued by AT&T for unpaid phone bills stretching back two years. AT&T says the company owes $85,482, plus late fees and attorney fees, according to the lawsuit filed in May in U.S. District Court in Columbus.
Longaberger signed a contract in January 2014 with AT&T for phone service, but beginning in May 2014, Longaberger failed and refused to pay the amounts invoiced to Longaberger under the contract, AT&T says in the lawsuit. The phone company isn't the only one that says it's owed money.
In another ongoing case, former CEO Tami Longaberger is suing, seeking repayment of a loan she made to the basket-maker's parent company.
The case involves events that took place after JRJR Networks, then known as CVSL, bought a 51.7 percent stake in Longaberger in 2013. Afterward, the company asked Tami Longaberger to loan the company $1 million to pay bills. But the parent company has not repaid any principal or interest, according to the lawsuit.
All of these complications take place against a backdrop of unpaid taxes on the Big Basket headquarters building. The Longaberger Co. currently owes $612,219 to various local taxing entities for roadwork, lighting and other improvements made when the headquarters was built.
If delinquent taxes aren’t paid, the county has the the power to foreclose on the property and offer it at a sheriff's sale, Licking County Auditor Mike Smith has said, but that isn’t likely.
With regard to the property, which is for sale now that the last of the office workers moved out in July, word from the marketer is that there's been little interest so far. There has been little movement in either selling the Big Basket building or getting tenants to occupy it, said real-estate agent Michael Guagenti of Cushman & Wakefield.
Source: The Colombus Dispatch