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Kelly-Moore Paints Furloughs 700, Halts Texas Manufacturing

Kelly-Moore Paints has furloughed approximately 700 of its employees across the company’s locations and is in the process of temporarily halting operations at its paint manufacturing facility in Hurst, Texas, according to The Dallas Morning News. The company is actively seeking new investors to help facilitate a turnaround. The company will continue to fulfill orders from existing inventory.

Kelly-Moore has retained Houlihan Lokey as its financial advisor.

“I am saddened by having to furlough valued employees, and our sympathy goes out to each of them during what we hope will be a temporary, short-term absence while we seek new capital,” says Kelly-Moore CEO Charles Gassenheimer. “This was an important and necessary step as we deal with pressing financial issues and try to preserve all our options.”

At this time, most of the company’s retail stores remain open for business, and Kelly-Moore’s dealer network and warehouse facilities are being utilized to fulfill existing and new customer orders from the company’s substantial paint inventory.

“Kelly-Moore is a great American company with a storied history,” Gassenheimer says. “I truly remain hopeful about our ability to continue innovating and serving the unique needs of professional painting contractors with whom we have long and well-established relationships by providing top-quality paint products and knowledgeable, efficient service at a fair price.”

For over 30 years, the company has been grappling with thousands of asbestos litigation claims related to the company’s past use of asbestos in cement and texture products under prior ownership, a practice that was discontinued in 1981. Through the cumulative cash drain caused by legal settlements and the cost of defending ever-continuing case filings, the company’s ability to reinvest in the business—including investments needed to address historical supply chain challenges that were exacerbated by the recent pandemic—has been severely constrained for an extended period of time. The company has also been impacted by large legacy liabilities that the new ownership group inherited at the time of acquisition in October 2022, including previously unpaid sales and use taxes and unpaid back rent.

The company has engaged and worked with outside professional advisors to further assess and try to help improve its liquidity position, exploring various options for new funding sources or partnerships. The constraints imposed by legacy liabilities including ongoing asbestos litigation, capital and operating expenditures and near-term impacts on the business have necessitated the decisions made at this stage.

About Melanie Moul

Melanie is the communications and content manager for the North American Hardware and Paint Association. She joined the NHPA team in 2016 as an editor for Hardware Retailing and now helps lead the communications team to deliver relevant, timely content to the industry.

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