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The company working with the Niagara County Industrial Development Agency to obtain tax breaks and up to $200 million for the construction of a steel plant on Buffalo Avenue has a history of bad debt that has led to numerous lawsuits and judgments, as well as a filing for bankruptcy protection.
While articles in the Niagara Gazette have painted Penninox America Inc. as a "leading producer" of stainless steel, that would "bring 300 new jobs to Niagara Falls," in reality, the company operates out of rented space in a one-story building in Trenton, N.J., according to a financial report on the company made available to the Reporter.
The report, dated Oct. 5, also found Penninox to be a higher financial risk than other companies in the same region, the same industry, same employee size range, and those with a comparable number of years in business.
Founded in 1996 by Duane Gerenser, Penninox America employs 30 people at its Trenton facility. Gerenser has a background in the steel industry dating back to 1970. Prior to founding Penninox, he was president of Pennington Metals Inc., a company that left creditors holding the bag when it went out of business in 1996, the report states.
Investigators preparing the report had a hard time obtaining any financial information on the company.
"(We) have been unable to obtain sufficient financial information from this company to calculate business ratios," the report states. "Our check of additional outside sources also found no information available on its financial performance."
The report uncovered no fewer than seven judgments against the company in New Jersey courts, four additional lawsuits, and a half-dozen filings under the Uniform Commercial Code that indicate the company used all of its machinery, products, equipment and proceeds as collateral on no fewer than six occasions since May 1998.
"That would be like taking six mortgages out on your house, if you could find a bank crazy enough to lend you the money," one local financial analyst said.
On May 27, 1998, the company filed for Chapter 11 bankruptcy protection, a filing that was dismissed the following month, the report states.
According to news reports, the company intends to build the multi-million dollar plant on the site of the old Acheson Graphite facility next spring. The Acheson building was demolished last month by Ontario Specialty Contracting, a company operated by Jon Williams.
The demolition raised eyebrows because most of it was carried out without the benefit of any city permits or oversight by the state Environmental Protection Agency.
Williams' uncle, James "Harry" Williams, also has expressed interest in building a steel plant on the site, leading to speculation that he would be a partner with Penninox in the venture. His most recent business setback occurred Nov. 5, when Laker Airways, a charter carrier he owned in Fort Lauderdale, Fla., closed its doors due to financial difficulties.
Since the closing, the U.S. Labor Department has received complaints from Laker employees about money they paid into a company retirement fund, according to a spokesman for the Pension and Welfare Benefits Administration in Atlanta. The spokesman would neither confirm nor deny that an investigation of the company is under way.
Harry Williams also is an investor in the troubled AquaFalls project, which suspended construction last year and is reportedly out of money.