Former Braidy CEO sues company, state-sponsored investment group over his ouster

The former CEO of Braidy Industries, an aluminum mill planned for northeastern Kentucky, filed suit last week against the company, its board members and a state-sponsored investment fund over his highly-publicized and contested ouster as CEO and board chairman.

Craig Bouchard alleged in the lawsuit, which was filed Friday in Delaware and first reported Tuesday by the Courier-Journal, that the board’s decision to remove him jeopardized hundreds of millions of dollars of investments.

A Braidy Industries’ spokesperson said the lawsuit was “an expected step in the process of removing him from the role of CEO of Braidy,” and that the company “was not pleased with the status of financing for the mill in Boyd and Greenup counties, and has other concerns regarding his performance as CEO.”

Bouchard’s lawsuit names defendants Braidy Industries; company board members John Preston, Charles Price, Michael Porter and Christopher Schuh; Commonwealth Seed Capital, a state-sponsored investment company that bought $15 million of Braidy shares in 2017; and Hannah Management, LLC., a Louisville-based Braidy stockholder.

The suit comes about three weeks after Braidy Industries issued a news release saying that Bouchard had stepped down as CEO and board chairman. Bouchard responded by rebuking the board’s decision in a post on his Facebook page.

State legislators raised concerns over the unusually-public dispute over the company’s leadership, and met with Braidy Industries officials during a hearing in Frankfort last week.

The company did not provide many details on Bouchard’s firing during that hearing, but said it still needed $500 million of funding before it can start building its $1.7 billion mill.

Following news of Bouchard’s suit, the company said in a statement that the board “voted to take action that it believes will be upheld in court under Delaware law.”

“Mr. Bouchard, as CEO, must be held accountable and the board of directors is willing to do what it takes to ensure that occurs,” a company spokesperson said Tuesday. “We intend to get this project built as promptly as possible.”

An official with Commonwealth Seed Capital did not respond to a request for comment.

Bouchard’s suit argues that he has the “unilateral, unqualified contractual power” to remove company board members. Bouchard can require company stockholders, including the state-sponsored fund, to vote to remove board members at Bouchard’s request, according to the suit.

On Feb. 5, one week after the board voted to remove him, Bouchard sought to exercise that authority by requiring the investors to remove the board members.

The stockholders declined Bouchard’s request, according to the suit.

Bouchard also alleges that Braidy Industries and Preston, a board member who also serves as the company’s newly-appointed secretary, breached the voting agreement by failing to use their “best efforts” to uphold the agreement’s contractual rights.

Kaylee Price, a Braidy Industries spokeswoman, said the company was following the normal procedures in formally responding to Bouchard’s suit, but did not provide a timeline on when the company would respond in court.

The lawsuit claims that Bouchard was on the cusp of securing hundreds of millions of dollars in funding for the mill — a project so large in scale that state officials once lauded it as a potential turning point in the economic future of Eastern Kentucky.

Bouchard alleged that an investment fund considering a $200 million investment said it wanted to see “the dust clear” before it moved forward, and that a “global entity” considering a $60 million investment was now reluctant to move forward without Bouchard at the helm.

“As many as five other investors followed on the company’s ‘Investor Tracker’ report to have gone silent, to Mr. Bouchard’s knowledge,” the lawsuit claims.

The lawsuit asks the court to force the defendants to remove Preston, Price, Porter and Schuh as board members, and to award Bouchard “damages, costs and expenses,” including attorneys’ fees.

Bouchard’s suit also reinforces a pitch the company has been making since its founding: that Braidy Industries decided to build in northeastern Kentucky out of a benevolent drive to help the region’s troubled economy.

Of the possible 24 sites where Braidy could have built its mill, Bouchard chose Ashland, “the poorest of those 24 towns,” according to the suit.

“He did so because the people there were dedicated and skilled. And they needed help,” the suit reads.

The suit references the decline of the coal industry and the prevalence of opioid addiction, and says that “family breakup is common under this sort of duress, and hope is disappearing in the region.”

The message contained in Bouchard’s suit has been echoed by Kentucky officials who supported the project, including former Gov. Matt Bevin, who orchestrated the state’s $15 million investment of taxpayer money into the project.

That investment brought considerable scrutiny, and the hearing in Frankfort last week continued to raise questions about whether Braidy Industries would make good on its promises.

Braidy still needs $500 million to start building the mill, and will almost certainly miss a state-ordered deadline to invest $1 billion in the mill by the end of this year.

Still, company officials remained optimistic last week. Gregg Whigham, Braidy’s general manager of primary operations, said the project was “shovel-ready” and interim CEO Tom Modrowski said Bourchard’s ouster would help the company move along more quickly.

“We are confident the changes we made will yield that progress,” Modrowski said.

This story was originally published February 18, 2020 at 3:30 PM.