Commentary

Orecks Hope To Bag Eponymous Firm With $22M Bid

David Oreck has one of those avuncular, made-in-the-USA infomercial voices that exude homespun quality so convincingly it was something of a shock to read a few weeks ago that the company that makes his vacuum cleaners was filing for bankruptcy protection. What’s this country coming to, one wondered, if it can’t support the likes of Twinkies, Levitz Furniture and a nine-pound vacuum cleaner powerful enough to suck up bowling balls and withstand the force of a 7,000-pound truck rolling over it. 

Well, it turned out that Oreck wasn’t really Oreck anymore. It was one of them-there “alternative asset management” firms, Black Diamond Capital Management, that “focuses on investing in debt securities that offer structural protection and have substantial underlying assets.”

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After “extensive negotiations,” the Oreck family has made an offer to buy back the company that bears its name, Pierce Greenberg reports in the Nashville Post. “According to bankruptcy court documents, the family's bid is approximately $21.9 million, including $14.5 million in cash and other warranties, liabilities and fees.” 

Oreck started the business in 1963, according to a history on the company website, with an “obvious yet radical idea: design a lightweight yet powerful vacuum to relieve the drudgery felt by hotel housekeepers using the much heavier models then available.” 

“In 2003, ownership was transferred to Oreck’s three children in a joint partnership with American Securities Capital Partners, a private investment firm,” writesThe Inquistr’s Theresa Hurst. 

“Thomas Oreck, the founder’s son, served as CEO of the company from 1997 to 2007. He claims conflicting ideas about the business direction of Oreck Corp. prompted the investment firm, which maintained controlling shares of the company, to request his resignation.”

Black Diamond Commercial Finance, an affiliate of Black Diamond Capital Management, bought controlling interest in 2010. “By this time, Oreck Corp. was struggling and disagreements flared between shareholders and the company’s CEO Doug Cahill,” Hurst reports.

“The things I saw that they were doing, I felt, were alarming,” the 90-year-old founder David Oreck tells New Orleans’ WGNO. Oreck, who was pitching his new book, From Dust To Diamonds, said the company was “financially solid” when he sold it. “They proceeded to change almost all the things that had made it successful.”

And while David was trotted out for the occasional promotion, Black Diamond Commercial Finance bought controlling interest in 2010. 

The operation, which had been moved from New Orleans to Tennessee in 2005 following Hurricane Katrina, also found itself as the loser in the Great Bag Debate. 

“When the competition [Dyson] was rolling out the bagless models, founder David Oreck doubled down on bags,” Nevin Batiwalla reports in the Nashville Business Journal.He took to the late-night airwaves with infomercials warning of the horrors of the bagless vacuums, calling them dirt and bacteria spewing devices that must be kept out of homes. The company even trademarked 'bagless is a dirty word' in 2004.

“Oreck had acquired an abandoned design for an upright vacuum cleaner from Whirlpool and a failing RCA distribution facility in New Orleans, Louisiana,” explains a case history of the The Oreck Challenge infomercial for the XL vacuum by REP Interactive. His model in reaching consumers was QVC

Should the family’s bid succeed -- it’s the only one thus far -- “I would be CEO again, although that’s not exactly how I was planning to spend my retirement,” Tom Oreck told The Tennessean. “But I’m very excited about the possibilities. We believe it’s a great brand and great product, and believe the company deserves the opportunity to prosper again, and we want to preserve these jobs.”

"I think the company was most successful when we focused on directed consumer efforts and sold through licensed or company stores dedicated to our products," Oreck tells The Tennessean’s G. Chambers Williams III in a story published by USA Today. “When the company started to falter was when they went after the big-box stores, which were not a good fit for us. We are customer-oriented, and moving away from our long-successful business model got the company in trouble.” 

But the real secret to Oreck’s success, as David told an audience at Drexel University in 2001, was, well, him.

"There is a certain facelessness and namelessness to business today," Oreck told about 100 students at the school's LeBow College of Business, the Philadelphia Inquirer’sReid Kanaley reported. "But people are still people, and they relate to other people. If they bought my product and they have a problem, they call me, and they write to me," he said.

“If you buy a Chevy, who do you call? Mr. Chevy?”

And of course he used the product at his own home, he indicated. 

“He’s a neatnik,” his wife, Jan, averred to Kanaley. A loveable old coot of a neatnik who’d just as soon clean the house as pick up a putter! What’s not to like?

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