2007-03-30

Lakeport suit caps long partnership

By Steve Buist
The Hamilton Spectator
(Mar 30, 2007)
Eight years ago, Allen Fracassi and Teresa Cascioli joined forces to help pull struggling Lakeport Brewing Corporation out of bankruptcy protection.

Since then the Hamilton beer maker has flourished, slowly but surely finding its niche as a brewer of low-cost suds thanks to a successful "buck-a-beer" marketing campaign.

Lakeport wasn't the first time that the paths of Fracassi and Cascioli intersected, nor would it be the last.

Now, the former business partners are on opposite sides of a $50-million lawsuit launched by Fracassi late Wednesday in Hamilton court -- the same day that Labatt learned it would be allowed to proceed with a planned $201-million takeover of Lakeport.

Fracassi's history in Hamilton is well-documented.

He and brother Philip took over their father's bankrupt trucking company in 1979 and turned it into Philip Services Corp., a waste recycling and industrial service behemoth that was alternately praised and vilified over its life.

After Philip Services, Fracassi became one of the principals behind Newcastle Logistics Corp., a warehousing, packaging and distribution company on port authority land that he continues to run.

Cascioli was formerly vice-president of investor relations at Philip Services until she left the company in 1998. She was also the chair of Newcastle Logistics.

The origins of their Lakeport dispute date back to the summer of 1998, when Fracassi and Cascioli created a company called Do 4U Services Corp.

Fracassi owned 75 per cent of the company's shares and Cascioli owned the rest.

In March 1999, they created another company called AlphaCorp Holdings Ltd., which was a wholly owned subsidiary of Do 4U.

When Fracassi and Cascioli rescued the beer company from bankruptcy protection in the summer of 1999, it was done through their AlphaCorp company.

That meant that Lakeport became a wholly owned subsidiary of AlphaCorp, which in turn was a wholly owned subsidiary of Do 4U.

Shortly after that, Cascioli became Lakeport's CEO, a position she continues to hold.

Fast forward to Dec. 30, 2004.

On that day, Fracassi sold his 75 per cent stake in Do 4U to Cascioli for approximately $9.3 million, which meant that Cascioli now had control of the Lakeport brewery.

Six months after Cascioli acquired Fracassi's shares, Lakeport concluded an initial public offering and became a publicly traded income fund.

The deal provided Cascioli and her company Casc Corp. with $28 million and 1.5 million units of the Lakeport income fund, which had an initial value of $15 million.

Cascioli's Lakeport units will now be worth slightly more than $43 million when Labatt concludes its takeover of Lakeport.

Fracassi's lawsuit alleges that Cascioli, as an insider, took advantage of confidential information that significantly affected the value of the shares of Do 4U that she purchased from Fracassi.

The allegations contained in Fracassi's statement of claim have not yet been proven in court.

Fracassi and Cascioli both declined to comment on the lawsuit.

sbuist@thespec.com 905-526-3226

Used with permission from The Hamilton Spectator, www.thespec.com Copyright The Hamilton Spectator. All rights reserved.