At the end of August US-based Kyanite Mining Corp. (KMC) was
ordered to wind up and liquidate the business and affairs
of the corporation following a 14-day trial. The court
decision stated that the company mismanaged its assets and
treated its shareholders unfairly.
In the ruling, Fairfax County
circuit judge, Jane Marun Roush, said that the case had shown
that the private family-run business had a long history of
stock manipulation, exorbitant salaries for company officers
and inappropriate use of company assets.
Roush named the Baltimore-based
risk and business consulting firm Protiviti as the receiver,
and ordered KMC to be turned over to the firm for liquidation
proceedings to begin.
Evidence of the corporations
mismanagement included using KMC assets to embellish the
estates of company leaders, while allowing other assets to
languish unproductively, the judge said.
The decision was the culmination of
years of wrangling between shareholders of KMC.
End of an era: KMCs assets, including the magnetic
house (pictured above) constructed at the Ridge East
2009 are now in the hands of the receivers.
The case continues
A week after the court issued its ruling, IM
learned that the company had filed a Notice of Appeal with the
Virginia Supreme Court. KMCs lawyers later confirmed that
they would be appealing Roushs decision and said that the
dissolution of the company would stop if an appeal is
Hank Jamerson, KMCs vice
president for sales and marketing explained that KMC, and its
holding company, the Disthene Group, was two years into
an on-going legal dispute between its controlling and minority
This dispute is
unfortunate, Jamerson said, insisting that as it
has done for the last seven decades, KMC will continue to meet
the needs of its global customer base, look out for the
interests of its employees and meet its environmental and
community obligations well into the future.
Speaking outside the court,
KMCs former CEO, Gene Dixon Jr, spoke of his
determination to remain part of the Buckingham mining scene:
Weve been dug-in there a long time, he said,
adding, Were the same people weve always
Both Dixon and the plaintiffs
stressed that the courts decision is unlikely to affect
either mining operations or employment levels at KMC.
However, if the liquidation process
goes ahead, day-to-day operations at KMC will continue under
Protviti, which has the power to sell off assets Ð thought
to total around $200m - and analyse all operations of the
Years of litigation
The case against KMC was brought by three of the companys
minority shareholders - all of whom are related to the Dixon
family - who claimed that the actions of the majority
shareholders defrauded them and went against their
The lead plaintiff in the case is
86-year-old Marion Colgate, who was married to the now deceased
sister of KMCs founder, Gene Dixon Sr, and has spent a
decade litigating KMCs stock transactions and company
All we wanted all these years
was just to be treated fairly, Colgate told the
Richmond Dispatch local newspaper after the court
decision had been announced.
Amongst other conclusions drawn
from evidence heard during the three-week trial, the judge
found that KMCs company assets were used to pay premiums
on multimillion-dollar life insurance policies for the Dixons
in an effort to minimise the impact of estate taxes.
The court also found that the
majority shareholders retaliated against Colgate and others for
filing legal actions by refusing to value their stockholdings
at levels reflecting the companys true worth.
In her ruling, Roush said that the
actions of KMCs majority shareholders, Gene Dixon Jr, and
his son, Guy, the companys president, were
motivated not by the best interests of the corporation
but by their personal interest.
She added that the
corporation is controlled by a domineering shareholder who is
unlikely ever to treat the minority shareholders
Since being turned over to the
receivers, KMC has filed a request with the Virginia Supreme
Court to halt liquidation proceedings until the companys
appeal against the county courts decision has been
In its appeal, the Dixon family
asserted that it was willing to cut back on expenses and
address the management of the business to stay in control of
A Supreme Court decision on the
request had not been issued at the time of going to
A kyanite dynasty
KMCs operations were started in Buckingham County,
Virginia, US, in 1945 by the Dixon family, and it has remained
a private, family-run firm for three generations spanning
almost 70 years.
The company is currently the
leading international producer of kyanite, a mineral essential
to heat-resistant manufacturing processes such as steel making,
as well as casting, abrasives and ceramic applications.
Disthene controls a number of
kyanite surface mines in Buckingham County and is the
worlds largest producer of the mineral, which is used in
refractory linings for steel making, casting, abrasives and