Pressure is mounting on a Houston oil equipment builder to return $10 million in federal funding intended for small businesses after a corporate watchdog group revealed Wednesday that a business entity controlled by Purdue Pharma’s Sackler family is the company’s largest shareholder.
Piton Capital Partners, a company managed by Sackler family investment fund Kokino, owns a nearly 12 percent share in Gulf Island Fabrication. The billionaire family also controls one of 10 board seats in the company through Kokino portfolio manager Robert Averick.
Gulf Island received a $10 million loan in April through Congress’ Paycheck Protection Program. The federal program offers forgivable loans to small businesses with the agreement they do not lay off their employees during the pandemic.
Public Accountability Initiative, a corporate watchdog group based in Buffalo, N.Y., first reported the Sackler family connection to Gulf Island in a report published Wednesday. Members of the Sackler family founded and own Purdue Pharma, the Stamford, Conn.-based maker of the highly addictive opioid OxyContin that was a target of numerous lawsuits in the wake of the nation’s opioid crisis. The family, which Bloomberg estimated to have a net worth of $13 billion in 2018, is not involved in the day-to-day operations of Gulf Island, however.
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“The PPP was created to help struggling small businesses, not big corporations with access to major investors and borrowing capacity,” said Derek Seidman, a research analyst with Public Accountability Initiative. “A worldwide leader in the energy industry should not be taking bailout money that small struggling businesses desperately need.”
Gulf Island, which has a market value of nearly $43 million, is the latest publicly traded company facing scrutiny for requesting and accepting a PPP loan. Other firms that have come under fire for taking federal funding earmarked for small businesses include Ruth’s Hospitality Group, the parent of Ruth’s Chris Steak House; New York-based hamburger chain Shake Shack; and Houston-based Luby’s Inc. Ruth’s and Shake Shack have returned their PPP money. Luby’s has not said what it plans to do with its loan proceeds.
Gulf Island, which makes ships and heavy equipment for offshore oil and gas drilling, was asked this month by House Democrats to return its $10 million loan and “allow truly small businesses — which do not have access to alternative sources of capital — to obtain the emergency loans they need to avoid layoffs, stay in business and weather the economic disruption caused by the coronavirus crisis,” according to a letter sent by the House Select Subcommittee on the Coronavirus Crisis to Gulf Island on May 8.
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The company reported $48.6 million in cash and access to a $40 million revolving line of credit during its most recent quarter that ended March 31. The company, which has more than 900 employees, reported a loss of nearly $49.4 million and revenue of $303 million in 2019.
Gulf Island did not respond to requests for comment. The Sackler family did not respond to a request for comment. Averick, the portfolio manager of Sackler family investment firm Kokino and a member on Gulf Island’s board, declined to comment.
Anita Mancini, who with her husband owns Bugs Inc., an insect extermination company in Katy, said she is angry that large corporations are taking federal dollars earmarked for small businesses like hers. The Katy resident applied for a PPP loan last month but had to wait six weeks before receiving a $61,000 loan on May 11, enough to cover two and half months of payroll for her seven employees.
“That $10 million that’s going to one company could have helped 100 small businesses,” Mancini, 52, said. “It’s despicable that companies are taking more than their fair share. These are companies you rely on to step up and put money in when you’re in a crisis, not take it out.”
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