For Jacob I. Bregman, the wheels really came off the cart in a hurry.
Two years ago, he was president and chief executive officer of Wapora Inc., a fast-growing, Chevy Chase-based environmental consulting and testing firm that was reporting record sales and profits and opening new offices across the nation.
By mid-1982, he was struggling to keep the company afloat in the face of plummeting sales and mounting losses.
"It wasn't a dip, it was falling off a cliff," Bregman said last June of the decline in contracts that forced Wapora to slash its payroll from 200 to about 75.
Now Bregman is out in the cold entirely. Wapora has a new owner, a new chairman and a new president, and Bregman is at home trying to figure out what happened.
He was forced out when a majority interest in Wapora was purchased, right out from under his nose, by a fast-moving New York entrepreneur named James Schirripa, who paid $2.50 a share for Wapora stock that was trading at less than $1. Schirripa, whose office is on Long Island, is now chairman of Wapora.
"I'm very bitter about it," Bregman said. "I started the company and I ran it for 12 1/2 years, and I think we made it a pretty good company." He said he quit after the controlling interest was sold because of "irreconcilable differences with Mr. Schirripa about the financial relationships between Wapora and its major stockholder."
The story of the change of regime at Wapora is remarkably complex for such a small operation.
Schirripa bought 472,519 shares, or 78 percent of Wapora's stock, from Wapora's former parent company, Alcolac Inc., a Baltimore chemical company. At $2.50 per share, that comes to more than $1.18 million, but Schirripa put up only $250,000 in cash and gave Alcolac a promissory note for the rest, according to sources familiar with the transaction.
Bregman and two other minority shareholders, former Wapora executive vice president William A. King and Wachtel & Co. investment broker John D. Sanders, didn't get $2.50 for their stock. They were left holding shares worth less than $1 on the open market and wondering, according to Sanders, "whether the interests of the minority shareholders were represented."
Sanders said he and Bregman themselves had spent six months trying to arrange financing to purchase the stock held by Alcolac, and were taken by surprise when "this guy from New York appeared all of a sudden."
Bregman said Alcolac declined even to consider offers from his group or from other outside purchasers before making its deal with Schirripa, whom he described as overextended financially.
One other prospective purchaser, Stewart Bainum Jr., vice chairman of the board of Quality Inns Inc., said he had considered buying Wapora as a "personal investment." He said he had made "several attempts" to contact Charles N. Anderson Jr., Alcolac's president, to find out the asking price for the Wapora stock, but "he never got back to me, and I assumed he was no longer interested in selling. That was in August--a month before the stock was sold." Anderson did not return telephone calls inquiring about the transaction.
Schirripa said he bought Wapora from Alcolac because "we are firmly convinced that it is a winner. It had some problems in how it was managed, but the next time you hear from us we'll be telling you that Wapora made a profit in the first quarter of 1983." Bregman, however, said Wapora is actually in "terrible" financial condition, and he predicted it would continue to lose money throughout 1983.
Wapora was born in 1970, when environmental consulting and testing were in their infancy, and grew steadily until the advent of the Reagan administration, with its stress on deregulation. It was created by Bregman with financing provided by the late Vsevolod Blinoff, an Estonian chemist who was chairman of the board of directors of Alcolac, and of its Wapora offspring, until his death in 1977.
After Blinoff died, Alcolac was acquired by a subsidiary of Rio Tinto Zinc, the giant British mining company. According to persons familiar with the company's history, Alcolac's holdings in Wapora were of little interest to Rio Tinto, and when Wapora started losing money, Alcolac decided to unload it.
For the six months ending in September 1982, Wapora reported revenues of $1.64 million, less than half the $3.46 million in the same period a year earlier, and an after-tax loss of 20 cents a share, against a profit of three cents the year before. Enter Schirripa.
Until a year ago, Schirripa, by his own account, owned only an obscure, $500,000-a-year environmental testing and consulting service called IHI, based in Huntington, N.Y. Then, he said, he "had the opportunity to purchase the Kemron division of Borg-Warner," which he acquired in what he called "a real good deal."
Overnight, he said, the renamed IHI Kemron Inc. "went from a half million -dollar company in one location to $3.5 million in six locations," working on industrial health, smokestack monitoring, water analysis, hazardous waste and other environmental issues.
He said he bought Wapora because "it will be a success" if it is "managed with an eye on current realities in environmental health," meaning it has to serve more commercial clients and depend less on government contracts.
The dependence on the federal goverment, he said, meant that Wapora "had too many eggs in one basket. If the federal government pulls your ticket, that's it." He said Wapora "needs to diversify into the industrial and commercial sector. It needs to be trim and lean and become a bit more aggressive in marketing. These done, it will be a success."
Robert France, who joined Wapora in 1980 as a vice president, has been elevated to president, and is in charge of day-to-day operations. He said the technical staff is intact and has a "very positive feeling" about the company.