Thor Cos., the Minneapolis-based construction firm that is the state's largest minority-owned company, has run into financial trouble just months after it celebrated its move into a new North Side headquarters partly funded by Hennepin County.
Thor Companies running into a financial bind
Target has paid millions to help minority-owned contractor dig out of crisis.
January 17, 2019 at 4:48PM
Target Corp., which long has used Thor on store projects and holds a lease on Thor's office space, has provided millions in assistance to pay subcontractors of Thor and forgiven nearly $300,000 in unpaid rent. On Tuesday, Hennepin County commissioners learned that liens had been placed on the Thor building.
Thor's problems came to light in recent days after St. Paul-based Sunrise Bank, a Thor lender, moved to collect an overdue loan against the company in Ramsey County.
MEDA, the nonprofit minority business counselor and lender, has begun to work on a financial restructuring of Thor with Target and other interested parties, including Hennepin County, said MEDA CEO Gary Cunningham.
MEDA and Thor are also tenants in the new county-financed, $36 million office building and small-business center, called the Regional Acceleration Center, on Penn and Plymouth avenues N.
Cunningham said MEDA wants to find a solution for Thor outside of bankruptcy.
"Thor has cash-flow problems," Cunningham said. "We think there's an opportunity to right-size Thor and continue to operate. We're going to be here as partners with Target and others. Thor's demise is not a foregone conclusion. We are in negotiations with Sunrise Bank."
The future of Thor CEO Ravi Norman is unclear. Founder Richard Copeland, chairman of Thor, said Norman was at work Wednesday. Other Thor employees have been dismissed.
"It really started out as a dispute with Sunrise, but they have, and we have, come a long away," Copeland said. "A lot of people have leaned in when they heard we were having cash-flow issues with our bank. So it's a bunch of moving parts and things in the works, but we think there's going to be a very positive outcome and no disruption to business or projects."
Target said in a statement that the company "has been doing all that we can for the past few weeks to help Thor."
"Target paid more than $7 million that Thor owed to subcontractors who had worked on Target stores to ensure they were paid over the holidays," said the statement by Target spokeswoman Katie Boylan. "It's important to Target that anyone who works on our stores is paid on time, and we didn't want other local businesses to suffer because of the challenges Thor is facing.
"We are in close contact with Thor and plan to continue working with them to remodel Target stores in the Twin Cities throughout 2019. … Regardless of what the future brings with Thor, Target will continue to work with a lot of local partners to keep the vision of the Regional Acceleration Center alive for North Minneapolis. We have a long-term contract at the 'RAC' and will be part of the future of this space for years to come."
The depth of Thor's financial shortfall, and the reasons for it, are unclear.
Copeland, 63, founded Thor as a laborer in 1980 "with a shovel and a truck." He and Norman, a former banker, grew the developer-contractor to be Minnesota's largest minority-owned company, with revenue of $368 million, Norman said.
Thor said it would move more than 50 employees into the RAC from its headquarters in Fridley.
Hennepin County and Thor played roles in the three-corner development at Penn and Plymouth, including the new Estes Funeral Chapel and expansion of Northpoint Clinic, an affiliate of Hennepin County's nonprofit health care system. The new Thor headquarters and business incubator was inaugurated in September.
Hennepin County Administrator David Hough said the county invested $22 million in the RAC building and parking ramp. Thor and Target invested about $14 million, according to earlier statements. The county also invested in an adjacent parking ramp.
Hough said he was aware of Thor's financial situation and three liens totalling $211,000 against Thor on the the work on the building. The county put money in an escrow account to pay them off, he said.
Thor owns the entire building except for the fifth floor, which is owned by the county. Four hundred twenty of the parking spaces connected to the building are owned by Hennepin County, but another 130 are owned by Thor. The County Board discussed a minor administrative action relating to the parking ramp this week.
Commissioner Irene Fernando, who serves the district where Thor is located, said the projects happening at Penn and Plymouth contribute to a long-term positive vision for the North Side.
"My commitment is to keep community at the center of these conversations, while working closely with county staff and partners to ensure an orderly process moving forward," she said.
Staff writer Nicole Norfleet contributed to this report.
Neal St. Anthony • 612-673-7144 Andy Mannix • 612-673-4036 David Chanen • 612 673-4465
Correction: Previous versions of this article mischaracterized ownership of the Thor headquarters and its parking spaces. Thor owns the entire building, except for the fifth floor, which is owned by the county. Hennepin County will retain ownership of 420 parking spaces that had been scheduled to be transferred to Thor.
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