Neil Young News
Neil Young part of group purchasing Lionel Trains
By Joel J. Smith, The Detroit News
Rock musician Neil Young is part of an investment group that is buying Lionel Trains Inc., the Macomb County maker of model and toy trains.
The Chesterfield Township-based toy maker, owned for the past 10 years by Detroit businessman Richard Kughn, will be sold Thursday to Wellspring Associates L.L.C. of New York.
The group is headed by Martin S. Davis, former chairman of Paramount Communications, and includes Young. Young, an avid model train hobbyist, has been involved for several years in a joint venture with Kughn to build remote controls that make it easier for handicapped people to use model trains. Young has two sons with cerebral palsy.
The controller they developed was introduced last November on some Lionel models. "It takes the model train from the antique into the 21st century," Young said in a 1994 interview.
Young founded a company with Kughn called Liontech Inc. to develop the remote controls and other technology for toy trains. The purchase price for Lionel was not disclosed. A spokesman for the new owners said they have no plans to change anything at Lionel, the world's leading manufacturer of toy trains and accessories.
"There are no plans to move the company," said the spokesman. "There are no plans for layoffs. Everything will remain as is." Kughn notified the company's 600 employees Monday by letter of the pending sale. He told them that the "time is right for me to step aside and turn over the reins of the business to an outstanding new management team.
"It is my belief that this strategic move is necessary to enhance the future growth, development and success of the business." Kughn said he will become a minority shareholder of the new company and will assume the title of chairman emeritus. The company will be called Lionel L.L.C.
Greg S. Feldman, managing partner of Wellspring Associates, said in a press release that Lionel Trains, with its tremendous name recognition, provides an excellent investment opportunity for his company.
"The company is highly profitable with a large and loyal customer base throughout the country, yet it has the potential to generate even greater returns in both the U.S. and abroad," said Feldman. "We look forward to capitalizing on the company's strengths while incorporating exciting new technology, marketing techniques and distribution systems to take Lionel to a higher level."
Kughn, a former executive with the Taubman Co., also owns The Whitney restaurant in Detroit and a one-quarter interest in Upper Deck, the largest maker of sports trading cards.
Kughn bought Lionel in 1986 when the company was struggling and its revenues were about $20 million a year. It since has returned to its former prominence as a leader in model-train building and revenues have tripled.
Lionel began making model trains in 1900 and at one time was the world's largest toy maker.
Copyright 1995, The Detroit News
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