Bus Shelter Firm Sees Signs of Hope : Advertising: Metro Display’s ad sales are up. And a new deal with a major billboard firm could also buoy it.
A year ago, Metro Display Advertising was beset by the kind of problems that would have sent most companies into oblivion.
The bus shelter company filed for bankruptcy after federal regulators alleged that the founder had actually devised a Ponzi fraud scheme, which resulted in the FBI searching company offices. Advertising sales were dismal and hundreds of investors were clamoring for their money back.
The company is now run by new managers who are hopeful that their latest reorganization plan will lift the 9-year-old company out of bankruptcy. Advertising sales are up and Metro Display has just signed a joint venture deal with a prominent billboard company.
“We’re trying to market shelters on the upscale approach,” said Scott Kraft, company president and a onetime investor in Metro Display. Since the new management took over, about 30% of the Tustin company’s 2,600 shelters have paid advertising compared to only 10% a year ago.
Metro Display, which also did business as Bustop Shelters of California, was one of the leading firms in the fast-growing bus shelter business. Cities across Southern California have contracted with companies like Metro Display to plant their shelters on major streets for the benefit of bus riders. In return, Metro Display sells the advertising space--a lucrative proposition in affluent cities that limit billboards.
Unlike its competitors, however, Metro Display founder Jean Claude LeRoyer sold shelters as investments for about $10,000 each. More than 1,100 people signed up, including many elderly who put their nest eggs into the investments.
Kraft defended LeRoyer last year to angry fellow investors. Now Kraft says he has changed his mind.
“This was a Ponzi scheme. There is no doubt,” Kraft said Tuesday in an interview. The company severed ties with LeRoyer and is now suing him.
LeRoyer, reached for comment, maintains that the allegations are “nonsense.” He has never been charged with any crimes.
“Our life has been ruined by those people,” he said of Metro Display managers. “That company was my life. I feel they took everything from me.”
Under the reorganization plan, shelter owners would become stockholders in a debt-for-equity swap. The company’s largest investor, La Jolla anesthesiologist Allan Ross, would loan the company up to $800,000 to cover back payments owed to cities and would be first in line to be paid in the event that Metro Display was ever liquidated.
The loan will take care of Metro Display’s immediate debts. The joint venture is aimed at long-term growth. Under the agreement, the billboard firm VW Martin Co. of Los Angeles would concentrate on advertising sales, while Metro Display would handle operations for both billboards and bus shelters, Kraft said.
