Workforce accommodation specialist appoints new CFO

Carolyn Stone has been appointed CFO of Civeo Corporation. She replaces Frank Steininger. He is staying on at the company as Executive VP of Strategic Initiatives until he retires in March 2020.



Civeo has its head office in downtown Houston. The company provides workforce accommodation services to the oil and gas and mining industries. It has operations in the US, Canada and Australia. The company has a market capitalization of $151 million, though its current share price is only 81 cents.

Ms Stone joined the company in May 2014 as its Controller and Corporate Secretary. Prior to joining Civeo, she was the CFO at Synagro. At that time Synagro was a Houston-based biosolids company that went in Chapter 11 in April 2013. Before that, Ms Stone spent many years working for Dynergy. She started her career at PricewaterhouseCoopers.

Compensation for Ms Stone was not disclosed.

Ms Stone’s appointment means that 10% of all Houston-area public companies have female CFOs. You can see the list of all the companies here.

https://www.businesswire.com/news/home/20191118005882/en/Civeo-Appoints-Carolyn-Stone-Chief-Financial-Officer

 

Marine vessel fabricator appoints new CEO

Gulf Island Fabrication

Richard Heo has been appointed the new CEO of Gulf Island Fabricators. He replaces Kirk Meche who stepped down in October.



The company is a fabricator of marine vessels with facilities in Houma and Lake Charles, Louisiana. It has its head office in west Houston and a market capitalization of $68 million.

The company has struggled in recent years as the market for offshore vessels has shrunk. The company is trying to diversify into onshore fabrication and other areas where project management skills are needed (such as offshore wind).

Prior to joining, Mr Heo was the Senior VP of North, Central and South America for McDermott International. He had previously served as VP of Fabrication Services for CB&I.

Mr Heo will receive a base salary of $487,000. He also receive an initial grant of 100,000 restricted stock units that will vest over 3 years (current price $4.47).

SEC filing – HEO appointment

 

Weatherford appoints new CFO

Christoph Bausch, CFO of Weatherford International, has resigned effectively immediately. He will be replaced by Christian Garcia, who will begin his new role on January 6, 2020.

Weatherford entered bankruptcy proceedings in July 2019. It is nearing an exit from Chapter 11 that will reduce debt by $6 billion. The bondholders will own 94% of the restructured company. 5% will be set aside for a management incentive plan. Existing shareholders will own the other 1%.



Mr Bausch has been CFO since April 2017. He will receive a severance package of $650,000 (one year’s salary) and a pro-rated bonus for 2019 (not sure how much this will be). Note also that he received a cash retention bonus of $1.3 million in April 2019.

Mr Garcia has been the CFO at Michigan-based Visteon Corporation for the past three years. However, prior to that, he spent ten years at Halliburton including 18 months as interim CFO. In fact, he replaced Mark McCollum, the current CEO of Weatherford, as CFO during Halliburton’s ill-fated proposed merger with Baker Hughes (2015-2016).  At the time of the proposed merger, Mr McCollum was appointed Chief Integration Officer. After the merger fell apart, Mr MCollum was reappointed CFO at Halliburton before becoming the CEO at Weatherford in March 2017.

Mr Garcia will receive a base salary of $675,000 and a one-time sign-on bonus of $500,000. He will also receive a long-term equity award of $2,000,000 that will vest over three years. These will be granted once the company emerges from Chapter 11.

SEC filing – Weatherford CFO

 

Houston biotech company appoints new CFO

CNS Pharmaceuticals, which just went public last week, has officially appointed Christopher Downs as its new CFO.



Mr Downs joins from Innovative Aftermarket Systems LP, a privately held provider of finance and insurance solutions where he was VP of Finance and Treasurer. Prior to that he spent 7 years at InfuSystem Holdings Inc, a provider of infusion systems to oncologists in the US. He is a West Point graduate and has an MBA from Columbia Business School.

CNS doesn’t have any revenues yet and is developing anticancer drugs for the treatment of brain tumors. Based on preclinical data and positive results of the Phase I clinical studies conducted at MD Anderson Cancer Center, the company believes its lead drug candidate, Berubicin, could significantly help in the treatment of glioblastoma, a type of brain cancer that is considered incurable.

The company raised $8.5 million (net of fees) by selling 2.1 million shares at $4, at the low end of its range of $4-$5. Mr Downs agreed to join in September, conditional on the Initial Public Offering being completed.

Mr Downs will receive a base salary of $300,000. He was also granted a 10-year option to purchase 30,000 shares at an exercise price equal to the public offering price per share of the shares sold in the IPO. Mr Downs, who has lived in Houston previously, but currently lives in Utah, will also receive a one-time relocation bonus of $15,000.

Mr Downs replaces Matt Lourie who was the part-time fractional CFO prior to going public.

SEC filing – CNS Pharmaceuticals – CFO

CFO out at Houston E&P company

Gleeson Van Riet has resigned as CFO of SilverBow Resources, effectively immediately. He has been replaced by Chris Abundis, currently General Counsel of the company. Mr Abundis will perform the CFO duties in addition to his current role.



SilverBow is based in west Houston and has a market capitalization of $148 million. The company operates in the Eagle Ford basin in South Texas. It was formerly known as Swift Energy which filed for bankruptcy in December 2015. After the company emerged from bankruptcy in April 2016, it changed its name to SilverBow.

Mr Van Riet was appointed CFO in March 2017. Prior to that he was the CFO of Sanchez Energy. For his severance package he will receive a payment of one year’s salary ($390,000) and one year’s target bonus ($292,500).  He will also receive an acceleration of time-based restricted stock units. These were valued at $85,000 at December 2018.

Mr Abundis joined the company in 2007 and has been the General Counsel since April 2016.

It’s not clear what triggered the departure of Mr Van Riet. The share price has halved since the start of the year, but that’s in line with other E&P companies. The company is not especially leveraged and generated a small positive free cash flow in the third quarter.

However the company did disclose a material weakness in internal controls in the second quarter pertaining to deferred tax accounting. This remained a weakness in the third quarter.

SEC filing – SilverBow CFO

 

Houston biotech company completes IPO

CNS Pharmaceuticals, a biotech company, has completed its initial public offering. It has its head office in the Galleria area. The company raised $9 million by selling 2.1 million shares at $4, at the low end of its range of $4-$5.

The company is listed on the Nasdaq with a ticker symbol ‘CNSP’ and has a market capitalization of $67 million.



CNS doesn’t have any revenues yet and is developing anticancer drugs for the treatment of brain tumors. Based on preclinical data and positive results of the Phase I clinical studies conducted at MD Anderson Cancer Center, the company believes its lead drug candidate, Berubicin, could significantly help in the treatment of glioblastoma, a type of brain cancer that is considered incurable.

Berubicin was discovered at MD Anderson by Dr Waldemar Priebe, the founder of the company. Dr Priebe initially licensed the drug to Reata Pharmaceuticals. However they allowed their investigative drug application with the US Food and Drug Administration (FDA) to lapse for strategic reasons.

The money, along with a $5.8 million grant given to a sub-licensee, partially owned by Dr Preibe, will be used to commence the Phase 2 trials of Berubicin.  However the company will need to raise a further $7 million to complete the trials.

CNS becomes the fifth Houston-area IPO this year, following Sunnova and Castle Biosciences in July, Landcadia Holdings II, and Soliton.

You can see the complete list of Houston-area public companies on my blog here.

https://www.prnewswire.com/news-releases/cns-pharmaceuticals-announces-pricing-of-initial-public-offering-300954480.html

 

 

 

Harris County judge charged with fraud

Judge Alexandra Smoots-Thomas has been indicted on allegations of wire fraud. Since 2009, she has served as the presiding judge for the 164th District Court for the State of Texas. She has jurisdiction of Texas civil cases located within Harris County.



Beginning in early 2013, the indictment alleges that Smoots-Thomas used funds donated to her campaign for personal expenses unrelated to the campaign. She then hid her misuse of these funds by filing false campaign finance reports with the Texas Ethics Commission and concealing her activity from her campaign manager.

The indictment lists 7 transactions for a total of $24,890 where Smoots-Thomas allegedly used the campaign account for personal use. $11,809 was used to pay a home mortgage and $9,942 to The Regis School for tuition. An airfare, a Prada handbag and a ring from Zales comprise the other transactions.

Each of the seven counts of wire fraud carries a possible sentence of up to 20 years in federal prison as well as a maximum $250,000 fine.

Smoots-Thomas was the presiding judge over the initial phase of the TechnipFMC – McDermott lawsuit involving COO Sumit Mukherjee. Smoots-Thomas was replaced as the judge on the case just before the parties were set to go to trial as she was diagnosed with breast cancer. She is still receiving treatment for the cancer.

Smoots-Thomas indictment

https://www.justice.gov/usao-sdtx/pr/local-judge-charged-fraud

Houston E&P company appoints new CFO

Penn Virginia Corporation has appointed Rusty Kelley as its new Chief Financial Officer, effective November 13, 2019. He replaces Steve Hartman, who is leaving the company as previously previously reported in July.



Penn Virginia filed for bankruptcy in May 2016 and moved its headquarters from Pennsylvania to west Houston as part of that process. It emerged from bankruptcy in September 2016.  In October 2018 the company announced that it would be acquired for $1.7 billion (including debt) by Denbury Resources. However that deal collapsed in March due to shareholder opposition.

Mr Kelley was previously the CFO of Extraction Oil & Gas, a public company based in Denver, from July 2014 to September 2019. Prior to that he worked as an investment banker for Moelis & Company and Goldman Sachs. He will have a base salary of $400,000.

Penn Virginia currently has a market cap of $411 million and an enterprise value of $933 million. That’s way below the $1.7 billion that Denbury agreed to pay. Given his investment banker background, I presume Mr Kelley has been brought in to help sell the company.

SEC filing – Penn Virginia new CFO

 

 

McDermott CFO resigns after worse than expected results

McDermott International has announced the resignation of CFO Stuart Spence, effectively immediately. Chris Krummel, currently the Chief Accounting Officer, has been promoted to the CFO position.



It’s been approximately two weeks since the company announced that it had obtained $1.7 billion in additional financing (at 12% interest rates) to tackle its liquidity crisis. In the same press release, the company also announced that the senior management were granted retention bonuses. Mr Spence was granted $1.3 million, with a third of that payable immediately.

McDermott announced third quarter results even worse than forecast last month in its refinancing presentation. Free cash flow for the quarter was a negative $146 million compared with negative $86 million in the presentation.

The SEC filing by the company makes no mention of the severance package, if any, that would be granted to Mr Spence. If he has truly resigned voluntarily he would be required to repay the retention bonus already paid out.

Interestingly, the company has signed contracts with the senior executives that only spell out severance payments in the event of a change in control. There is no formal provision for severance in the event of an involuntary termination without cause. When the predecessor to Mr Spence left in 2014 he received a lump sum payment of $640,000. His salary at the time was $515,000.

Mr Krummel joined the company in October 2016. He was previously the Chief Accounting Officer of Cameron International. No compensation was disclosed for Mr Krummel.

[Update 11-13-19 : McDermott has filed another 8-K. Mr Spence will receive a severance of $866,666.67. That’s the balance of the $1.3 million retention bonus not already paid out. His restricted stock units will also vest. They are valued at less than $100,000 with the stock price currently at 67 cents. His deferred consideration will also fully vest (worth approx $70,000).

Mr Krummel will be paid $600,000 a year.]

SEC filing – McDermott CFO resignation

Oilfield Services company misses interest payment as bankruptcy looms

Photo by Joshua Doubek

Key Energy Services has announced that it has engaged Moelis & Company as its financial advisor and Sullivan & Cromwell as its legal advisor to analyze various strategic alternatives. The company also elected not to pay interest on its $250 million term loan. The interest was due October 18, 2019. This caused a default on the loan.



On October 29, the company entered into forbearance agreements with its lenders in which the lenders agreed not to exercise any rights related to the loan default until the earlier of December 6, 2019 or the occurrence of certain early termination events.

Key operates the largest well service rig fleet in the US. It also provides fishing and rental tools, coiled tubing and fluid management services. It is based in downtown Houston.

For the six months ended June 30, 2019, the company had revenues of $222 million and a net loss of $42 million. At that date, it only had $6 million in equity.

2016 Bankruptcy

Key entered into a pre-packaged bankruptcy agreement in October 2016. As part of that deal, its $1 billion of debt was reduced to $250 million (due in December 2021). The term loan had an average interest rate during 2018 of 12.42%. No wonder the company is seeking strategic alternatives!

Big loss for Platinum Equity

$338 million of the original debt was owned by Platinum Equity, a large PE firm based in Beverley Hills. After the restructuring, Platinum ended up with 50% of the equity of Key. After emerging from Chapter 11, the total equity of the company was valued at $252 million. The current market capitalization is $10 million (47 cents per share). So Platinum is sitting on a big loss. Even their $2.75 million annual advisory fees are now in jeopardy. Platinum subsequently acquired $30 million of the term loan so they will have some say in the restructuring.

Goldman Sachs stake

Back in May, Goldman Sachs disclosed it owned 1.5 million shares, or 7.5% of the company. The shares were acquired between February and April 2019. At the time Goldman said it planned to engage with Key’s management and board to discuss issues including corporate structure, board compensation, dividend policy and transactions such as asset sales or mergers “as a means of enhancing stockholder value”. In June, Goldman disclosed it had reduced its stake to 4.4%.

Robert Drummond, the CEO at the time of the bankruptcy, left in May 2018 to become the CEO of Keane Group. They have just merged with C&J Energy Services. Later that year, Key tried to merge, in an all-stock deal with Basic Energy of Dallas. Basic rejected the merger offer.

SEC Filing – Key Energy loan default