Tellurian appoints Investment Banker as its new CFO

Tellurian has appointed Simon Oxley as its new CFO. He replaces Kian Granmayeh, who resigned in March to become the CFO at Carriage Services, another Houston company. Khaled Sharafeldin, who was interim CFO, reverts back to previous role of Chief Accounting Officer.

Tellurian is trying to build an LNG export plant in Driftwood, Louisiana and needs about $13 billion in financing to do so. It had agreements in place last year with Shell and Vitol for each to buy 3 million metric tons a year. Those deals fell apart.  It’s only deal currently is a similar-sized deal with Gunvor. However, Gunvor can walk away anytime as Tellurian missed a February deadline to secure financing.

It seems that higher interest rates and the tightening credit markets are causing the banks to push for more equity funding in the project. Tellurian has said it is seeking equity partners willing to invest about $2 billion to $2.5 billion.

Mr. Oxley is based in London and is the Managing Director and Co-Head of Oil & Gas Investment Banking for Europe, Middle East and Africa at Barclays Investment Bank. In that role, he led a number of liquified natural gas (LNG) related transactions. That experience will be invaluable for Tellurian. Mr. Oxley has a Chemical Engineering degree from Edinburgh University.

Mr. Oxley will receive a base salary of $525,000. He also receives 200,000 shares of common stock (current trading price $1.32). He will also receive a grant of 200,000 shares of restricted stock that will vest upon a final investment decision for Driftwood.

It’s not clear whether Mr. Oxley will relocate to Houston. I guess he will remain in London in the short term as the company has upcoming deadlines. Last month, Tellurian said it entered into a binding letter of intent (sounds like an oxymoron) with an unnamed institutional investor for the sale and leaseback of 800 acres at Driftwood for $1 billion.  However, the deal is contingent on Tellurian securing financing commitments for Phase 1 by July 14.

The land at Driftwood was bought for $52 million and construction-in-progress was $351 million at March 31, 2023. So it’s understanding that the sale-leaseback is contingent on the project getting financed.

SEC filing – 8-K Oxley appointment

Mattress Firm to be acquired for $4 billion

Source: Social Woodlands

Tempur Sealy, based in Kentucky, has agreed to buy Mattress Firm, based in Houston for approximately $4 billion. The purchase price consists of $2.7 billion of cash and $1.3 billion in stock.

Mattress Firm was a public company until it was acquired by Steinhoff, a South African company, in September 2016 for $2.4 billion. The following year, Steinhoff was hit with an accounting fraud (not involving Mattress Firm) and, in October 2018, Mattress Firm filed for Chapter 11 bankruptcy. It exited 48 days later, having shed 640 uneconomic leases.

Ironically, one of the contributing factors in the bankruptcy was that Mattress Firm and Tempur Sealy had a spectacular falling out in February 2017, that caused revenues to fall significantly. A new supply agreement with Tempur Sealy was signed in 2019, allowing Tempur and Sealy beds to be sold in Mattress Firm’s stores again.

Post-bankruptcy, Steinhoff owns 50.1% of the common stock whilst creditors that provided the exit financing owned the rest (prior to dilution due to management equity).

Revenue grew from $3.3 billion for the year ended September 2020 to $4.4 billion in each of the following two years. For the 12 months ending March 2023, revenues fell 9% over the comparable period to $4.2 billion as consumer spending shifted towards services. It currently has 2,329 stores ($1.8 million revenue per store).

The transaction values Mattress Firm at 9.3 times adjusted EBITDA. In addition, Tempur Sealy expects to generate $100 million in annual savings by year 4.

Mattress Firm filed to go public in January 2022 but withdrew its filing a year later, having incurred $10.5 million in costs.

The deal is expected to close in the second half of 2024.

Another Houston SPAC dissolves

Another Houston SPAC (Special Purpose Acquisition Company) has dissolved and return the monies raised during its IPO to the shareholders. This time, it is Newhold Investments II which went public in October 2021 in an IPO that raised $175 million.  In February, three Houston SPACs dissolved.

The company was targeting businesses involved in advanced robotics, the Internet of Things, Software as a service with machine learning or new energy technologies.

In a press release, the company said they looked at over 130 companies and signed over 30 NDAs. It conducted due diligence on several. The company came close to announcing a merger partner in April 2023 but market conditions prevented the company from securing the minimum cash needed to proceed.

The company was led by Kevin Charlton, who had taken a number of SPACs public in recent years. He had also worked for McKinsey, NASA and JP Morgan in his career.

One of the SPACs taken public was Newhold Investments I. It raised $150 million in July 2020 and took Boston-based Evolv Technologies public in July 2021 in a deal that valued the business at $1.25 billion. Evolve is a leader in AI touchless security screening. However, its current enterprise value is only $335 million.

SEC filing – Newhold Investments II

Baytown woman admits to embezzling $3m from employer

Judy M. Green, of Baytown, admitted embezzling over $3 million from her employer over a 10 year period. She pleaded guilty to wire fraud and will be sentenced in August. Ms. Green faces up to 20 years in prison as well as a $250,000 fine.

Her employer, Liqua Tech services commercial properties and focused on roofing, siding and building maintenance for those properties. Ms. Green was hired in 1994 and served as the primary and often only manager of accounts payable for the company.

As part of her duties, Ms. Green received and entered invoices and presented them to the owner for her signature or approval for payment. She would then produce the physical checks for the owner to sign as Ms. Green did not have signature authority.

Beginning in December 2011 and continuing until July 2022, Ms. Green devised a scheme to divert funds for her own personal use. She began to create fake invoices in the name of legitimate vendors. Once she got those invoices approved by the owner, she would change the payee name in the accounting system to one of her or her children’s credit card companies.  She would then physically print the check, forge the owner’s signature and mail the check to the credit card company to cover her personal debts. Ms. Green would then go back in the system and change the payee back to the original listed vendor.

The scheme was uncovered In the summer of 2022 when the owner noticed a large payment to an unknown credit card company.

Expro to pay $8m to settle Angola bribery allegations

Expro Group has settled with the SEC over allegations that Frank’s International paid bribes to Angolan officials between 2008 and 2014. Expro merged with Frank’s in 2021 in a deal that valued Frank’s at $742 million.

Expro has agreed to pay $4.2 million which represents the profits made by Frank’s on the Angolan contracts after Frank’s completed its IPO in 2013. In addition, Expro will pay $0.8 million in interest and $3 million in penalties.

Frank’s primarily supplied tubular services and technology used in deepwater drilling. Starting in 2007, it tried to increase its business with the ultimate end customer, Sonangol, the state-owned Angolan oil producer. Initially, Sonangol directed Frank’s customer to use a competitor to Frank’s that made a bigger investment in Angola.  But a senior Sonangol executive said they could change its mind if Frank’s established a consulting company and paid five percent of the value of the contract to the consulting company for the benefit of high-ranking Sonangol officials.

Instead of creating a consulting company, Frank’s hired an agent in Angola in November 2007 without a contract in place. The first payment was made in January 2008. Towards the end of 2008, the Frank’s CFO and Chief Accounting Officer started asking questions about the commission payments, which, at that point, amounted to $688,000. The regional senior management then approved a back-dated contract.

In 2011, a new agency agreement was created. This provided for a 10% sales commission, although only 2.2% was actually paid in commissions, with the rest being used for bribes.

Between 2008 and 2014, Frank’s paid the Angolan agent approximately $5.5 million from Frank’s Angolan Operations, a portion of which was paid to the senior Sonangol executive. Frank’s received at least $4,176,858 in post-IPO net profits from its contracts with oil companies where Sonangol was the ultimate customer and for which the Sonangol executive possessed decision-making authority.

Frank’s self-reported the issue to the SEC and Department of Justice in 2016 and Expro made a reserve of $8 million, that was recorded as an additional liability on the acquisition of Frank’s.


Amplify Energy appoints new CFO

Amplify Energy has appointed Jim Frew as its new CFO. He replaces Jason McGlynn who resigned last month to become the CFO at Monarch Bioenergy.

Amplify Energy was formed in 2019 from the all-stock merger of Tulsa-based Midstates Petroleum and what was Memorial Production Partners. It has its head office in downtown Houston.

The company primarily operates mature wells in Oklahoma and East Texas, though last week it announced that it had received the required regulatory approvals to restart its operations in offshore Southern California. See my post last month for the background on this.

Previously, Mr. Frew worked for Linn Energy between 2011 and 2018 in Business Development and as VP of Marketing and Midstream. He was the CFO of Riviera Resources, which was spun out of Linn, from August 2018 to October 2020. Linn Energy grew rapidly by acquisitions between 2007 and 2014 before filing for bankruptcy in 2016 with debts of over $8 billion. Riviera ended up selling all its assets and liquidating itself (outside bankruptcy) in 2020.

Mr. Frew and Martyn Willsher, the Amplify CEO, worked together at JM Huber earlier in their careers. Most recently, Mr. Frew was a Partner in Sentinel Petroleum, a privately-held operator of wells in the Western Anadarko Basin of Oklahoma.

Last month, Amplify appointed Dan Furbee as its new COO. He, too, was a partner in Sentinel Petroleum and also worked at Linn Energy and Riviera Resources.

Mr. Frew will receive a base salary of $364,000

SEC filing – Amplify Energy – new CFO

Houston SPAC to take biotech company public

Graf Acquisition IV, based in The Woodlands, is to take NKGen Biotech public, in deal that values the company at $160 million.

NKGen is based in Santa Ana in California and is developing cell therapies for possible treatment of Alzheimer’s and Parkinson’s diseases and other neurodegenerative and oncological diseases. The company is currently owned by NKMax, a public company based in South Korea.

Graf Acquisition IV went public in May 2021 in an $150 million Initial Public Offering. It had two years to complete a deal or otherwise return the money to shareholders. That date could be extended by shareholder agreement. Graf is now planning an extension to September 2023, by which time the deal with NKGen should be completed.

The first Graf Acquisition special purchase acquisition company (SPAC) went public in October 2018. It took Velodyne Lidar public in September 2020 in a transaction that valued the business at $1.6 billion. The San Jose-based company, which makes radar-like sensors used in autonomous vehicles, had a rocky life as a public company. The original founders clashed with the SPAC and were ousted. Its technology began lagging its competitors. Velodyne Lidar merged with Ouster, another lidar company, in February 2023 in a deal that valued Velodyne at just $200 million.

Graf Acquisition IV was formed by blank check veteran James Graf. Mr Graf has served as a founder and executive officer or director of 6 SPACs. Prior to Velodyne Lidar, Mr Graf’s blank check company acquired Williams Scotsman, a business providing modular space solutions, for $1.1 billion.

Graf Acquisition II and III each filed for initial public offerings in 2021 but never completed their IPOs.

CFO of struggling food company steps down

Todd Mitchell, CFO and COO of RiceBran Technologies has resigned to pursue another opportunity. The company has appointed Bill Keneally to serve as interim CFO.

RiceBran has its head office in Tomball. It converts raw rice bran into stabilized rice bran and derivative products such as rice-based proteins.

The company has revenues of $42 million. It hasn’t made an operating profit for at least 15 years. The company has a market capitalization of $6 million as well as net debt of $6 million.

After its most recent quarterly results, the company announced it was undergoing a strategic review of all possible alternatives to generate improved returns to its shareholders.

Mr. Mitchell was appointed CFO in July 2019 and added the COO role in December 2021.

Mr. Keneally, who is based in Atlanta, is actually employed by CXO Partners, a consulting firm that specializes in placing C-suite executives on an interim basis. The agreement is on a month-to-month basis. RiceBran will pay CXO $45,000 a month.  The services covered include assisting in the preparation of SEC filings and maintaining the data room.

SEC filing – 8-K RiceBran CFO

CFO of W&T Offshore to leave

Janet Yang, CFO of W&T Offshore, has resigned, effective May 11, 2023 as she is relocating to another city for family reasons. Trey Hartman, currently Chief Accounting Officer, has been appointed interim CFO. The company will conduct a permanent search for her successor.

W&T Offshore holds working interests in 47 offshore fields in the Gulf of Mexico. It has a market capitalization of $741 million.

Ms. Yang joined the company in December 2008 as a Finance Manager. She was appointed Acting CFO in August 2018. Her position became permanent three months later.

Mr. Hartman joined the company in April 2021 and was promoted to his current role in May 2022. He has previously been the Controller at Sheridan Production and Halcon Resources (that company appointed a new CEO this week) and Assistant Controller at Petrohawk (before and after its takeover by BHP).

SEC filing – WTI CFO departure

Battalion Oil appoints new CEO

Battalion Oil has appointed Matt Steele as its new CEO, replacing Rich Little who leaves after nearly four years in the role.

The company is based in NW Houston and has working interests in approximately 40,000 net acres in the Delaware Basin. Its market capitalization is currently $108 million. Unfortunately, it also has $182 million of net debt that carries an interest rate of over 12.5%.

The company was formerly known as Halcon Resources. It went into bankruptcy in August 2019. The company emerged in October 2019, having eliminated over $750 million of debt. In return, the debt holders got 91% of the newly reorganized equity. It changed its name to Battalion in January 2020.

The new CEO, Mr. Steele, founded Bruin E&P Partners in 2015. The company bought Halcon’s Bakken assets in 2017 for $1.4 billion. It filed for Chapter 11 bankruptcy in July 2020. Mr. Steele left when the company was sold to Enerplus in March 2021 for $465 million.

Mr. Steele will receive a base salary of $250,000, considerably lower than his predecessor ($500,000) and new CFO, Kristen McWatters, ($300,000) who joined in January. He will also receive the opportunity to earn unspecified incentive compensation bonuses.

Mr. Little will receive a severance payment of $1 million.

SEC filing – 8-K Battalion Oil CEO