TechnipFMC appoints new CFO ahead of proposed split

Alf Melin has been appointed the new CFO of TechnipFMC. He replaces Maryann Mannen, who is leaving to become the CFO at Ohio-based Marathon Petroleum Corporation.



TechnipFMC is in the process of splitting into two publicly-traded companies by hiving off Technip Energies, its Engineering & Construction business. The product business will be based in Houston, while the Energies business will have its head office in Paris.

Mr. Melin has been with the company since 1995 and is currently the Senior VP of Finance Operations. He has has direct oversight of the finance operations of the Subsea segment, He has held various operational roles and is a graduate of Lund University in Sweden. No compensation details were disclosed.

Ms. Mannen joined FMC Technologies in 1986 and was its CFO between March 2014 and January 2017. After FMC merged with Technip, she became the CFO of the combined business. At Marathon, she will receive a base salary of $925,000, a raise on her $803,000 base at TechnipFMC.

Marathon Petroleum is a downstream energy business owning refineries and the Speedway retail convenience stores. In 2011 it was spun out of its former parent, Marathon Oil, which is now an upstream exploration and production company, based in Houston.

SEC filing – TechnipFMC CFO

 

Famous Houston pastor gets 6 years for $3.5 million fraud

Kirbyjon Caldwell, a famous Houston pastor, has been sentenced to 6 years in prison for conspiracy to commit wire fraud. Caldwell was ordered to pay restitution in the amount of $3,588,500, as well as a fine of $125,000.



Mr Caldwell built up Windsor Village United Methodist Church in SW Houston into a 18,000 member mega church and was a spiritual advisor to President Bush. He offered the benediction at both his inaugurations and officiated at the wedding of President Bush’s daughter, Jenna. He was also a spiritual advisor to President Obama.

Former Investment Banker

Caldwell is a former director at Continental Airlines (until 2011) and NRG Energy (he left the board one month after he was indicted in 2018).  He was also a minority owner in the Houston Texans until recently. Prior to becoming a pastor he was an investment banker on Wall Street and worked for a bond firm in Houston. He has a master’s degree from Wharton School of Business.

The fraud scheme

Caldwell was charged along with Gregory Smith, a Shreveport-based investment advisor. Smith pleaded guilty in July 2019. Smith was also sentenced to 6 years back in November.

Between April 2013 and August 2014, Caldwell and Smith raised $3,588,500 from 29 investors through a fraudulent offer and sale of various pre-1949 Chinese bonds. Caldwell and Smith falsely represented to these investors that the bonds were safe, risk-free, worth tens, if not hundreds of millions of dollars and could be sold to third parties. In reality, the bonds have no investment value.

The Chinese government doesn’t recognize the validity of bonds issued prior to the communist takeover of 1949. It has never paid out on any of these bonds, except once in 1987. As part of the negotiations over Hong Kong, the Brits received 36 cents on the dollar. The US courts have generally said that the People’s Republic of China can assert sovereign immunity in not paying these debts.

Caldwell kept approximately $0.9 million and used it to pay down personal loans, mortgages and credit cards. Smith received $1.1 million of the total monies raised.

Caldwell surrendered his clergy credentials before pleading guilty in March 2020.

At the sentencing hearing, Caldwell’s lawyers presented evidence that he has repaid his victims more than $4 million. They also pleaded for him to be confined to his home, rather than going to prison, citing his ongoing treatment for prostate cancer, as well his hypertension and the threat COVID-19 poses for those incarcerated with underlying conditions.

Caldwell was ordered to report to the Bureau of Prisons on June 22, 2021.

https://www.justice.gov/usao-wdla/pr/former-houston-texas-pastor-sentenced-federal-prison-his-role-multimillion-dollar

Oilfield services spin-off back on

TechnipFMC has announced that its plan to split into two is back on. The company first announced the split in August 2019 but put it on hold in March 2020 at the height of the pandemic.

The company intends to spin off 50.1% of its Engineering and Construction arm into a new public company called Technip Energies. This will have its headquarters in Paris and be listed on Euronext Paris.



Bpifrance, a 5% shareholder currently, has agreed to invest $200 million in Technip Energies to buy part of TechnipFMC’s remaining 49.9% stake. The ownership stake acquired will depend on average price of the shares of Technip Energies in the first 30 days after spin-off

The remaining business, primarily the production business that was formerly part of FMC, will still be called TechnipFMC and be headquartered in Houston.

The company has disclosed that Technip Energies will be spun off with net cash of $2.7 billion. TechnipFMC will have $1.7 billion of net debt. The current market cap of the combined business is $5.25 billion.

Goodwill impairment

FMC Technologies and Technip announced plans to merge in May 2016 and completed the merger in 2017. The total purchase price was $8.2 billion, including $5.2 billion of goodwill. Since the acquisition, the company has written off $3.4 billion of goodwill, though not all of that relates to the merger

Integration costs

The company spent $262 million on integration costs between 2016 and 2019. Since the separation was announced, the company has spent a further $99 million through September 2020 on separation costs. Impressively, in 2019, the company managed to spend $31 million on merger costs and $72 million on separation costs!

The company expects the separation to be completed in the first quarter.

https://investors.technipfmc.com/news-releases/news-release-details/technipfmc-announces-resumption-activities-toward-separation-two#

Houston woman charged in lottery fraud scheme

Gloria KIrk Edmonson, 75, of Houston has been charged for her involvement in a lottery fraud scheme. The case was filed in the Northern District of Alabama, where a couple of the victims lived.

She allegedly persuaded individuals, often vulnerable elderly individuals, to send money and/or valuable property via mail. The individuals were led to believe they had won the lottery and need only pay their taxes or fees to receive their winnings.



Edmonson deposited the money into bank accounts that she controlled. The funds were transferred to other accounts that her co-conspirators had access to via a debit card, which they used to withdraw cash from financial institutions in Jamaica.

The scheme ran from January 2019 to around December 2020. In February 2020, the FBI interviewed Edmonson as part of their investigation, but she alleged that she was herself a victim in the scheme.

The Victims

The location and amounts taken from the alleged victims listed in the indictment include;

  • $22,000 – Holt, FL
  • $7,000 – Jenkintown, PA
  • $10,000 – Brookhaven, GA
  • $10,000 – Normandy Park, WA
  • $7,500 – Cedartown, GA
  • $7,000 – Las Vegas, NV
  • $8,000 – Claypool, AZ

In one instance, an elderly individual from Greensprings, OH sent $500. The package was intercepted by the US Postal Inspection Service and returned to the individual. Subsequently, someone called the Sandusky County Sheriff’s Department posing as the son of the individual and requested a welfare check. Edmonson, or one of her unnamed co-conspirators, also sent a plumbing service to the victim’s home in attempt to regain contact.

Charges and Maximum sentence

A five-count indictment filed in U.S. District Court charges  Edmonson with one count of conspiracy, two counts of wire fraud, one count of mail fraud, and one count of conspiracy to commit money laundering.

The maximum penalty for conspiracy is five years in prison.  The maximum penalty for wire fraud, mail fraud, and the money laundering conspiracy is 20 years in prison.

Justice Dept – press release

Gloria Edmonson – Indictment

CEO departs oilfield services company

Holli Ladhani has left her role as CEO of Select Energy Services. She is replaced by Chairman and former CEO John Schmitz.



The company, which has its head office in the Galleria area, provides water management solutions to the oil and gas industry. It went public in early 2017 and acquired Rockwater later that year for $620 million in an all-stock transaction.

In the first quarter of 2020, it wrote off all $267 million of goodwill associated with that transaction. The company has a market capitalization of $422 million. Unusually, as of September 2020, the company had cash on hand of $185 million and no debt.

Prior to the Select/Rockwater merger in November 2017, Mr. Schmitz was the CEO of Select and Ms. Ladhani was the CEO of Rockwater. After the deal closed, Mr. Schmitz became executive Chairman.

Ms. Ladhani joined Rockwater as CFO in 2011 and became CEO in May 2015. Prior to that, she  had been the CFO of Dynegy.

Ms. Ladhani will receive a cash severance of $3.2 million. That appears to be 2x base salary ($725,000) plus 2x target bonus ($725,000) plus her earned bonus for 2020.

SEC filing – Select Energy CEO transition

Southwestern Energy CFO dies suddenly

Julian Bott, the CFO of Southwestern Energy, has died suddenly after experiencing a sudden non-COVID related medical condition.

The E&P company has its head office in Spring. It has its operations in the Marcellus shale region in Appalachia. Mr. Bott joined the company as CFO in February 2018, having previously been the CFO at Sandridge Energy, based in Oklahoma City.

Southwestern has appointed Michael Hancock, currently VP Finance and Treasurer, as its interim CFO. He joined the company in 2010.

https://www.businesswire.com/news/home/20210104005810/en/

 

 

Blank check company completes acquisition of online gaming business

Landcadia Holdings II, a blank check company launched by Tilman Fertitta, has completed its acquisition of Golden Nugget Online Gaming (GNOG). The transaction was originally announced in June 2020.

Landcadia II went public in May 2019. GNOG was a subsidiary of Landry’s the restaurant and casino business owned by Mr. Fertitta.



Currently GNOG is involved in online casino gaming in New Jersey, where it has a 13% market share. It is planning to expand into Pennsylvania, Illinois, Michigan and West Virginia, where online betting is now legal. It is not planning to enter the sports betting market, where DraftKings is dominant. GNOG may be precluded from betting on NBA games as Mr. Fertitta also owns the Houston Rockets.

For the nine months ending September 2020, GNOG had revenues of $68 million and operating income of $22.5 million. Revenues and operating income are up about 75% on the comparative period.

Consideration

Landcadia II is paying $542 million for GNOG., This includes $314 million in equity, $30 million in cash and $150 million repayment of debt owed by GNOG. There is also $48 million of consideration in the form of debt repayment fees and a tax receivable agreement. GNOG is also taking on $300 million of debt which was used to fund a capital distribution to an affiliate of Mr. Fertitta.

Mr. Fertitta owns 11.3% of the equity post-close. However, due to the dual class structure, he owns 79.9% of the voting rights. Jefferies, the financial partner of Mr. Fertitta, received a $11.1 million underwriting fee as a result of the transaction. It will also receive fees of $3.75 million for being the exclusive financial and capital markets advisor.

Management

Mr. Fertitta will serve as the Chairman and CEO of GNOG. Thomas Winter will be the President. He joined Landry’s in 2013 as the General Manager of the online gaming division He has a lot of experience in online gaming gained in Europe.

Michael Harwell will be the CFO, subject to gaining regulatory approval from the New Jersey Division of Gaming Enforcement. He was the Chief Accounting Officer of Independence Contract Drilling until May 2020.  However, he worked for Landry’s for seven years prior to that.

Landcadia III

Landcadia Holdings III, the third blank check company launched by Mr. Fertitta and Jefferies, went public in October.

SEC filing – Golden Nugget Online Gaming

 

 

 

E&P CEO leaves with a large severance weeks after bankruptcy

Tommy Nusz, the CEO of Oasis Petroleum, has retired. He has been replaced, on an interim basis, by Chairman Douglas Brooks, the former CEO of Energy XXI and Yates Petroleum.



Mr. Nusz founded Oasis in 2007 and the company went public in 2010. Most of the company’s operations are in the Williston Basin of North Dakota and Montana It also has operations in Delaware Basin in Texas. The company has its head office in downtown Houston. At its peak in 2014, its market capitalization was almost $6 billion.

Oasis filed for a pre-packaged bankruptcy on September 30, 2020. Unsecured loan note holders swapped $1.8 billion of debt for 92.5% of the equity in the newly-reorganized company. Existing shareholders were diluted down to 7.5%.

Mr. Nusz was Chairman and CEO prior to bankruptcy. After the company exited from Chapter 11 in early November, he remained on the Board of Directors. However, because he was no longer Chairman, it was deemed a termination for good reason following a change of control, under the terms of his 2018 employment contract.

That means Mr. Nusz gets a change of control payment of 2.99 times base salary of $881,250 plus 2.99 times average bonus paid in the previous two years. In the 2019 proxy statement that total came to $5.4 million. He will also receive a target bonus for 2020 which is probably another $984,000 (based on the 2019 target bonus) .

Mr. Nusz has also stepped down as a director of Oasis Midstream Partners, the publicly-traded MLP controlled by Oasis Petroleum. The midstream entity was not part of the bankruptcy proceedings.

SEC filing – Oasis Petroleum CEO change

 

 

ION Geophysical agrees to out-of-court restructuring

Poseidon

ION Geophysical, based in west Houston, has reached agreement with 84% of its senior note holders for a debt-for-equity swap that will reduce debt by up to $120 million. The deal was made without going through Chapter 11 restructuring.



The company was originally an offshore seismic data provider. More recently, it has been trying to grow its business in mission critical software to optimize vessel movements and operations.

The company has debt, net of cash, of $92 million and negative shareholders’ equity of $61 million. It has $121 million of loan notes due in December 2021. The agreement calls for these notes to be redeemed for $18 million of cash and $107 million of new convertible notes due in 2025.

If all the loan note holders convert, the company will no long-term debt and equity of $73 million. At the midpoint of the conversion price range, the loan note holders will own approximately 74% of the proforma equity. Existing shareholders will be diluted down to 21%. The remaining 5% is from a $25 million rights issue the company is planning to make. The company expects that most of the participants in the rights issue will elect to receive loan notes rather than equity.

ION has relatively new senior management. CEO Christopher Usher was appointed to the role in May 2019, though he joined the company in 2012. Mike Morrison has been interim CFO since his predecessor, Steve Bate, retired in February. Mr. Morrison joined the company back in 2002.

[Update 12-29-20 The company issued an 8-K announcing that Mr. Morrison was appointed CFO back in September. Oops. Base salary $300k]

ION’s largest shareholder is China National Petroleum Corporation, who own 10.6% of the stock.

SEC filing – ION Geophysical restructuring – Project Poseidon

Small E&P company agrees to reverse takeover

Camber Energy has agreed to buy 51% of Viking Energy for $20 million. Both E&P companies are based in Houston, with Camber traded on the NYSE and Viking traded over-the-counter. The deal is effectively a reverse takeover as it’s the Viking management who will be running the show post-close.



Camber Energy used to be called Lucas Energy and went public in 2006. It’s had a troubled past. The strangest event was in October 2011 when the then-CEO made an acquisition for $22 million without telling the Board or making it public. The issue only came to light a year later when the seller sued for payment that was due in November 2012.

Camber has effectively been a shell since selling its main operating assets in 2019. In June 2019, it announced a reverse takeover by Lineal Holdings, an oilfield construction company. The deal closed but had to be unwound on December 31, 2019 as it did not meet NYSE listing requirements

Viking deal

The Viking deal was originally announced in January 2020, though in a different form. In the original version, Camber would have issued shares to Viking shareholders so that the latter would own 85% of the combined group post-closing.

Instead the revised deal calls for Camber to pay $20 million in cash. This is financed by $9.2 million cancellation of debt owed to Camber by Viking. Camber had lent money to Viking earlier in 2020 to enable Viking to close on an acquisition of 123 wells in Texas and Louisiana.

The remaining $10.8 million was paid in cash and funded by a new loan from Camber’s preferred shareholder.

James Doris, the CEO of Viking, has been appointed the CEO of Camber. Frank Barker, the CFO of Viking, becomes the CFO of Camber. Louis Schott, former interim CEO and Robert Schleizer, the former CFO of Camber, have stepped down. Each was paid a bonus of $150,000.

Fake CFO

Viking Energy was the subject of my most bizarre post I’ve written in this blog.  In September 2019, the SEC announced fraud charges against a former CEO for creating a fake CFO.

SEC filing – Camber Energy Viking acquisition