Category Archives: Manufacturing

Houston company planning IPO sold for $1.2 billion

Ipsco Tubulars, a pipe maker that was planning an Initial Public Offering, has instead been sold to Tenaris, which has its head office in Luxembourg, for $1.2 billion.

Ipsco has its head office in NW Houston and is subsidiary of PAO TMK, a Russian company. TMK bought the assets of IPSCO for $1.7 billion through a two-part transaction in 2008 and 2009.

IPO postponed in Feb 2018

Ipsco originally filed for an IPO in January 2018. It had planned to raise $500 million by offering 23.3 million shares at a price range of $20 to $23. That would have valued the company at $1.3 billion. Unfortunately, on the day they were due to price in February 2018, the Dow fell 1,000 points and they postponed the IPO.

In December 2018, they updated their prospectus with the aim of trying again. They hadn’t yet filed revised terms before the announcement by Tenaris.



Acquisition by Tenaris

Tenaris was virtually no presence in Texas until it bought St Louis-based Maverick Tube for $2.4 billion in 2006 and Houston-based Hydril for $2.1 billion the following year.

For the nine months ended September 30, 2018, Ipsco had revenues of $1.1 billion and adjusted EBITDA of $124 million. Both of those numbers are up 50% on the corresponding period in the previous year.

Tariffs and local competition changed the dynamics

The 25% tariffs imposed by President Trump on imported steel enabled Ipsco to raise prices to its customers. Its primary material input for its seamless steel pipe is steel scrap. Prices for scrap were not significantly affected by the tariffs, allowing Ipsco to expand margins. However, the tariffs caused Ipsco to reduce imports sourced from its Russian parent.

Tenaris recently completed a new $1.8 billion pipe mill in Bay City and thus increased its local competition to Ipsco. For these reasons, it appears the parent company decided they were better off selling Ipsco than going through with the IPO.

http://ir.tenaris.com/news-releases/news-release-details/tenaris-acquire-ipsco-tubulars-tmk

 

Building products company relocates HQ to North Carolina after merger

NCI Building Products (market cap $730 million) has completed its stock-for-stock merger with North Carolina-based Ply Gem. The deal was originally announced in July. NCI manufactures building products for commercial construction whereas Ply Gem does the same for residential.

The corporate office will relocate from NW Houston to Cary, North Carolina.

NCI shareholders own 53% of the combined company. NCI Chairman, James Metcalf, has become the Chairman and CEO of the combined company. Shawn Poe, current CFO of Ply Gem, has been appointed overall CFO. Interim CFO, Brad Little, has stepped down. He became acting CFO after previous CFO Mark Johnson left in June 2018.

(UPDATE 1-7-2019 : NCI announced that Shawn Poe is stepping down as CFO, effective May 2019. The company has launched a search for his successor).

Clayton, Dubilier & Rice, a PE firm based in New York, owned 34% of NCI. They originally gained a 68% stake in NCI in 2009 as part of a financial restructuring and gradually reduced their stake since then, through various means. In April 2018  CDR acquired Ply Gem and concurrently merged it with Atrium Windows and Doors. After the merger, they now own just under 50% of the combined business.

The stock price of NCI was $20.70 at the time the deal was announced. It is now trading at $11.19. That means that the enterprise value of Ply Gem has dropped from $3.7 billion at acquisition to $3.2 billion at closing.

SEC filing – Closing of transaction

https://www.andrewjowett.net/2018/07/18/houston-public-company-to-move-headquarters-after-merger/

Houston CFO moves – week ending 16 Nov

Bob Gwin, the CFO of Anadarko, an E&P company (market cap $28 billion) was promoted to President. He will be responsible for leading worldwide operations and project management and next-generation technology development and systems solutions. Ben Fink, currently the CEO of the Western Gas Partners division, becomes the CFO.

Steve Tremblay, the CFO of Kraton Corporation, a chemical manufacturer, (market cap $836 million) left the company with immediate effect. He will receive a severance payment of $1.6 million and approximately $3 million in accelerated vesting of equity awards. Christopher Russell, the company’s Chief Accounting Officer, will serve as the interim CFO.

Brian Small, the CFO of Cactus, an oilfield services company,  (market cap $1.1 billion), said he would step down as CFO and become Senior Finance Director, effective March 2019. Steve Tadlock is appointed as the new CFO. He joined the company in June 2017 as VP of Corporate Services. He previously worked at Cadent Energy Partners. Cactus went public in February 2018. Mr Small has been CFO since 2011.

The CFO at another company that went public in February 2018 also stepped down. Mike McCabe, CFO of Alta Mesa, an E&P company (market cap $384 million) announced his retirement. He will stay on while the company searches for a replacement. Mr McCabe joined the company in 2006. Alta Mesa went public via a reverse takeover by Silver Run II, a blank check company.

Following the completion of the takeover of Gulfmark Offshore by Tidewater (market cap $700 million), the Tidewater CFO,  Quinn Fanning, has been replaced by Gulfmark CEO, Quintin Kneen. Mr Fanning had been CFO of Tidewater since 2008. It’s not clear what Mr Fanning will receive in severance payments.

Lance Loeffler replaces Chris Weber as Halliburton CFO

Following its carve out from Apache Ben Rogers becomes the CFO at Altus Midstream after its reverse takeover by Kayne Anderson, a blank check company.

 

Houston manufacturing company hires CFO

Powell Industries (market cap $341 million) has hired Mike Metcalf as its new CFO. He joins the company immediately and will assume the role of CFO once the annual report for the year ending September 2018 is filed. At that point, existing CFO Don Madison will retire.

Powell designs, manufactures and services custom-engineered equipment for the distribution, control and monitoring of electrical energy. It has its head office in SE Houston, near Hobby Airport.

Mr Metcalf joins from GE where he has worked for 20 years. He was the CFO of GE Oil & Gas Supply Chain from 2011 to 2015, the CFO of the Artificial Lift division of Baker Hughes, a GE company and most recently the CFO of Aeroderivative Products, part of GE Power.

Mr Metcalf will receive a base salary of $325,000 as well as a signing bonus of $100,000. He also signed an employment agreement that states he will receive his base salary for 2 years, if he is terminated without cause (3 years if this occurs after a change of control).

Back in May, Mr Madison announced his intention to retire. He had been the CFO since 2001.

SEC filing

 

Houston blank check company completes IPO

Graf Industrial, a blank check company based in NW Houston, has completed its Initial Public Offering (IPO). The company raised $225 million by offering 22.5 million units at a price of $10, in line with the offering terms.

Graf was formed earlier this year by blank check veteran James Graf. It intends to buy an industrial business in the US or Canada worth $1 billion. Mr Graf has served as a founder and executive officer or director of 4 special purchase acquisition companies (SPAC).

The units of the company are now listed on the NYSE under the symbol GRAF.U.

The company is the first Houston-area business to complete an IPO since Spirit of Texas Bank, back in May.

https://www.prnewswire.com/news-releases/graf-industrial-corp-announces-pricing-of-225-million-initial-public-offering-300731469.html

Houston blank check company files for $225m IPO

Houston blank check company files for $225m IPO

Graf Industrial, a blank check company based in NW Houston, has filed for an Initial Public Offering (IPO). The company plans to raise $225 million by offering 22.5 million units at a price of $10.

Graf was formed earlier this year by blank check veteran James Graf. It intends to buy an industrial business in the US or Canada worth $1 billion. Mr Graf has served as a founder and executive officer or director of 4 special purchase acquisition companies (SPAC). They have raised $1.3 billion in their initial IPOs over the past 8 years. In his most recent deal, Mr Graf’s blank check company acquired Williams Scotsman, a business providing modular space solutions, for $1.1 billion.

The CFO of the company is Michael Dee. He spent a lot of his early career at Morgan Stanley in both Houston and Southeast Asia. Most recently Mr Dee was a Senior Advisor to the President for Finance of the Asian Infrastructure Investment Bank in Beijing.

The principal stockholder or sponsor is an investment vehicle owned by Mr Graf, Mr Dee, Owl Creek (a hedge fund) and other investors that have had a long-standing relationship with Mr Graf.

EarlyBird Capital and Oppenheimer & Co are the joint bookrunners on the deal. The company plans to list on the NYSE under the symbol GRAF.U.

If the company completes its IPO it will end a barren run for Houston-area businesses. The last completed IPO was Spirit of Texas Bank, back in May. Nationally, Renaissance Capital predicts that the amounts raised through IPO’s in 2018 is on pace to be the 2nd largest in the last 15 years, behind only 2014.

SEC filing

Houston CFO moves – week ending 17 August

W&T Offshore (market cap $827 million), an offshore E&P operator with its head office in Greenway Plaza, announced that CFO, Danny Gibbons had retired from the company with immediate effect. Mr Gibbons joined the company as its CFO in 2007.

The company filed an 8-K with the SEC but it wasn’t clear how much severance Mr Gibbons would be receiving. It only stated that he would be ‘entitled to payment of certain separation payments and benefits under his employment agreement’. Frankly, that’s poor disclosure. According to the most recent proxy, Mr Gibbons had a base salary of $440,000 and would be entitled to 3 x base salary ($1.32 million) in the event of termination by the company.  He would also be entitled to approx $1.3 million in accelerated vesting of equity awards.

Janet Yang, currently the VP of Corporate Development, has been appointed acting CFO. She joined the company in 2008 as Finance Manager and in 2012 was appointed Director, Strategic Planning & Analysis.

C&J Services appointed (market cap $1.5 billion) has hired Jan Kees van Gaalen as its CFO, effective September 17. 2018/ Until recently he was the CFO at Pittsburgh-based Kennametal. Prior to that he was the CFO at Dresser-Rand and Treasurer at Baker Hughes. He will receive a base salary of $500,000.

David Schorlemer, the CFO at Gulf Island Fabrication (market cap $157 million) since January 2017, resigned (with two days notice!) to take the same position at Basic Energy Services in Fort Worth. Kirk Meche, the CEO will assume the role of interim CFO while the company searches for a replacement.

Talon Energy, an independent power producer with its head office in The Woodlands, has promoted Stacey Peterson to Senior VP of Finance, Treasurer and Head of Investor Relations. She will report to Alex Hernandez, the CFO. Talen was a spin-off from PPL Corporate in 2015 that was taken private by PE firm Riverstone in late 2016.

Ms Peterson joined in April 2018 from Calpine as VP and Treasurer. In January 2018, the company had appointed Yvonne Fletcher as Head of Investor Relations. No mention of her fate.

Houston CFO moves – week ending 20 July

Bellicum Pharmaceuticals (market cap $318 million) entered into a separation agreement with CFO Alan Musso, effective August 31, 2018. The company has started a search for his replacement. Rosemary Williams, currently the VP of Finance and Controller will serve as the interim Principal Accounting Officer and CEO, Richard Fair, will be the interim CFO.

US Well Services, a pressure pumping company based in the Galleria, announced it is going public via a reverse takeover of a blank check company. As part of the deal, Kyle O’Neill has been appointed CFO. He is currently a non-exec director and currently works for TCW Direct Lending, the main equity shareholder. Current CFO, Matt Bernard will become the Chief Administrative Officer.

As part of the merger between Houston-based NCI Building Products (market cap $1.4 billion) and North Carolina-based Ply Gem, Shawn Poe, the current CFO of Ply Gem, has been appointed as the CFO of the combined company, effective once the merger is completed. The combined company will be based in North Carolina. The previous CFO of NCI, Mark Johnson, left in June.

Denise DuBard notified Contango Oil & Gas Company (market cap $158 million) of her resignation as Chief Accounting Officer to pursue other opportunities.  She joined the company in March 2015.

Ben Chambers, Controller at TETRA Technologies (market cap $551 million), notified the company that he intends to retire effective 30 September, 2018 after a 25-year career with the company.

This week’s M&A activity in Houston

There were a few deals this week in the oilfield service sector. Unfortunately two of them will lead to many layoffs in the Houston area.

Independence Contract Drilling (market cap $155 million) agreed to merge with PE-backed Sidewinder Drilling in an all-stock merger that will more than double the size of the onshore drilling fleet to 34 rigs. Both companies were formed in 2011 and both are based in Houston.

Sidewinder’s CEO, Anthony Gallegos, will lead the combined company and the CFO will be Philip Choyce, currently CFO of ICD. The company expects to achieve synergies of $8 million, mainly through SG&A overhead reductions

 

Two Houston-based offshore companies agreed to combine. Tidewater is taking over GulfMark Offshore for $340 million in an all-stock deal. Tidewater shareholders will own 63% of the combined company. Both serve the offshore supply vessel market and both companies filed for Chapter 11 bankruptcy in May 2017 (Tidewater exited in July 2017, Gulfmark in November).

Tidewater had its head office in New Orleans but recently moved to the Westchase area of Houston following the appointment of John Rynd as CEO earlier this year. Gulfmark’s head office is less than 5 miles away in the Memorial City area of West Houston. Tidewater is expecting cost reductions of $15 million following the transaction.

 

US Well Services, a PE-backed pressure pumping company with its head office in the Galleria, is going public via a reverse takeover. It is being acquired by Matlin & Partners Acquisition Corp, a blank check company. The business will have an enterprise valuation of $588 million. USWS has developed electric fracking technology and intends to roll out an all-electric fleet. It was formed in 2011 but went through a debt-for-equity recapitalization in early 2017.

Joel Broussard, the CEO of USWS, will be the CEO of the combined company. The CFO will be Kyle O’Neill who is currently a non-exec director and will move over from the main equity shareholder, TCW Direct Lending. The existing CFO of USWS, Matt Bernard, will become the Chief Administrative Officer.

You can read my earlier blog post on NCI Building Products’ merger here

Independence Contract Drilling and Sidewinder Drilling announce merger

Tidewater and GulfMark to combine to create Global Offshore Leader

Matlin & Partners Acquisition Corp and US Well Services to combine

Houston public company to move headquarters after merger

NCI Building Products (market cap $1.4 billion) has announced a stock-for-stock merger with North Carolina-based Ply Gem Parent. NCI manufactures building products for commercial construction whereas Ply Gem does the same for residential.

The combined business will have a proforma enterprise value of $5.5 billion with NCI shareholders owning 53% of the combined company. NCI Chairman, James Metcalf, will become the Chairman and CEO of the combined company. Shawn Poe, current CFO of Ply Gem, will serve as the overall CFO.

Last month, NCI CFO Mark Johnson retired without a permanent successor being named.

After the merger, which is expected to be completed in the fourth quarter, the headquarters of combined company will move from NW Houston to Cary, North Carolina.

Clayton, Dubilier & RIce, a PE firm based in New York, owns 34% of NCI. They originally gained a 68% stake in NCI in 2009 as part of a financial restructuring and have gradually reduced their stake since then, through various means. In April 2018  CDR acquired Ply Gem and concurrently merged it with Atrium Windows and Doors. After the merger, they will own just under 50% of the combined business. Sounds like a shotgun wedding!

PR Newswire – NCI Building Systems and Ply Gem merger