Huntsman CFO resigns to take senior position with LDS Church

Sean Douglas, the CFO of Huntsman Corporation, has announced he is resigning to take a senior leadership position with The Church of Jesus Christ of Latter-day Saints. His last day will be July 1, 2021.

Huntsman, a chemicals company with revenues of $6 billion, is based in The Woodlands. However, it was founded in 1970 in Utah by Jon Huntsman, Sr. The Huntsman family is Mormon and just last month, it was announced that James Huntsman, his son (but not an employee of the company), was suing the church, accusing it of spending members’ tithes meant for charity on commercial purposes.

Mr. Douglas has been the CFO since January 2017. He joined the company in 1990, though he left the company between 2012-2015 to perform charitable services for the Church.

The company has initiated a search for a new CFO and is evaluating both internal and external candidates. The company expects to appoint a new CFO before July.

SEC filing – Huntsman CFO resigns

 

Weatherford applies to relist its shares on Nasdaq

Weatherford International plc has applied to have its share listed on the Nasdaq Exchange. The stock used to trade on the NYSE until they were delisted in April 2020 for having too low a share price.



Weatherford entered Chapter 11 bankruptcy in July 2019 and exited in December 2019, having converted $7.6 billion of debt into equity. With hindsight, it left bankruptcy proceedings too soon as its business was ravaged by the pandemic.

In 2020, revenues were $3.7 billion, a drop of 26% on the prior year. It made an operating loss of $1.5 billion. The losses included a goodwill write off of $239 million, which was all the goodwill created in the fresh-start accounting when it emerged from bankruptcy. There was also impairment of $814 million on intangible assets ($155 million), fixed assets ($571 million) and right-of-use assets ($88 million). Again these were values determined in the fresh-start accounting.

When Weatherford exited Chapter 11 in December 2019, it had shareholders’ equity of $2.9 billion and long-term debt of $2.1 billion. One year later, it now has equity of $937 million and long-term debt of $2.6 billion.

While the Business suffered, the Executives didn’t…

Weatherford has had a reputation for paying large severances while performing poorly. The registration statement continues that trend by disclosing;

  • ex-CEO Mark McCollum (left June 2020) received $4.6 million in severance. For good measure, he also received $780,000 in cash bonuses in 2020.
  • COO Karl Blanchard retired in February 2020. The bankruptcy was deemed a change-of-control under his contract so he gets 3 x base salary (3 x $700,000) plus 1 x average bonus for the past 3 years. It’s hard to tell what the average bonus is. He didn’t get any bonuses in 2018 or 2019 but got $2.2 million in bonuses for his interim CEO position in the 2nd half of 2020. He was also paid $672,955 in 2020 for cash bonuses in lieu of stock options.
  • Stuart Fraser, Chief Accounting Officer, is leaving March 31, 2021. He has the same change-of-control clause as Mr. Blanchard. Mr. Fraser gets 2 x base (2 x $425,000) plus average annual bonus. He also got $270,938 in 2020 for cash bonuses in lieu of stock options.
  • Mark Swift, former President of the Western Hemisphere, left in March 2020 with a $1.4 million severance.

Weatherford employed 17,200 at December 2020, down nearly 7,000 from the prior year.

Weatherford new CEO is Girish Saligram, appointed in September 2020. Keith Jennings was appointed as CFO the previous month.

SEC filing – Weatherford Nasdaq listing

E&P company appoints new CFO as it relocates to The Woodlands

Ring Energy has appointed Travis Thomas as its new CFO as it relocates its head office from Midland to The Woodlands. Former CFO Randy Broaddrick, who had been CFO since 2012, elected not to relocate from Tulsa, Oklahoma, where the accounting office was based.



Ring is an E&P operator with properties in the Permian Basin. It has revenues of $108 million and a market capitalization of $245 million. In February 2019 it acquired assets in the Permian Basin for $300 million from Wishbone Energy Partners. $28 million of the consideration came through issuance of new equity at $6.20 per share, the rest came from a revolving line of credit.

Prior to the acquisition from Wishbone, the company had been conservatively run with little long-term debt. In February 2018, one year prior, it issued new stock at $14 per share. High debt and a declining share price is not good for management and shareholders and both Lloyd Rochford (Chairman and co-founder) and Kelly Hoffman (CEO) stepped down in September 2020.

New CEO and dissident shareholders

Paul McKinney was appointed CEO. He spent 23 years at Anadarko (hence The Woodlands connection) and 6 years at Apache. More recently he was CEO at Yuma Energy from April 2017 to January 2019 and at Sandridge Energy for 11 months in 2019.

Those short stints raised the ire of Dr. Simon Kukes, a 11% shareholder , who stated that Mr. McKinney was too connected to the old Board and was overpaid ($480,00 base salary). Dr. Kukes is the CEO of Pedevco, another E&P company headquartered in Houston, with properties in the Permian Basin.

CFO compensation

Mr. Thomas joined the company in October 2020 as its VP of Finance. Prior to that, he was the Chief Accounting Officer and Treasurer at Paradox Resources, a private E&P company with its head office in downtown Houston. Mr. Thomas will receive a base salary of $290,000. His predecessor had a base salary of $195,000.

I’ve added Ring Energy to the list of Houston-area public companies. You can see the complete list here.

SEC filing – Ring Energy CFO appointment

Houston SPAC to take space technology company public

Credit: Made in Space (a Redwire company)

Genesis Park, a Houston-based Special Purpose Acquisition Company (SPAC), has agreed to take Redwire, a space technology company, public.



Genesis Park went public in November 2020 in a $150 million IPO.

Redwire, is based in Jacksonville, FL and manufactures space-capable robotics, solar arrays and antennas, and other equipment used in space. It plans to manufacture and assemble components in-space using 3D printing. The company was formed in June 2020 from the merger of two companies, with backing from AE Industrial Partners. Since then, it has made five more acquisitions.

Redwire becomes the seventh space venture in the past year to announce a SPAC deal. It had revenues of $120 million in 2020 and is currently cash flow positive. By 2025, it expects to grow to $1.4 billion. The transaction values the company at $615 million enterprise value.

Its CEO, Peter Cannito, was previously the CEO of Polaris Alpha, a high-tech solutions provider that developed systems for the Department of Defense. He’s also spent 12 years working for PE-backed companies in the defense, technology and government services market.

Jonathan Baliff, the CFO of Genesis and former CFO at Bristow Group, will join the Board of Redwire as a non-executive director.

The deal is expected to close by June 2021.

Investor Presentation – Genesis Park Redwire

Noble Corporation acquires Pacific Drilling in all-stock transaction

Noble Drilling has agreed to acquire Pacific Drilling in all-stock transaction. Noble has its operational headquarters in Sugar Land while Pacific is based in west Houston.



The shareholders of Noble will own 75% of the combined company. It currently operates 19 drilling rigs, while Pacific operates 7. However, Noble said it plans to sell the Bora and Mistral rigs that are currently idle.

There’s little overlap in the customers or the territories between the companies. Pacific currently has three rigs running, one in the US Gulf of Mexico (for Murphy), one in West Africa and one in the Mexican side of the Gulf of Mexico (both for Petronas). Noble is not currently operating in the latter two territories.

Both companies have recently exited bankruptcy protection. Noble filed for Chapter 11 in July 2020. $3.4 billion of unsecured debt was exchanged for 86% of the newly reorganized company and the company exited in February 2021.

Pacific filed in November 2020 for the second time in three years. It emerged from bankruptcy on December 31, 2021. Bondholders exchanged $1.1 billion of debt for 91.5% of the equity in the new company.

Neither company has stock that is currently traded, so no value of the transaction was disclosed. I would expect Noble to re-list in the near future. Noble is forecasting at least $30 million of annual synergies. The combined company will be run from Sugar Land.

The transaction is expected to close in April 2021.

Investor Presentation – Noble acquires Pacific Drilling

Houston distributor to be acquired for $91 million

Houston Wire and Cable has agreed to be acquired by OmniCable, a subsidiary of Dot Holdings, which is a family office investment firm specializing in acquiring distribution companies. The price is $5.30 per share which values HWCC at $91 million. The price represents a premium of 39% over yesterday’s closing price.



Houston Wire is a distributor of electrical and mechanical wire and cable with revenues of $300 million. Approximately a third of its revenues come from the energy sector.  The company has its head office near the 610/I-10 interchange on the east side.

The company was founded in 1975. It went public in 1987. It was acquired two years later by ALLTEL Corporation. After the business was sold to a PE firm in 1997, the company went public for a second time in 2006.

For some time, the company has been laboring under high debt level of around $75 million of relatively low profitability levels.

The agreement with OmniCable includes a 30-day ‘go-shop’ period, which permits the Board of Directors and advisors to solicit alternative buyers. However, the company expects the deal to close in late May.

The current CFO is Eric Davis. He was appointed to that role in November 2020 after previous CFO Chris Micklas stepped down in June 2020.

SEC filing – HWCC sale

Autism service provider agrees to pay $2.7 million to resolve fraud allegations

Dr. Domonique Randall, the former owner of The Shape of Behavior (“The Shape”), a Texas-based provider of therapy services for children with autism, has agreed to pay $2.7 million to resolve allegations the company submitted improper claims to TRICARE. TRICARE is the health care program for uniformed service members, retirees, and their families.



Dr. Randall lives in Spring, TX. Humana, TRICARE’s managed care support contractor, uncovered alleged improper claims. The settlement resolves allegations that nine separate TSOB locations submitted claims to TRICARE that

  • misrepresented the identity of the actual rendering providers
  • medical records could not substantiate
  • individual providers billed excessive hours on individual dates of service.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Blue Sprig Pediatrics, also based in Houston, acquired The Shape in October 2018. At that time, The Shape had 22 clinics in four states, including 19 in Texas.

 

https://www.justice.gov/usao-sdtx/pr/former-children-s-autism-service-provider-pays-over-27-million-resolve-health-care

CEO and CFO of Superior Energy leave with large severances

The CEO and CFO of Superior Energy Services have left the company with large severances just six weeks after the company exited Chapter 11 bankruptcy.



Superior, based in downtown Houston, announced back in September 2020 that it intended to file for a pre-packaged bankruptcy. It did not actually file until December. The company converted $1.3 billion of debt into equity as part of the restructuring.  At the time of filing, the company had negative shareholders’ equity of $250 million. The stock of the company had previously been delisted because the negative equity breached NYSE listing standards.

Overpriced Acquisition

The company’s debt problem stems all the way back to October 2011 when it agreed to buy Complete Production Services for $2.9 billion. It paid $553 million in cash and issued stock for the rest. As part of the deal financing, in December 2011, it issued $800 million of unsecured senior notes, due 2021, to repay $650 million of debt that Complete owed. The other $500 million of notes were also, effectively, issued in 2011, though they were refinanced in 2017.

Severance

David Dunlap had been CEO since 2010. He leaves with a payment of $3.7 million. This represents two times base salary plus target annual bonus plus pro-rated target annual bonus for 2021.

Westy Ballard, who was appointed the CFO in March 2018, receives $1.7 million on the same terms as Mr. Dunlap.

Cash retention bonuses

Prior to the filing in September 2020, the old Board paid cash retention bonuses (as advances) to Mr. Dunlap ($3.1 million) and Mr. Ballard ($1.1 million).  Today’s filing does not make clear whether the severance payments are in addition to the retention bonuses or instead of them. Unfortunately, the company didn’t file the waiver and release agreements that would have cleared this up.

Michael McGovern, the newly-appointed Chairman of the Board, was appointed the interim CEO, while the company conducts a search. James Spexarth, the Chief Accounting Officer, becomes interim CFO.

SEC filing – Superior Energy CEO CFO exit

 

 

CFO at Vaalco Energy to retire

Elizabeth Prochnow has decided to retire from her role as CFO of Vaalco Energy, effective March 31, 2021. She is the second Houston E&P CFO to retire this week, following Jim Ulm at Callon Petroleum.



Vaalco’s primary source of revenue is from offshore Gabon in West Africa. It also has an undeveloped block in offshore Equatorial Guinea. The company has revenues of $67 million and a market capitalization of $139 million.

Ms. Prochnow joined the company in May 2015 as its Chief Accounting Officer and was promoted to CFO in April 2019.  According to the press release issued by the company, her husband has recently retired and they wish to spend more time traveling and with her family.

The company has initiated an executive search for a new CFO. In the meantime, Jason Doornik, the company’s Chief Accounting Officer, will serve as the interim CFO.

SEC filing – Prochnow retires

Callon Petroleum CFO to retire in May

Jim Ulm, the CFO of Callon Petroleum, has told the company he plans to retire from the company in May 2021 due to personal and health reasons. The company has commenced a search for his successor.

The company is an E&P company focused on the Permian and Eagle Ford Basins and it has its head office in the Westchase area of Houston. Due to its high leverage, the company’s stock price is very sensitive to changes in crude oil prices. Its shares have risen eightfold since October as crude prices have risen. The market capitalization is now $1.8 billion. Callon took over Carrizo Oil and Gas in an all-stock transaction in December 2019 that valued Carrizo at $765 million.

Mr Ulm, 57,  joined Callon in December 2017 as its CFO. He was previously the CFO at other large E&P companies such as Fieldwood Energy and Pogo Producing.

SEC filing – Callon CFO retirement