Foxo Technologies goes public via Houston SPAC

Delwinds Insurance, a Houston SPAC, has completed its business combination with Foxo Technologies. As a result, the company has been renamed and is now based in Minneapolis.

Foxo is developing proprietary saliva-based epigenetic biomarkers with a plan to create simper, smoother, non-invasive underwriting of life insurance. Currently, underwriting involves lengthy timelines and invasive blood and urine specimen requirements.



Epigenetic biomarkers are chemical modifications, called DNA methylation that alter gene expression from external stimuli such as lifestyle and environment. The company plans to use automated machine learning to identify patterns of epigenetic biomarkers that correlate to health and wellness (e.g tobacco use, hypertension, alcohol abuse etc).

Foxo started in 2019.  The company is projecting its first revenues in 2023 with positive EBITDA during the following year. The transaction values Foxo at $300 million and leaves it with $194 million in cash to fund its growth.

Delwinds went public in December 2020 in a $200 million Initial Public Offering.  It planned to target businesses in insurance technology so the deal for Foxo (announced in February 2022) definitely met that criteria. Delwinds had 18 months from its IPO to complete a deal, otherwise it would be wound up and the cash returned to investors. In May, it received a 3-month extension to Sept 15.

SEC filing – Foxo completes Delwinds deal

Nauticus Robotics closes SPAC deal to go public

Nauticus Robotics, a Houston-based marine robotics company, is now a public company. Back in December 2021, it agreed a deal with CleanTech Acquisition Corp, a SPAC (Special Purpose Acquisition Corporation). The deal valued Nauticus at $377 million enterprise value.



The company used to be called Houston Mechatronics. It was founded in 2014 by Nicholaus Radford, who previously worked at NASA and Oceaneering. The company has its head office in Webster, two miles from the NASA Johnson Space Center and employs about 25 former NASA robot engineers.

Currently, manned service vessels are used to service the offshore energy sectors. Nauticus is developing tetherless, autonomous electric-powered robots that can be controlled by staff onshore. The company plans to rent out its Aquanaut robot for around $40,000 a day, less than half the cost of a deepwater rig.

Pre-production units are projected to be deployed in later this year. The company recently sold its first unit to IKM Subsea in Norway.

Investors in the business included Schlumberger (who now own 20%) and Transocean (19%).

Mr. Radford is the CEO. Rangan Padmanabhan was appointed CFO in May 2022. He spent many years at Solaris Asset Management and is a graduate of Rice University.

The company will trade on the NASDAQ under the ticker ‘KITT’.

SEC filing – 8-K

Corebridge $1.7 billion IPO largest in US this year

Corebridge Financial, a carve-out of AIG’s retirement services and life insurance business, has announced the pricing of its Initial Public Offering (IPO). 80 million shares will be offered at $21 per share, the bottom end of the range.  The $1.7 billion raised is the largest IPO this year in the US.



Corebridge manages $358 billion in client assets as of June 30, 2022. It is a leading provider of annuities for individual retirement plans (1.2 million policies) and retirement plans for education, healthcare and government sectors (1.9 million customers).

The shares being sold are about 12% of the total float. AIG will own 78% of the shares while Blackrock will own 10%. All the proceeds will go to AIG.

Blackrock acquired its shares in 2021 for $2.2 billion. That was part of a deal where AIG agreed to transfer the management of $50 billion of Corebridge’s client assets to Blackrock. That figure will rise to $93 billion by 2027.

Houston head office

Corebridge has its head office on Allen Parkway in Houston. That connection is because the life insurance business was primarily built on AIG acquiring American General Corporation (AGC) in 2001 for $23 billion. AGC was founded in 1926 by Gus Wortham, who was one of the Houston’s major civic leaders.

Management

Kevin Hogan, the CEO of Corebridge, has been in that position since 2014. According to LinkedIn, he is based in New York as is Elias Habayeb, the CFO. He has been in that role for almost a year. Both Mr. Hogan and Mr. Habayeb are long-time AIG employees, though, interestingly both left and then rejoined AIG.

The carve-out from AIG is expected to cost between $350 million and $450 million as the company rebrands and replaces systems and infrastructure provided by AIG.

Corebridge will list on the NYSE with the ticker ‘CRBG’

https://www.businesswire.com/news/home/20220914006004/en/AIG-Announces-Pricing-of-Corebridge-Financial-Inc.-Initial-Public-Offering

 

Houston bank first to settle allegations of false PPP lending

Prosperity Bank, based in Houston, has become the first US bank to settle claims arising out of the Paycheck Protection Program (PPP). It has agreed to pay $18,674 arising from a $213,400 PPP loan made to Woodlands Pain Institute.



The PPP application included a question asking whether the applicant is subject to an indictment or is facing criminal charges. At the time of his application, Dr. Emad Bishai was the sole owner of Woodlands Pain Institute. He checked the box marked ‘No’ even though he was facing criminal charges in Montgomery County.

Prosperity Bank employees knew Bishai was facing charges and was therefore ineligible to apply for the PPP loan. They processed his application anyway. Prosperity Bank received a 5% processing fee of $10,670.

Bishai entered into a $0.5 million settlement in November 2021 to resolve his liability arising from fraudulent medical billing and his submission of the PPP loan application. He also repaid the PPP loan in full in 2022.

https://www.justice.gov/usao-sdtx/pr/first-ever-false-claims-act-settlement-received-paycheck-protection-program-lender

Construction services company appoints new CFO

Orion Group Holdings has appointed Scott Thanish as its new CFO. He replaces Robert Tabb, who resigned in October 2021 to become CFO at privately-held Signal Energy Constructors.

Orion is based in SE Houston. The company was formed in 1994 to provide dredging and other marine construction services. However, it later diversified into concrete construction services. The company has revenues of over $600 million and a market cap of $96 million.

CEO and interim CFO Mark Stauffer was fired in April 2022. Chairman Austin Shanfelter took over as interim CEO until Travis Boone was appointed as its new CEO last month. Mr. Boone was a regional CEO of AECOM, an infrastructure engineering firm.

The root of the problems appears to be negative margins in the concrete segment, especially in the Austin and San Antonio regions, relatively new territories for the company.  The company had inexperienced management and weak relationships with customers in these regions and was unable to pass on cost increases.

Mr. Thanish joins from CHC Group, a private company providing helicopter services to the oil and gas industry. He has been CFO there for almost 5 years. He will receive a base salary of $425,000.

SEC filing – Orion Group CFO appointment

 

 

 

Midstream company appoints new CFO

Crestwood  Equity Partners has appointed John Black as its new CFO. He replaces Robert Halpin, who had been CFO since 2015. Mr Halpin will remain with the company as President, a role he took over in January.



Crestwood owns and operates midstream businesses primarily in the Williston, Powder River and Delaware Basins.  In February, it completed the acquisition of Oasis Midstream for $1.8 billion. The company currently has a market cap of $2.9 billion and has its head office in downtown Houston.

Mr. Black, age 34, joined Crestwood in 2014 and was formerly the Senior VP, Finance. Prior to joining Crestwood, he held positions at First Reserve and Citi. He will receive a base salary of $400,000.

Josh Wannarka, Senior VP, Investor Relations, has been promoted to to Mr. Black’s old position. He joined the company in 2015. In his new expanded role, Mr. Wannarka will oversee the investor relations team and the full financial planning and analysis function.

Andrew Thorington, VP of Finance, has been promoted to VP, Finance and Investor Relations. He joined the company in 2014.

Crestwood Equity – press release

Renewables company appoints new CFO

Archaea Energy has appointed Brian McCarthy as its new CFO, replacing Eric Javidi, who left in February after ten months with a $2.95 million cash severance.

Archaea develops, constructs and maintains renewable natural gas facilities (RNG) that capture waste emissions from landfills and converts them into low-grade fuels and electricity. It currently has 12 of them. The company also has 33 landfill gas to electric facilities, some of which were added after a recent acquisition.



The company is based in the Galleria area and was taken public in September 2021 by a SPAC based in Pennsylvania, Rice Acquisition Corp.  The SPAC actually acquired Archaea LLC for $347 million and Aria Energy LLC for $680 million, with the combined business being renamed Archaea Energy. The stock is trading at around $19, about a $1 higher than the price when the deal closed.

The company was supposedly conducting a search process for Mr. Javidi’s replacement, but ended up appointing Mr. McCarthy, who was the previous CFO and had been acting as the interim CFO since March. (Technically, he was the CFO of the legacy business from January 2019 to May 2021). Between his CFO stints, Mr. McCarthy was the Chief Investment Officer of the company.

No compensation details were disclosed for Mr. McCarthy. However, last month, the company adopted a new executive severance plan which limits the severance outside a change-of-control event to 1x base salary plus 1x pro-rata target bonus.

SEC filing – Archaea CFO appointment

CFO promoted to CEO at Oilfield Services company

Ryan Hummer, CFO of NCS Multistage Holdings, has been appointed CEO, effective November, 1, 2022. He replaces Robert Nipper, the company’s co-founder, who is stepping down, though Mr. Nipper will remain on the Board. The company described it as part of their normal succession planning.

The company manufactures highly engineered products used in fracking and the majority of its sales are in Canada. It has its head office in NW Houston.  The company was formed in 2006 and went public in April 2017 with an IPO stock price of $17 per share. Soon after, its market cap rose over $1 billion, before crashing in late 2019. The current market cap is $78 million.

The company is looking at both internal and external candidates to replace Mr. Hummer.

Mr. Hummer has an investment banking background and joined the company in July 2014 as VP of Corporate Development. He was later promoted to CFO in November 2016.

Mr. Hummer will receive a base salary of $450,000. That’s a considerable bump on both his previous salary as CFO ($250,000) and Mr. Nipper’s ($300,000).

SEC filing – NCS Multistage CEO

 

 

 

Shell to acquire rest of Shell Midstream in $1.9 billion transaction

Shell has agreed to acquire all of the common units of Shell Midstream Partners it did not already own for $15.85 a unit, in cash. The transaction is worth $1.9 billion. Shell currently owns 68.5% of the common units.

Back in February, Shell had offered $12.89 for each common unit in a zero-premium bid.

Many years ago, Master Limited Partnerships were in vogue and it was the fashion for E&P companies to spin off their midstream assets into publicly-traded MLPs. Shell were fashionably late in that they only spun off Shell Midstream for $23 per unit in October 2014, right before the crude oil price crash.

That crash laid bare the claim that MLPs had low risks and therefore low cost of capital. In addition, the tax rules changed in 2018 reducing the benefits of MLPs. Most publicly-traded MLPs have already been taken private by their sponsor. Why pay a dividend of 8% on a MLP when you can bring it inhouse by borrowing at 5%?

The transaction has been approved by the Conflicts Committee but most minority investors remain unhappy as they believe that the deal undervalues the company, particularly as some of the midstream assets were damaged by Hurricane Ida in 2021.

The transaction is expected to close in the fourth quarter of 2022.

SEC filing – Shell to acquire Shell Midstream Partners

Sharps Compliance to be taken private for $170 million

Sharps Compliance, a waste management company is to be taken private by Aurora Capital Partners. The PE firm offered $8.75 per share, which valued the company at $170 million.

[UPDATE 8-26 The deal is now compete]

The company handles medical, pharmaceutical and hazardous waste for small to mid-size companies such as pharmacies, dentist offices and nursing homes. The company went public in 2009 and has its head office is just south of NRG Stadium.

It grew rapidly during the pandemic, but revenues has since flattened out. Interestingly, the company has changed both its CEO and CFO this year. Patrick Malloy was appointed the new CEO in April 2022. He replaced David Tusa who had been the CEO since 2010.

In February 2022, Eric Bauer was appointed CFO, replacing Diana Diaz, who stayed with the company as Chief Accounting Officer. Prior to joining Sharps, Mr. Bauer was CFO at another Houston public company, Nuverra Environmental Solutions.

The acquisition came about after Andrew Wilson, a partner at Aurora, placed an unsolicited telephone call to Patrick Malloy, congratulating him on his appointment as the new CEO. Mr. Wilson and Mr. Malloy met a week later, at which time Mr. Wilson expressed a high level preliminary interest in acquiring the company. (Aurora already owns Curtis Bay Medical Waste Services).

Sharps had retained Raymond James in August 2021 to assist the company in seeking acquisitions and they were able to pivot quickly to negotiate with Aurora and assess the merits of the offer.

The offer price of $8.75 represents a premium of 207% over the $2.85 per share price as of July 11, the last day before the announcement of the merger. This time last year, the stock was trading between $9 and $10 per share.

SEC filing – Sharps Compliance – Aurora