Carbo Ceramics has been delisted from the New York Stock Exchange (NYSE) because its share price is too low. It was trading at 30 cents (market cap $9 million) at the time of the delisting. Going forward, it will be traded over the counter.
The company has its head office in west Houston and makes proppants, primarily for fracking. It started out making ceramic proppants and went public in 1996. At its peak in 2011, the company had a market capitalization of almost $4 billion. Ceramic proppants are considerably more expensive than natural sand. Although the company tried to protect itself by supplying natural sand as well, it has been hit hard by the downtown.
In November, the company disclosed that its largest customer planned to discontinue purchases of frac sand under its existing contract. (Its two biggest customers in 2018 were Halliburton and Keane Group). The company has significant fixed costs associated worth this contract such as rail car leases and a distribution facility. The company estimated that it will incur $8 million to $10 million in cash costs to exit these leases and other supply contracts, associated with the contract. As a result, the company issued a going concern warning.
The company has not made positive annual EBITDA since 2014. At the end of September, the company had cash balances of $40 million. Against that, it has a fully-utilized $65 million credit facility with the Wilks Brothers (who sold their pressure pumping business in 2011 for $3.5 billion) that matures in December 2022. It also has leases with a present value of $58 million.
You can see the complete, updated list of Houston-area public companies here
SEC filing – Carbo Ceramics delisting
Buckeye Partners has been delisted after its takeover by IFM Global Infrastructure Fund was completed. The $6.5 billion deal was originally announced in May 2019.
The original Buckeye Pipe Line Company was founded in 1886 as part of Standard Oil and became a publicly-owned independent company in 1911 after Standard Oil was broken up. In 1964, the company was acquired by a subsidiary of the Pennsylvania Railroad. In 1986, it was reorganized into a master limited partnership (MLP) and went public the same year.
Buckeye has 6,000 miles of pipeline and 115 liquid petroleum products terminals in the US and the Caribbean. In 2018, it had revenues of $4.1 billion. The company has its head office in Greenway Plaza.
Breakup of Standard Oil
Standard Oil was established by John D Rockefeller and Henry Flagler in 1870. In 1911 the Supreme Court ordered it to be broken up into 34 smaller companies. This included;
- Standard Oil of New Jersey – later merged with Humble Oil to become Exxon
- Standard Oil of New York – later merged with Vacuum to become Mobil
- Standard Oil of California – renamed as Chevron.
- The Ohio Oil Company – renamed as Marathon.
Background to the deal
In early 2018, the Board of the partnership decided to pursue strategic alternatives given that publicly-traded MLPs were out-of-fashion with investors. The company had discussions with various interested parties through May 2019.
IMF agreed to pay $41.50 per unit, all in cash. That represented a premium of 27.5% over the closing price of the partnership units prior to the announcement.
Equity awards vest
Equity options have vested on completion of the transaction and will be settled in cash. That means that CEO Clark Smith will receive $16.9 million and CFO Keith St. Clair $5.6 million. 7 other members of the executive management team will receive between $2.2 million and $4.8 million each.
If senior executives are also terminated as a result of the merger, they will also receive severance (annual salary plus target annual cash bonus). For CEO Smith that would be $2 million, for St. Clair that would be $1.2 million. The deal closed Friday without any terminations in the senior management group.
You can see the updated list of Houston-area public companies here
SEC filing – Buckeye takeover
Photo by Joshua Doubek
Superior Energy Services, based in downtown Houston, has been delisted by the New York Stock Exchange. This is because the share price has been below $1 for more than 30 days. The company plans to appeal the decision.
Superior provides a number of different oilfield services such as downhole rental tools, pressure pumping services and coiled tubing. It has been struggling for a few years and last made an operating profit in 2014.
At the time of delisting it had a market capitalization of $13 million but had debt of over $1.3 billion. $800 million of this matures in December 2021.
At lot of debt stems from the acquisition of Complete Production Services for $2.9 billion in February 2012. The company paid cash of $550 million and issued stock for the rest. However, three months prior to the finalization of the deal, it issued $800 million of senior loan notes (the ones that are due next year).
The Complete acquisition also involved $1.9 billion of goodwill. This has been written off in subsequent years.
The NYSE has acted unusually quickly in delisting the company. The NYSE originally informed the company about the non-compliance on August 9. The company issued a press release on August 12 stating that it planned to notify the NYSE by August 23 of its receipt of the notice and of its intention to cure the non-compliance.
The company didn’t issue a press release or file anything with the SEC on or after the August 23 deadline. Maybe they forgot to respond! Normally the NYSE are usually patient if a company files a plan to get back into compliance. That’s how many companies can go months with the stock price below $1.
The shares of EP Energy have been delisted by the New York Stock Exchange due abnormally low trading price levels. Before the delisting, the shares were trading at 16 cents.
The company has its head office in downtown Houston. It has producing assets in the Eagle Ford, Northeastern Utah and the Permian Basin.
The company first received a delisting notice in early January following 30 days of trading below $1. Normally a company has six months following the notice to regain compliance. There had been no indications of a reverse stock split that would have achieved that, so I guess the NYSE decided to pull the plug early.
Apollo Global Management, a private equity group, bought EP Energy in February 2012. The company was the E&P arm of El Paso Corp that was being divested as part of its merger with Kinder Morgan. The purchase price was $7.2 billion, which included $4.3 billion of debt.
The company went public in 2014 at $20 a share ($704 million offering). In an April 2019 article, the Wall Street Journal stated that Apollo and its partners will lose about $2.5 billion on the investment, even after extracting about $750 million in fees and dividends from the company.
In its most recent quarterly filing, the company made an operating loss of $55 million and a net loss of $140 million. It had debt of $4.4 billion and negative equity of $736 million.
The company stated that it does not have enough liquidity to repay $182 million of unsecured notes due in 2020. It is evaluating alternatives.