CFO JUMPS BEFORE WEXFORD PUSHES
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Energy Partners CFO resigns
By: The Associated Press
NEW ORLEANS - Independent petroleum producer Energy Partners Ltd., which has seen its stock price plunge amid a major investor's call for a shake-up, said Wednesday that its chief financial officer has left the company.
In a filing with the federal Securities and Exchange Commission, EPL said Joseph T. Leary, who also held the post of executive vice president, informed the company on Sunday that "he would resign immediately."
A message was left with EPL for comment. Leary could not be reached for comment.
Energy Partners, which focuses its drilling and producing in the Gulf of Mexico and onshore in southern Louisiana, has seen its stock slide precipitously over the past few months. From a 52-week high of $16.50 recorded during booming oil prices, EPL closed trading Wednesday at 29 cents per share.
The company has not yet reported fourth-quarter earnings. But for the third quarter, the company earned $34.4 million, or $1.07 per share, on revenue of $94.7 million. That included a one-time unrealized gain of 48 cents per share.
But other independent producers already have reported fourth-quarter reversals of fortune as oil prices sagged and companies were forced to write down the value of their reserves.
In late January, Wexford Capital LLC, based in Greenwich, Conn., sent a letter to the company demanding the firing of all top management, a sharp reduction in costs, debt restructuring and a smaller board.
Wexford, a major stakeholder in EPL, both in common stock and senior notes, said EPL's administrative and overhead costs were out of proportion to the company's size, its exploration activities and efforts to replace reserves "have been a dismal failure" and the company is carrying too much debt.
On Feb. 23, EPL cut the size of its board from 11 members to seven and said it had retained a financial adviser to study "a variety of strategic alternatives, including a recapitalization of the company's balance sheet, in light of the current economic downturn and lower commodity prices."
PREVIOUS NEWS:
Jan 30, 2009
Wexford Capital LLC, a Greenwich-based private equity firm, is pushing for major changes at Energy Partners Ltd., one of its portfolio companies.
Arthur Amron, Wexford's partner and general counsel, on Monday sent a letter to the New Orleans-based oil and natural gas exploration company urging its board of directors to terminate senior management and cancel "change in control" severance agreements with its executives.
Amron also wrote that Wexford, which was founded in 1994, is calling on Energy Partners to "reduce significantly" its overhead, restructure its debt and reduce the size of its board.
Wexford, which manages more than $6 billion of assets through hedge and private equity funds in energy, real estate and other sectors, has "watched with increasing dismay in the company's loss in enterprise value," and its poor performance is exacerbated by its lack of urgency to do anything about it, Amron said in the letter.
"Management, it would seem, is content to proceed with business as usual as the Company continues to decline in value," he wrote.....
.....Energy Partners' board has received the letter and is reviewing it, said Al Petrie, investor relations coordinator for Energy Partners.
"We will make an appropriate response once we have had a chance to review it," he said.
Funding sources use several tactics to ensure their directives are followed, said Matteo Tonello, associate director of corporate governance for the Conference Board in New York City.
"Normally, funds start with less confrontational tools and become more aggressive if ignored by the company," he said.
Private equity firms usually "pull the plug" on investments that do not follow their directives, said Joyce Gioia, president and chief executive officer of a Greensboro, N.C.-based management consulting firm.
"It has been my experience that companies like this don't have a choice," she said.
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