Sem Group meltdown

[FOTD]

"A private & sound business unit with liquidity issues." Indeed CF. Thought the same going through your post.

Your point on credit is right on. A business saying about owning the bank when you owe them too much could work. Lenders are going to be better off renegotiating the debt than going through bankruptcy.

A white knight.....want me to take a stab? KF.

[MDepr2007]

Curious why trading wasn't halted , oh well.... They didn't weren't part of the $30 million for the ballapark were they?

[sgrizzle]

quote:Originally posted by MDepr2007

Curious why trading wasn't halted , oh well.... They didn't weren't part of the $30 million for the ballapark were they?

Yes

[Breadburner]

quote:Originally posted by inteller

SemGroup is going no where.

Did you say that when you worked for CFS....!

[cannon_fodder]

Down another 30% in pre-market trading.  

- No clarification on where they stand
- Parents stated an unknown course of action (they MUST have seen a cash issue coming and failed to plan.  Or worse, they didn't see it coming)
- Subsidiary failed to address how this will effect their business

The market doesn't like uncertainty.  Management is either incompetent or hiding something.  Then add in a TON of insider trading allegations (volume of 6mil on a 60K volume stock).

They did a CYA filing with the SEC.   But there will certainly still be an investigation.  Anytime a stock slides 50% and the news on why comes out a day later, it just doesn't look good.
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001392091-08-000008

Looks like the open will be somewhere under $8.    It opened near $25 yesterday.  One year ago today the IPO opened at $12 (initially set for $11).

An amazing meltdown.  Management had better announce a plan BEFORE trading ends today or at least the public portion of the company will be worthless.  I'd be interested to see the underlying causes - an oil firm that has made good money going broke when every other oil player is raking it in.

Also, if they had not taken units public last year all this would be under the table.  For better or worse.

Fingers crossed.  Come on management!  You don't build such a large company so fast by being an idiot.  Come out with SOMETHING.

[kylieosu]

Ironically, Kivisto just won ABoT's best business leader award this week:

Business Leader

Tom Kivisto

Tom Kivisto is the CEO, president and co-founder of the Tulsa-based international crude oil service company SemGroup. He was featured in one of our cover stories in May, just after his company sponsored the LPGA Championship. Along with his business acumen and golf patronage, Kivisto is also a modest but avid benefactor of Project Single Parent, the Tulsa Ballet and a host of other endeavors in both charity and art.

Close Calls:

Chet Cadieux

George Kaiser

Elliott Nelson

[Conan71]

Oh the irony:

"Natural gas futures for August delivery fell more than 8 percent Thursday, marking their biggest one-day drop in nearly a year, according to Nathan Golz, researcher at Wachovia Securities in St. Louis. Prices for the key heating, cooking and power generation fuel settled 86.1 cents lower at $10.537, their lowest point since April."

I heard on the news last night regulators with very deep anal probes showed up at Wachovia in St. Louis.  Assumedly unrelated, but couldn't miss the irony from diamondback's post.

SEM has good assets.  We've done business with them since they bought Koch and Frontier's assets around this area.  They've been a good customer and if the **** totally hits the fan,
these are assets which will have good value to someone else.  I'd guess they will start spinning off assets if they really do file Ch. 11.

Before anyone starts comparing Tom Kivisto to Bill Bartmann too closely, CFS was really much more of something like a shell game or ponzi scheme and the owners knew that.  Bartmann is a narcisitic con-man.

I think SEM has been reasonably well-run, but their acquisition binge is likely what has got them in the liquidity crisis.  Couple that with some drops in oil, NG, and LP prices, they could be in deep **** over night.  We somewhat questioned how quickly they were buying asphalt terminals, but as long as a customer pays their bills, we don't really quibble with what they buy and sell.  Let's just hope they keep paying their bills for the time being and there aren't any job losses at SEM over this.  

[cannon_fodder]

Wow.  Opened at $6.39.  Just passed the $6 mark on it's way down.  308,000 shares traded already.  Look's to be stable around $6 - 6.40 at the moment.  

And it just announced Management is out, specifically SemGroup LP. has a new President and CEO:
"SemGroup, L.P. announced today that Terry Ronan has been named acting president and chief executive officer."  Replacing Kevin Foxx.
Press Release: Management Out

Markets are happy something was done.  Stock "stable" at $6.50 range, edging up slightly.  No, I won't be giving a stock price play-by play... but I thought the open was damn interesting.  $6.74. Looks like the bet is that they are a going concern... either that or so many people have lost enough to not make it worthwhile to get out.

[Conan71]

I think people are waiting to see what happens.  I'd like to think of them as being another Williams who can rebound, but they are the new kids on the block.  It's tempting to buy it right now, but if it de-lists, well just not worth the risk to me.

[Nik]

Stock back up to 8.80.

TULSA, Okla.--(BUSINESS WIRE)--A press story today incorrectly reported that Terry Ronan was named to an executive position at SemGroup Energy Partners (NASDAQ: SGLP). In fact, Terry Ronan on July 18 was named SemGroup, L.P. president and chief executive officer. Kevin Foxx is and remains president and chief executive officer of SemGroup Energy Partners, L.P.

[Nik]

From the World: http://www.tulsaworld.com/news/article.aspx?articleID=20080718_11_Thep051117

quote: Terry Ronan is replacing Tom Kivisto as head of SemGroup LP, which disclosed late Thursday it was considering filing for bankruptcy after SemGroup Energy Partners' stock price fell more than 50 percent.

[dbacks fan]

Just curious as to what the long term investments were. I'm guessing from what I've read they invested in asphalt production and transportation when oil was less expensive,made agreements for a certain price for delivery, and when oil spiked they could not change the price of product since it was already agreed upon.


Just guessing.

[cannon_fodder]

dbacks, as I understand it they aren't on the hook for long-term contracts.  Or at least that's not whats causing the trouble.  Again, as I understand it:

They have bought some 50 companies over the past 8 years.  Spinning some off, absorbing others, using others as subdivision entities.  All of those purchases were financed in debt.

Their primary industry - oil, requires buying the product on margin.  Midstream supplies handle the product and in many instances own it.  They need large amounts of capital to purchase the large amounts of oil (or leverage it).  As oil prices rise, the amount of liquidity they need also rises.

At some point the price of oil caused the margin to outstrip their ability to assure the transaction with liquid assets.  Since that directly effects their ability to operate and thus raise more revenue, their outstanding debt is in question.   Que the credit crisis.

Anyone verify that I have that right?  I'm no expert in this area (midstream production etc.).

[dbacks fan]

Thanks cf.

[Kenosha]

I think they just shorted oil...my understanding is that BOK is now in control of that company, for better or worse.

They and MidFirst gave them a ton of credits.  GK and Company, I think, shut them down.