Those block trades occur frequently in most stocks and show up after the market closes. It would be next to impossible for someone to trade such a large block AH without moving the stock by a huge amount.
Almost all of these huge trades in AH trading are block trades that were arranged earlier in the day, and don't post until after the market closes. I see this question all the time.....it's really pretty common knowledge.
Oil Bust Gives Billionaire Deal-Maker Buyer's Remorse
05/10/2016 02:09 PM
By Liz Hoffman and Alison Sider
Kelcy Warren became a billionaire oil man by making deal after deal, including purchases of thousands of miles of pipelines after Enron Corp. collapsed. Now he is suffering from a severe case of buyer's remorse.
As low oil prices spread pain throughout the energy industry, Energy Transfer Equity LP, the Dallas company where Mr. Warren is chairman, is scrambling to restructure or escape a $33 billion agreement announced just seven months ago to acquire Williams Cos., based in Tulsa, Okla. The deal would create a 100,000-mile network of pipelines.
Mr. Warren, 60 years old, has overseen a series of moves that could torpedo the biggest acquisition of his life, such as an unusual convertible preferred share issue that would dilute Williams shareholders and increase his own stake in the combined company.
When Williams Chairman Frank MacInnis called in February to complain, Mr. Warren responded curtly, according to Mr. MacInnis. "No one was going to tell him how to run his company," Mr. MacInnis said in the unredacted version of a court filing reviewed by The Wall Street Journal. The comment is crossed out of a publicly available copy of the filing.
Energy Transfer disputes the comment but says the two men have talked a number of times about what would be in the best interest of shareholders. The company says Mr. Warren isn't trying to kill the deal but is emphatic that it needs to be restructured.
The deal, one of the largest announced in 2015, is now in danger of becoming one of the highest-profile corporate casualties of the oil bust. After Messrs. Warren and MacInnis announced the agreement on Sept. 28, oil prices fell about 40%, though they have since rebounded. The share prices of both companies are still down by roughly half. The tumult also cost Energy Transfer's chief financial officer his job.
The mess shows how vulnerable many deals are to souring financial markets. Deals touted as mutually beneficial when announced can quickly turn better for one side than the other. The same thing happened when credit dried up in the financial crisis and droves of buyers scrambled to get out of deals.
So far this year, about $378 billion in U.S. mergers and acquisitions have been abandoned, more than 40% higher than in all of 2015, according to Dealogic. This year's broken-deal total will be a record even if no more deals fall apart.
Recent examples include Pfizer Inc.'s proposed $150 billion takeover of fellow drugmaker Allergan PLC and the $35 billion merger of oil-field services companies Halliburton Inc. and Baker Hughes Inc., which crumbled under pressure from U.S. regulators. Honeywell International Inc. and Canadian Pacific Railway Ltd. walked away from reluctant takeover targets.
Williams has filed lawsuits against Energy Transfer and Mr. Warren over the share issuance, alleging that it cheats Williams shareholders.
After initially resisting the deal, Williams now is considering asking a judge to force Energy Transfer to complete the takeover, say people familiar with the matter. Williams says a failed deal would cost its shareholders $10 billion in lost value.
Mr. Warren has long kept a tight grip on his sprawling pipeline empire, launched two decades ago. In addition to Energy Transfer, he essentially controls three other publicly traded companies stitched together so complicatedly that some analysts decline to follow them, they say.
He also is one of the country's richest men, with a net worth estimated at $7 billion by Forbes. Mr. Warren owns a private island in Honduras and an 8,000-acre property near Cherokee, Texas, that was once an exotic-animal ranch and is still home to roving zebras and buffalo.
His 23,000-square-foot Dallas mansion, bought for $30 million in 2009, includes a bowling alley and a baseball diamond that features a scoreboard with "Warren" as one of the teams.
He is an avid music fan and owns an independent recording studio that produced in 2014 a Jackson Browne tribute album with cover songs by musicians such as Bonnie Raitt and Don Henley.
Mr. Warren has boasted of seeing opportunity in downturns. He launched Energy Transfer in the wake of Enron's demise and then expanded.
In 2012, another company he runs, Energy Transfer Partners, agreed to buy Sunoco Inc. for $5.3 billion while Sunoco was in the middle of a complex restructuring. The $5.7 billion takeover of pipeline company Southern Union Co., also in 2012, came after a hostile bidding war.
In 2013, he hired Jamie Welch, a longtime energy investment banker at Credit Suisse Group AG who shared Mr. Warren's hearty appetite for deals.
The two men saw an opening in the oil rout that started in 2014, which Mr. Welch described as "a once-in-a-lifetime opportunity."
During a brief uptick in oil prices early last year, Mr. Warren told analysts: "This is going to sound odd to you, almost sadistic, but I was disappointed to see a rebound in crude prices...I was excited to see who might be more vulnerable if we saw this market continue a downward trend."
Energy Transfer set its sights on Williams and its crown jewel: the 10,000-mile Transco gas pipeline. But Williams stiff-armed Energy Transfer for months, according to securities filings.
When Energy Transfer made an all-stock offer in June then valued at $48 billion, Williams rejected it as too cheap and plowed ahead with plans to absorb an affiliate.
By the fall, Williams's outlook had worsened. In addition to sapping pipeline demand, oil's slide had hurt Williams's gas-processing business, which is especially vulnerable to price swings. A big customer, Chesapeake Energy Corp., looked increasingly troubled, too.
At a meeting of Williams's board of directors in Tulsa in September, the company's advisers said investors were losing patience, according to people familiar with the matter.
Hopes briefly flickered for a white-knight transaction with Warren Buffett-backed MidAmerican Energy Co., which expressed last-minute interest, but talks went nowhere, some of the people say.
Energy Transfer kept pushing for a deal, but the Williams board was divided seven to six against it. With tensions running high, the group took a break for dinner. Unable to find a private dining room big enough to accommodate them, they split into two groups, one "for" and the other "against," people familiar with the matter say.
When the meeting reconvened in the morning, two directors had changed their minds. The deal was approved by an 8-5 vote.
Energy Transfer shareholders, who had bid up the stock price when the offer first surfaced, were unimpressed with the details of the takeover announcement. Energy Transfer shares fell 13% in one day.
Early signs that regret was setting in came when Mr. Welch, Energy Transfer's finance chief, painted the deal unfavorably in conversations with some Williams shareholders in January. He even suggested that they consider voting against it, these people say.
The merger contract is written with unusually tight provisions on how Energy Transfer can get out of the deal. Williams shareholders can vote it down.
Word of Mr. Welch's efforts, which were earlier reported by the New York Times, filtered back to Williams. Integration meetings were postponed and progress slowed, people familiar with the matter say.
Energy Transfer's public statements about the deal got noticeably cooler. In March, the company slashed its estimate of annual cost savings at the combined companies by more than 90%, said it would suspend cash distributions for at least two years and warned that a credit-rating downgrade was possible because of the combined companies' heavy debt load.
Energy Transfer also backed away from its promise to keep a major presence in Williams's hometown of Tulsa after the deal is completed.
Last month, Energy Transfer said its lawyers couldn't guarantee the transaction would be tax-free to Williams investors, a condition of the merger's completion. Williams disputes Energy Transfer's legal position and says it is an attempt by Energy Transfer to wriggle out of the deal.
On an earnings call last week, Mr. Warren was dour about the takeover. "Absent a substantial restructuring of this transaction, which Energy Transfer has been very willing and actually desiring to do -- absent that, we don't have a deal," he said. Mr. Warren declined to comment for this article.
One big sticking point is the $6 billion cash portion of the deal, or $8 a share. Energy Transfer and some analysts are worried that the cash payout would saddle the combined company with too much debt.
"Kelcy is firing every bullet he has," says Benjamin Michaud, an analyst at asset manager H.M. Payson & Co., which owns $10 million of Williams shares and supports the takeover. "But from the standpoint of a Williams shareholder, $8 [a share] is very significant."
Some Williams shareholders say there is so much acrimony between the two companies that it is hard to imagine them getting along if the deal goes through. "There's got to be a lot of bad feelings on both sides of the aisle," says Jay Rhame, a portfolio manager at Reaves Asset Management.
Tulsa Mayor Dewey Bartlett Jr. says that he sees nothing good about the proposed takeover and that he recently told Mr. MacInnis that in a meeting in New York. Mr. MacInnis declined to comment for this article.
The biggest flashpoint is the convertible-share issuance. In March, Energy Transfer insiders, including Mr. Warren, President John McReynolds and two directors, swapped their existing shares for special units, which would forgo cash distributions over the next nine quarters.
Those units are convertible into regular shares at a discount to the market price, giving their holders a bigger stake than they started with.
Energy Transfer has said the move would save $518 million to help pay down debt. The company says it wanted to offer the shares to all its investors, but Williams withheld its consent. Williams says it opposed the move because it would hurt Williams shareholders.
In April, Energy Transfer said it intended to suspend cash distributions after the merger, meaning the insiders will have given up nothing but still stand to receive more equity when the units are converted in 2018.
People familiar with the matter say Mr. Welch disagreed about how far Energy Transfer could go to try to get out of the takeover and balked at the convertible-share issuance. The finance chief told Mr. Warren the share issuance would damage Energy Transfer's reputation on Wall Street. He also told his boss that he wouldn't publicly defend the move, these people say.
That was the last straw in a relationship that already had become troubled. The cash portion of the deal terms was Mr. Welch's idea, according to people familiar with the matter. He had argued that by including more cash, Energy Transfer could issue less stock and keep more of the upside of the combined company.
But as the industry's outlook worsened and investors grew concerned about the combined company's debt load, what seemed like a win for Energy Transfer became a liability.
Mr. Warren ordered Mr. Welch's firing, according to people familiar with the matter. The company announced Feb. 5 that he had been replaced.
Mr. Welch has sued Energy Transfer for compensation he says he is owed by the company. Mr. Welch has said his termination was "motivated by an agenda unrelated" to his performance as chief financial officer.
Mr. Warren told analysts that "the decision was made by me that we needed to make a move, and we did."
Last month, Williams filed one lawsuit in Delaware seeking to undo the convertible preferred share issue and another in Texas alleging that Mr. Warren interfered with the deal. Energy Transfer responded with a countersuit and says Williams breached the merger agreement by refusing to give its consent for the shares to be offered to all investors.
Unless the companies reach a surprise settlement, the deal's fate will likely be decided by a judge in Delaware. A court hearing is scheduled for mid-June.
(END) Dow Jones Newswires
ETE, WMB......Energy Transfer taking steps that may allow Williams renegotiation, Reuters says. Energy Transfer Equity (ETE) is taking steps that could allow it to renegotiate its acquisition of Williams Cos. (WMB), reports Reuters, citing sources. The two companies are in discussions to cut the number of days specified for completing certain administrative requirements of the deal, potentially affording enough time to renegotiate terms ahead of a June 28 deadline, the sources explained to Reuters.
Thanks for the info....you know much more about him and the company than I do. Any additional info is always welcome. I did buy some more today as I'm hopeful the company will do well in the future. Carole Hochman seems to have a good record, and has invested a lot of her own money in the company.
Are you referring to David Hochman, the director, who bot more @ 3.15, and owns over 100,000 shares? Can you give me more info on your knowledge of the company and Hochman and why you're so negative on the company? I must admit, the stock is not performing very well. Thanks for your info and thoughts. You seem to be pretty familiar with the situation, much more so than I am.
Seeking Alpha Article
As the Schedule 13D we filed today indicates, we are one of the largest shareholders of AdCare Health Systems, Inc. (NYSEMKT:ADK) ("ADK" or the "Company") and own over 3% of its common shares. We own more shares than all but one of the members of ADK's Board of Directors (the "Board").
We believe ADK's common stock and publicly traded preferred stock have been and continue to be deeply undervalued. Fortunately, we believe there is a clear path to creating shareholder value and we are calling on the Board to publicly endorse and the immediately implement this plan. While we have expressed our thoughts to members of the company's senior management (whom we commend for resolving many of ADK's operational problems), we believe it is now appropriate to share our views with the entire Board.
We believe significant shareholder value can be created by selling ADK either in parts or in whole. A buyer of the company could reap significant benefits by reducing ADK's outrageously high cost of capital and by eliminating virtually all of its corporate overhead (which is quite high relative to projected FFO). Furthermore, we believe ADK (with an equity market capitalization of only $45 million) is too small to justify remaining public considering the significant public company expenses it incurs and the clear lack of interest in the Company from the investment community.
One could argue that ADK should make acquisitions in an effort to grow and hopefully achieve a higher valuation multiple. However, we believe this strategy is naive and not in the best interests of shareholders. We believe ADK's cost of capital is too high to justify making acquisitions and that other company specific and market related issues will prevent ADK from ever achieving an appropriate valuation as a publicly traded entity. Simply put, we believe shareholders would be best served if the company were sold immediately. Conversely, we believe that NOT selling the company today would be a disservice to shareholders as it would force them to spend over $5 million on projected G&A expenses this year alone, to pay for the company's high cost of debt/preferred, to incur market, industry and interest rate risks and, importantly, to not be able to reinvest proceeds received from the sale of ADK into investments with more attractive risk/reward scenarios.
We believe that a not widely read 8k filed on February 9, 2016 highlights the underlying value of ADK's assets and the value that could be created through a sale of the entire company. In this filing, ADK disclosed that it granted a party an option to buy ADK's Arkansas facilities for $55 million or what we believe equates to a 10% cap rate. We believe the Arkansas facilities are ADK's weakest, so if a party is considering paying a 10% cap rate for these facilities, we believe ADK can obtain even more favorable multiples for its more attractive remaining facilities.
Therefore, we call on the Board to immediately implement the following plan which we believe is in the best interests of all shareholders. We also believe this plan will eliminate significant confusion (which contributes to ADK's depressed stock price) which we believe exists among the investment community as to Board's true objectives.
1. Publicly announce that the Board has retained a reputable investment bank to sell the company in whole or in pieces. We believe hiring an investment bank will ensure that the Board has conducted a wide and thorough sale process. We believe making a public announcement is important because it will (i) highlight the opportunity to numerous potential buyers, (ii) indicate to potential buyers that the Board is serious about the sale process and, (iii) give ADK investors confidence that the Board is committed to maximizing shareholder value. Importantly, we see very little downside to making such a public announcement since the company has very few employees and is unlike to incur any business risk.
2. Publicly announce the Company has no plans to pursue acquisitions. As stated above, we believe the company has much better uses of capital than making acquisitions. We believe acquisitions are inherently risky and note that ADK shareholders have historically suffered significantly as a result of poorly conceived acquisitions.
3. Use all excess cash to repurchase common stock or preferred stock. We have illustrated above why we believe ADK's common stock is so undervalued. We also believe that ADK's publicly traded preferred stock (on which the company is current on its dividend payments) is undervalued considering it yields over 13% and has an attractive change of control provision. On a risk/reward basis, we doubt ADK has a better use of its excess cash than repurchasing either its common stock or preferred stock.
Importantly, we believe that many of the Company's other large shareholders would agree with the sentiments expressed in this letter.
We also note that several Board members personally own very little ADK stock, especially if you exclude out of the money options and warrants. In general we get concerned when individuals with very little financial incentive to act in the best interests of shareholders are given the power to determine the fate of all shareholders.
We are large and long-standing shareholders who have seen significant shareholder value destroyed over the years. We believe the path to maximizing shareholder value is clear and that the Board should act immediately to implement our plan. We are prepared to take all actions necessary to ensure that shareholders' best interests are being looked after.